A report by Reuters suggests that the Ministry of Finance is planning to lift the restrictions that have prevented Chinese companies from bidding on government contracts since 2020. This step comes after a deadly border clash between Indian and Chinese troops, which led to mandatory registration with a government committee and political security clearances for companies from China and neighboring countries before bidding.
Following the imposition of these restrictions, Chinese companies were excluded from government tenders valued between $700 billion to $750 billion. Officials indicate that the ministry aims to eliminate the registration requirement for bidders from neighboring countries.
The Final Decision Awaits PMO
The report points out that the final decision to lift the bans lies with Prime Minister Narendra Modi's office and awaits approval. The bans are said to be lifted as project delays and resource shortages persist. Various ministries have reported challenges in procuring equipment and timely project completions.
The report mentions that a high-level committee, chaired by former Cabinet Secretary Rajiv Gauba, has recommended easing the restrictions. These recommendations align with the requests from various ministries seeking exemptions to prevent project delays.
Restrictions Enforced in 2020
The restrictions were imposed in 2020 and had an immediate effect. For instance, shortly after the rules were enforced, Chinese state-owned company CRRC was declared ineligible for a $216 million train construction contract.
According to a 2024 report by the Observer Research Foundation, the value of new projects awarded to Chinese companies fell by 27% to $1.67 billion in 2021. Diplomatic efforts over the past year have included Prime Minister Modi's visit to China, the simplification of trade visa issuance, and the restoration of direct flights. However, India remains cautious and maintains other restrictions on Chinese direct foreign investments.
