India Plans to Ease Curbs on Chinese Firms in Government Tenders

India is set to lift five-year-old restrictions on Chinese companies bidding for government contracts, signalling a cautious recalibration of economic ties with China amid easing border tensions. The proposed move, led by the finance ministry, could reopen access to public procurement projects worth an estimated $700–750 billion.

Background of the 2020 Restrictions

The curbs were imposed in 2020 following a deadly military clash along the India–China border. Under the rules, Chinese firms were required to register with a government committee and obtain political and security clearances before participating in public tenders. These measures effectively barred most Chinese companies from Indian government contracts, significantly reducing their participation in infrastructure, transport, and power sector projects.

Proposed Changes and Decision-Making Process

According to government sources, officials are now working to remove the mandatory registration and clearance requirements. The final decision will rest with the office of Prime Minister Narendra Modi. The finance ministry’s proposal follows repeated representations from other departments that faced shortages, higher costs, and project delays due to the absence of Chinese suppliers.

Economic Impact and Sectoral Concerns

The restrictions had tangible consequences. Chinese state-owned CRRC was disqualified from a $216 million train manufacturing contract, and imports of Chinese power equipment were curtailed. These limits have reportedly slowed India’s plans to expand thermal power capacity to about 307 GW over the next decade. A 2024 report by the Observer Research Foundation noted that the value of new projects awarded to Chinese bidders fell 27% to $1.67 billion in 2021 following the curbs.

Imporatnt Facts for Exams

• India imposed curbs on Chinese firms in 2020 after border clashes.
• The restrictions affected government contracts worth up to $750 billion.
• A high-level committee led by former Cabinet Secretary Rajiv Gauba reviewed the policy.
• FDI restrictions on Chinese firms remain in place.

Broader Geopolitical Context

The proposed easing comes amid a gradual thaw in bilateral ties between India and China. After Modi’s visit to China last year—the first in seven years—both sides agreed to revive commercial engagement. Direct flights have resumed and visa approvals for Chinese professionals have been streamlined. However, New Delhi continues to adopt a cautious approach, balancing economic pragmatism with strategic concerns as global trade dynamics and U.S. tariff policies reshape regional relationships.