NEW DELHI: India’s finance ministry is reportedly preparing to remove five-year-old restrictions on Chinese companies bidding for government contracts, as New Delhi looks to revive commercial ties amid easing diplomatic and border tensions. The move could restore opportunities worth hundreds of billions of dollars for Chinese firms, officials said.
The restrictions were imposed in 2020 following a deadly border clash and required Chinese bidders to register with a government committee and obtain political and security clearances. These measures effectively blocked Chinese firms from competing for Indian contracts valued between $700 billion and $750 billion.
A government source said officials are now working to eliminate the registration requirement for bidders from neighboring countries, while the final decision rests with Prime Minister Narendra Modi’s office.
Impact on projects and requests for exemptions
The curbs had immediate consequences: for instance, China’s state-owned CRRC was disqualified from bidding on a $216 million train-manufacturing contract. Other government departments have since faced shortages and project delays due to the restrictions.
“Several ministries have requested exemptions to overcome constraints that could derail projects in their sectors,” a second source said. A high-level committee led by former cabinet secretary Rajiv Gauba has also recommended easing the rules to prevent further disruptions.
Evolving commercial and geopolitical environment
The move follows steps to normalize India-China relations after Modi’s visit to Beijing last year, where both sides agreed to foster deeper commercial ties. Since then, direct flights have resumed, business visa approvals for Chinese professionals have been expedited, and trade channels are gradually reopening.
However, India continues to maintain caution, keeping limits on foreign direct investment from Chinese firms in place. Analysts note that the U.S. remains an influencing factor, with Washington signaling uncertainty over a potential trade deal with New Delhi, which could shape India-China economic relations.
