India’s finance ministry is planning to scrap restrictions imposed in 2020 that effectively barred Chinese companies from bidding on lucrative government contracts worth an estimated $700-750 billion.
The curbs, introduced after a deadly border clash between Indian and Chinese troops, required bidders from bordering nations to register with a government committee and secure political and security clearances—a process that often led to disqualifications.
Practical Pressures and Policy Recommendations Drive Change
Multiple government ministries have sought exemptions, citing shortages, project delays, and hindrances to sectoral goals, such as expanding thermal power capacity to 307 GW over the next decade due to restricted imports of Chinese equipment. A high-level committee led by former cabinet secretary Rajiv Gauba recommended easing the rules.
Sources indicate the final decision rests with Prime Minister Narendra Modi’s office. This shift follows eased diplomatic tensions, Modi’s visit to China last year, and agreements to deepen commercial ties—partly influenced by external factors like U.S. tariffs on Indian goods.
However, restrictions on Chinese foreign direct investment remain intact, signaling a cautious approach. The move could revive competition in infrastructure and manufacturing tenders, reversing trends like a 27% drop in awards to Chinese bidders in 2021.