Opening doors for China? Finance Ministry mulls allowing Chinese firms to bid for government contracts: Report

The Centre is reportedly considering rolling back rules that have kept Chinese companies out of government contracts since 2020, signalling a possible reset in commercial engagement as diplomatic and border tensions ease. According to two sources cited by Reuters, finance ministry is working on a proposal to eliminate limitations that forced Chinese bidders to register with a government panel and secure political and security clearances before participating in public tenders.Introduced after a deadly clash between Indian and Chinese troops along the disputed border, the measures effectively shut Chinese firms out of government projects estimated to be worth anywhere in the range of $700 billion to $750 billion. “Officials are working to remove the registration requirement for bidders from bordering nations,” one source said, adding that they were not authorised to speak publicly. Both sources said the proposal will ultimately require approval from PM Modi. The restrictions had an immediate and lasting impact, Reuters reported. China’s state-owned CRRC was barred from bidding for a $216 million train manufacturing contract just months after the policy came into force. Data from a 2024 Observer Research Foundation report shows that the value of new projects awarded to Chinese firms fell 27% year-on-year to $1.67 billion in 2021. Officials said the efforts to ease the curbs ramped up after repeated pushes from ministries struggling with stalled projects and supply bottlenecks. “Several ministries have requested exemptions to overcome the constraints that could derail projects in their sectors,” the second source told Reuters. The power sector has been hit the hardest, with limits on Chinese equipment imports slowing India’s plans to expand its thermal power generation capacity to about 307 gigawatts over the next decade. A high-level committee chaired by former cabinet secretary Rajiv Gauba has also backed a relaxation of the rules. Gauba is now part of a leading government think tank. The possible shift comes as New Delhi and Beijing take steps to normalise ties. Last year, PM Modi travelled to China for the first time in seven years, with both sides agreeing to strengthen commercial cooperation. The visit followed US President Donald Trump’s imposition of a 50% punitive tariff on Indian goods and coincided with improving US-Pakistan relations. Since then, India and China have resumed direct flights, while New Delhi has reduced red tape to accelerate business visa approvals for Chinese professionals. Even so, caution remains as restrictions on foreign direct investment from Chinese companies are still in place.