India Considers Easing FDI Curbs on Chinese Investment, While Hanoi Sets Ambitious $4.5 Billion Target

Major Asian economies are pursuing divergent strategies on foreign direct investment, with India considering an easing of stringent restrictions on Chinese capital while Vietnam continues to aggressively court foreign funds. The moves highlight a complex regional landscape where national economic needs and geopolitical considerations are creating different paths for attracting investment.

The Indian government is reviewing its Press Note 3 policy, which was implemented in April 2020 amid border tensions with China, according to The Economic Times. The rule made prior government approval mandatory for all FDI from countries sharing a land border with India, a measure primarily aimed at preventing opportunistic takeovers by Chinese firms during the pandemic. The potential review could introduce a ‘de minimis’ clause, which would exempt smaller investments from the lengthy approval process. This policy recalibration comes as industry executives have argued that the current framework causes significant delays even for minor stake purchases and as relations between the two countries have changed.

In sharp contrast to India’s cautious re-evaluation, Vietnam is signaling its continued openness to foreign capital. The city of Hanoi has set a specific goal to attract approximately US$4.5 billion in FDI in 2026, as reported by Vietnam News. This target is a key component of the capital’s plan for international economic integration, which is designed to foster sustainable growth and improve its business environment. The city also aims to increase the number of export businesses with green certifications and welcome 8.6 million international tourists.

These differing approaches in India and Vietnam unfold as other regional powers are moving in another direction entirely. Japan, for instance, is strengthening its investment defenses by creating a new committee modeled after the U.S. CFIUS to screen inbound investments for national security risks, with a target to be operational by the end of 2026. This divergence illustrates that there is no monolithic approach to FDI in Asia, with nations tailoring their policies to balance economic ambitions with evolving national security and geopolitical priorities.