New Delhi: India is preparing to remove restrictions that have kept Chinese companies out of bidding for government contracts for the past five years according to government sources familiar with the matter.
The curbs were introduced in 2020 after a deadly border clash between India and China and required firms from neighbouring countries including China to obtain special security clearances before taking part in public tenders. In practice the rule shut Chinese companies out of a large section of government procurement worth an estimated seven hundred billion dollars or more.
Sources say the finance ministry has now recommended scrapping these conditions following repeated requests from several ministries that faced delays and shortages in key infrastructure projects. Officials said restrictions on Chinese suppliers made it difficult to source specialised equipment on time especially in sectors such as power transmission railways and large scale construction.
A high level government committee has backed the move arguing that easing the rules would help speed up project execution and reduce costs. The proposal has been sent to the office of Prime Minister Narendra Modi for a final decision.
The possible policy shift triggered a sharp reaction in Indian stock markets on Thursday. Shares of major engineering and capital goods companies including state owned manufacturers fell as investors worried that Chinese firms could return as strong competitors in government tenders.
Officials stressed that even if bidding curbs are lifted other safeguards will remain in place. India will continue to enforce its separate rules on foreign direct investment from neighbouring countries and national security reviews will still apply in sensitive sectors.
The move comes at a time when ties between India and China show cautious signs of stabilisation after years of strain. Direct flights and business travel have slowly resumed and trade discussions have picked up pace though border issues remain unresolved.
If approved the change would mark one of the most significant shifts in India policy towards Chinese businesses since 2020 balancing security concerns with economic and infrastructure needs.