Centre plans to remove curbs barring Chinese firms from bidding for govt contracts: Report

The finance ministry is planning to remove restrictions that have barred Chinese companies from bidding for government contracts since 2020, according to two government sources who told Reuters. These restrictions were introduced after a deadly border clash between Indian and Chinese troops and required firms from neighbouring countries, including China, to register with a government committee and obtain political and security clearances before bidding.

The measures effectively excluded Chinese companies from government tenders worth an estimated $700 billion to $750 billion, limiting their participation across various sectors. Officials said the ministry aims to eliminate the registration requirement for bidders from bordering nations, marking a significant change in procurement policy, the report added.

The final decision to lift the curbs rests with Prime Minister Narendra Modi’s office and is awaiting approval. The move responds to sectoral shortages and project delays caused by the restrictions, especially in infrastructure and energy. Ministries have reported challenges in sourcing equipment and completing projects on time, with the power sector struggling to raise its thermal capacity to about 307 GW over the next decade.

A high-level committee led by former cabinet secretary Rajiv Gauba has recommended easing the restrictions, the report stated. These recommendations align with requests from several ministries seeking exemptions to prevent project delays. The restrictions imposed in 2020 had an immediate impact; for example, Chinese state-owned CRRC was disqualified from bidding for a $216 million train manufacturing contract soon after the rules were introduced.

The value of new projects awarded to Chinese firms fell by 27 per cent to $1.67 billion in 2021, according to a 2024 report from the Observer Research Foundation. Diplomatic efforts over the past year, including PM Modi’s visit to China and steps to ease business visa approvals and restore direct flights, have taken place. However, India remains cautious, maintaining other restrictions on Chinese foreign direct investment.