NEW DELHI: India’s finance ministry plans to scrap five-year-old restrictions on Chinese firms bidding for government contracts as New Delhi seeks to revive commercial ties amid easing border tensions, two government sources told Reuters.
The curbs were imposed in 2020 after a deadly clash between Indian and Chinese troops. They required Chinese bidders to register with an Indian government committee and obtain political and security clearances, effectively barring them from competing for government contracts estimated at $700 billion to $750 billion.
Reuters is the first to report on the plan to ease the restrictions. One source said officials are working to remove the registration requirement. Both sources, who declined to be named as they were not authorised to speak publicly, said Prime Minister Narendra Modi’s office would take the final decision.
The restrictions had a major impact. Months after they were introduced, China’s state-owned CRRC was disqualified from bidding for a $216 million train-manufacturing contract.
The finance ministry’s move follows requests from other government departments facing shortages and project delays linked to the 2020 rules, the sources said.
A high-level committee headed by former cabinet secretary Rajiv Gauba has also recommended easing the curbs. Gauba is a member of a prominent government think tank.
According to a 2024 report by the Observer Research Foundation, the value of new projects awarded to Chinese bidders fell 27 per cent year-on-year to $1.67 billion in 2021 after the restrictions were imposed.
Curbs on Chinese equipment imports, particularly for the power sector, have also hindered India’s plans to raise thermal power capacity to about 307 GW over the next decade.
Following the Reuters report, shares of Bharat Heavy Electricals fell 10.5 per cent, while Larsen & Toubro declined 3.1 per cent on Thursday.
Despite improved ties — including the resumption of direct flights and faster business visa approvals — India remains cautious, with restrictions on Chinese foreign direct investment still
in place.