The Indian government's top think tank has proposed easing rules that de facto require extra scrutiny for investments by Chinese companies, arguing that the rules have meant delays for some sizeable deals, three government sources said, Reuters reported. Currently, all investment by Chinese entities in Indian companies need to gain a security clearance from both India's home and foreign ministries.

According to the Reuters report, NITI Aayog, has proposed that Chinese companies can take a stake of up to 24% in an Indian company without any approval being required, said the sources who were not authorised to speak to media and declined to be identified.

The proposal, reported for the first time by Reuters, is part of a plan to boost foreign direct investment in India and is being studied by the trade ministry's industries department, the finance and foreign ministries, as well as Prime Minister Narendra Modi's office, the sources said. And while not all of NITI Aayog's ideas are necessarily taken up by the government, the proposal comes at a time when India and China are seeking to mend ties that have been particularly strained since border clashes in 2020.

Any decision to ease might be months away and will be taken by political leaders, two of the sources said. They added that the industries department is in favour of easing, but the other government bodies are yet to give their final view. NITI Aayog, the ministries, the industries department and the prime minister's office did not reply to Reuters requests for comment.