Before a Chinese company sends money to India it normally has to clear its own outbound investment process: an NDRC approval or filing, a MOFCOM approval or filing for the overseas enterprise, and foreign exchange registration through its bank under SAFE rules. New State Council regulations on overseas investment were reported to take effect on 1 July 2026 and sit above the older departmental rules. These Chinese steps, the Indian Press Note 3 approval and the Indian incorporation must be sequenced, because each depends on the others. Your Chinese counsel must confirm the current Chinese requirements for your company type.
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Key facts
| Chinese approvals | NDRC project approval or filing; MOFCOM approval or filing for the overseas enterprise; SAFE registration through the bank |
|---|---|
| New regulations | State Council regulations on outbound investment reported effective 1 July 2026 (State Council Order 837); older NDRC, MOFCOM and SAFE rules continue to apply alongside |
| Sensitive vs non-sensitive | Sensitive projects need approval; others generally a filing. Thresholds are set in the departmental rules; confirm them |
| State-owned groups | Extra supervision by the controlling shareholder or SASAC for central and local state enterprises |
| Technology | Transfer of controlled technology or staff may need export-control authorisation; China has reportedly tightened some transfers to India |
| Annual reporting | Overseas investment reporting through the MOFCOM system, and tax reporting of foreign income |
| Tax | Chinese enterprise income tax at 25% on worldwide income with credit for foreign tax; confirm with a Chinese adviser |
| Sequence | Plan Chinese approvals, the Indian Press Note 3 approval and the incorporation together |
The Chinese approval steps in order
| Step | Authority | Typical content | Notes |
|---|---|---|---|
| Project approval or filing | NDRC or its local office | Project details, investor, amount, sector, use of funds | Sensitive sectors or countries need approval; others a filing |
| Overseas enterprise approval or filing | MOFCOM or its local office | Overseas enterprise, shareholding, business scope | Gives the overseas investment certificate |
| Foreign exchange registration | SAFE through the bank | Registration of the overseas direct investment | Needed before funds go out; later changes need updates |
| Funds transfer | Bank | Purchase of foreign exchange and remittance to India | The Indian bank issues an inward remittance certificate |
| Changes and exit | NDRC, MOFCOM, SAFE | Further investment, transfer, disposal | Fresh filing or approval may be needed |
How the Chinese and Indian steps fit together
- Decide the sector and structure, and check the Indian cap and Press Note 3 position. See Press Note 3.
- Prepare the Chinese filing in parallel with the Indian government application, because both ask for the same ownership and project details.
- Do not incorporate the Indian company or remit funds until the Indian approval is in hand and the Chinese filings allow the transfer.
- Keep the Chinese certificate and the Indian approval consistent in the investor name, amount and shareholding.
- File the Indian incorporation and funding steps. See incorporation steps and funding and FEMA.
Technology, equipment and people
- Chinese rules on export of controlled technology can apply when engineers, designs or machinery go to India. Press reports in 2025 described difficulties for some manufacturers moving equipment and Chinese engineers to India; treat the position as case-specific and ask Chinese counsel before committing a delivery schedule.
- Intellectual property transferred to the Indian subsidiary should be licensed under a written agreement priced at arm's length. See transfer pricing.
- Data and personal information leaving China is subject to a separate regime. See data protection.
Chinese tax on the investment (for your Chinese adviser)
- Chinese resident enterprises are generally taxed on worldwide income at 25% with a credit for foreign tax paid, within limits.
- Dividends from a foreign subsidiary are generally taxable in China, with direct credit for Indian Withholding Tax and, for qualifying holdings, indirect credit for the underlying Indian tax.
- Controlled foreign company rules can attribute low-taxed foreign profits to the Chinese parent.
- Transfer pricing documentation requirements apply in China for related-party dealings, and the Chinese file must match the Indian file.
- Keep Indian Withholding Tax certificates and the Indian return to support the credit.
Governance and reporting
- Board approval and, for state-owned groups, the approval of the controlling shareholder.
- Anti-corruption and compliance policies must reach the Indian team; Indian anti-bribery law applies there.
- Annual reporting of the overseas investment to MOFCOM and tax authorities.
- Prepare for questions on beneficial ownership from Indian banks and regulators.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, MOFCOM (China), SAFE (China) and the Ministry of External Affairs (India).
Frequently asked questions
Does a Chinese company need approval in China to invest in India?
Generally yes. Outbound investment needs an NDRC approval or filing, a MOFCOM approval or filing and SAFE foreign exchange registration through the bank, depending on the project. Confirm the current rules with Chinese counsel.
What are the new Chinese outbound investment regulations?
State Council regulations (Order 837) on overseas investment were reported to take effect on 1 July 2026. They sit above the existing departmental rules, which continue to apply.
Which approval comes first, the Chinese or the Indian?
Prepare both in parallel, but do not remit funds or incorporate until the Indian Press Note 3 approval is received and the Chinese filings allow the transfer.
Can I send technology or engineers to India freely?
Not always. Controlled technology and some equipment transfers may need authorisation in China, and some manufacturers have reported difficulties. Check before planning delivery.
How is the Indian subsidiary's dividend taxed in China?
Generally taxable, with credit for Indian Withholding Tax and, for qualifying holdings, indirect credit for underlying Indian tax. Your Chinese adviser must confirm the position.
Do state-owned enterprises face extra steps?
Usually yes. The controlling shareholder or SASAC may need to approve overseas investments.
Related guides
Press Note 3 for Chinese Companies: When Government Approval Is Needed and What the 2026 Easing Changes
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Read the guide →Preparing Chinese Documents for India: Why There Is No Apostille Between China and India and What to Do Instead
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How a Chinese parent funds an Indian subsidiary: equity pricing and valuation, compulsorily convertible instruments, external commercial borrowing, the Chinese SAFE step, inward remittance, FC-GPR and the 60-day and 30-day clocks.
Read the guide →India-China Double Taxation Avoidance Agreement Explained: Rates, Permanent Establishment and Relief for a Chinese Parent
The India-China DTAA explained for a Chinese parent: 10% rates on dividends, interest, royalties and technical fees, permanent establishment rules, business profits, share gains, employment income, relief from double tax and how to claim treaty rates.
Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Chinese rules change often; confirm current requirements before acting.