Chinese funds keener on India investments as geo-political tensions between countries ease

Chinese investors are starting to show greater interest in the Indian markets as geo-political tensions between both the countries seem to be cooling down. At least four new Chinese funds are presently exploring taking a foreign portfolio investor(FPI) licence in India. Of these the investment manager of three funds are Chinese state-owned institutions, said people with direct knowledge of the matter. A leading Chinese state owned  investor which manages billions of dollars worth global assets is eyeing to  register two new FPIs in India.

Additionally, a large American investment manager catering to Beijing-based clients through the Hong Kong route is also planning to include India is its Asian fund portfolio with an initial weightage of around 5 percent, the people cited above added.  In the last few months, Chinese lender Guangfa Bank has registered its Global Selective Fund as a foreign investor in India, data from depositories showed.

Curbs post-Galwan

Post the 2020 skirmishes in the Galwan Valley between India and China, India started imposing restrictions on Chinese investment coming into India. The government issued Press Note 3 which made it mandatory for Chinese investors to take prior government approval before making any fresh investment into unlisted companies.

Even in the case of public procurement and import of equipment, certain restrictions were placed on Chinese entities. However, there were no hurdles for Chinese investors wanting to invest in India through the FPI route, but still Chinese funds were wary due to the political tensions.

“Despite no curbs, Chinese investors have preferred to stay from Indian markets due to the simmering geo-political tensions between both the nations. However, things started cooling down after Indian Prime Minister met Chinese Premier on the sidelines of Shanghai Cooperation Organization (SCO) in Tianjin on 31 August 2025,” said a person cited above. “Along with Chinese state-owned entities, some of the private investment managers from Hong Kong are also exploring India investment option.”

India currently has just 18 China-based FPIs registered. The current list of funds includes People’s Bank of China(PBC), BEST Investment Corporation amongst others. Hong Kong, on the other hand, has 152 foreign funds registered in India, data from depositories showed. PBC is the Chinese central bank which has had an exposure to India for at least a decade. The bank has over 50 portfolio investments in India with most of these investments amounting to less than 1% stake in various companies .

Market participants say these new Chinese investors could provide some counterbalance to other FPIs who have been selling Indian shares in large numbers. In Calendar 2025, FPIs net sold securities worth over Rs 1 lakh crore in India and in January so far, the FPIs are net sellers to a tune of Rs 25,000 crore, data showed.