New Delhi, March 10 -- India has lowered a policy barrier that held back Chinese capital for four years, signalling a pragmatic shift as New Delhi seeks to integrate into global supply chains and revive a cooling investment landscape.

The Union cabinet on Tuesday relaxed restrictions under the Press Note-3, which mandated pre-approval for investments from countries that share a land border with India. According to an official statement, such investments will now be automatic up to 10% in a local firm, on the condition that the foreign investor must not exercise management control or hold a board seat. Besides, existing rules on sectoral caps, entry routes and other conditions will continue to apply.

The decision, which sets the stage fo...