Press Note 3 is only the first rule a Chinese-linked company meets in India. Sector caps and bans apply to every foreign investor. Government procurement rules require bidders from land-border countries to register with a competent authority before they can bid. India has blocked many Chinese-linked apps under Section 69A of the IT Act and reviews telecom and infrastructure suppliers on security grounds. Imports from China face customs duty and, for many products, anti-dumping or safeguard duties. Check each layer for your business before you commit capital.
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Key facts
| Sector caps | Defence, insurance, multi-brand retail, some media and financial services have caps or conditions for all foreign investors |
|---|---|
| Procurement | Bidders from land-border countries must be registered with a competent authority before bidding for central government contracts, under the General Financial Rules as amended in 2020; check the current rule and state rules |
| Apps and platforms | Many Chinese-linked apps have been blocked under Section 69A of the IT Act; new products face security scrutiny |
| Telecom and critical sectors | Trusted-source rules and security review for telecom equipment and infrastructure suppliers |
| Customs | Customs duty and GST on imports; anti-dumping and safeguard duties on many products from China |
| Enforcement | FEMA, tax and customs agencies scrutinise Chinese-linked companies; keep clean records |
| Banks | Enhanced due diligence on ownership and sources of funds |
The layers of rules
| Layer | Applies to | What to check |
|---|---|---|
| Sector caps and conditions | All foreign investors | The FDI Policy entry for your activity |
| Press Note 3 approval | Investors from land-border countries and their beneficial owners | See the Press Note 3 guide |
| Government procurement registration | Bidders from land-border countries for public contracts | Registration with the competent authority; local content and security conditions |
| IT and app blocking | Digital services and apps with Chinese links | Section 69A notices; data location and access |
| Telecom and critical infrastructure | Equipment and software vendors | Trusted-source requirements and security audits |
| Trade remedies | Imported goods from China | Anti-dumping, countervailing and safeguard duties notified by the customs authority |
| Customs value | Related-party imports | Consistency with transfer pricing |
Government procurement
- Central government procurement rules, as amended in 2020, require a bidder from a country sharing a land border with India to register with a competent authority before bidding. Registration involves political and security clearance.
- The rule applies to bidders from such countries and to Indian companies with such ownership in some cases; read the current text for the ownership test.
- Public sector companies and some state governments apply similar conditions.
- If government and public sector customers are important to your plan, include the registration and the likelihood of clearance in the business case.
Apps, data and security reviews
- Section 69A of the Information Technology Act allows the government to block access to apps and websites in the interest of security and public order. Many Chinese-linked apps were blocked from 2020.
- A new company is not blocked automatically, but a product with Chinese links can face data localisation and access questions from customers and regulators.
- See data protection for the cross-border data rules in both countries.
Customs and trade remedies
- Imported inputs pay basic customs duty, IGST and, for many products, anti-dumping or safeguard duty. The list is notified by the customs authority and changes.
- Check duty and the remedy list for each input before you set the transfer price or the bid price.
- Customs valuation of related-party imports is tested; keep the same documents for transfer pricing. See transfer pricing.
- A free trade agreement does not apply between India and China, so no preference is available.
Scrutiny and records
- Press reports describe tax, customs and foreign exchange investigations into several Chinese-linked companies in India. Treat the point as a reason to keep records, not as a prediction about any company.
- Keep ownership charts, board minutes, invoices, wage records and import documents ready for inspection.
- Respond to notices promptly with the help of Indian counsel, and keep the Chinese parent informed.
- Consider a periodic internal compliance review once the operation has started.
Before you commit
- List every government and regulated customer you expect to serve.
- Check sector caps, the Press Note 3 route and the procurement rule for each.
- Check import duty and trade remedies for key inputs.
- Map data and security questions for the product.
- Decide the structure and partner accordingly. See structure options.
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-owned Indian company face restrictions on government contracts?
Bidders from land-border countries must register with a competent authority before bidding for central government contracts under the 2020 procurement rules. Check the current rule and any state conditions.
Are Chinese apps blocked in India?
Many Chinese-linked apps have been blocked under Section 69A of the IT Act since 2020. A new product is not automatically blocked but may face security and data questions.
Do anti-dumping duties apply to imports from China?
Many products from China face anti-dumping or safeguard duties notified by the customs authority. Check the list for your inputs.
Is there a free trade agreement between India and China?
No. No preference applies, so normal customs duty and any trade remedies apply.
Are Chinese-linked companies scrutinised by Indian agencies?
Press reports describe investigations into several such companies. Keep full records and respond to notices promptly.
Where should I start?
With the sector, Press Note 3 and procurement checks, then the structure and partner.
Related guides
Press Note 3 for Chinese Companies: When Government Approval Is Needed and What the 2026 Easing Changes
How India's Press Note 3 (2020) applies to a Chinese parent: prior government approval for investors incorporated in China, the 2026 easing for passive minority land-border ownership, the control test, the 60-day sectors, director clearance and planning.
Read the guide →Manufacturing in India with a Chinese Partner: Approval, Joint Venture Terms, Technology Licences and Local Content
How Chinese manufacturers approach India: joint ventures with Indian partners, the 60-day fast-track sectors under the amended Press Note 3, incentive schemes, technology licences, supply chains, customs and the practical limits.
Read the guide →Moving Personal Data Between China and India: PIPL Cross-Border Routes, Important Data and the DPDP Act
How China's PIPL, Data Security Law and cross-border data rules apply to a Chinese company with an Indian subsidiary, and how India's Digital Personal Data Protection Act and data restrictions affect the Indian side.
Read the guide →Common Mistakes Chinese Companies Make in India and How to Avoid Them
The most frequent mistakes Chinese companies make when setting up in India: investing before Press Note 3 approval, assuming an apostille works, hidden ownership, late FEMA filings, visa mismatches and weak records.
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.