India contemplates to ease five-year restrictions on Chinese firms bidding for govt contracts: Report

India’s Finance Ministry is contemplating to lift the five-year-old curbs on Chinese firms participating in government contracts, according to Reuters citing two sources, as New Delhi looks to restore commercial ties amid eased diplomatic and border tensions.

"Officials are working to remove the registration requirement for bidders from bordering nations," one government source mentioned.

The Finance Ministry’s move to relax the restrictions comes after other government departments reportedly flagged shortages and project delays caused by the 2020 curbs. “Several ministries have requested exemptions to overcome the constraints that could derail projects in their sectors,” a second government source stated.

Neither India’s Finance Ministry nor the Prime Minister’s Office responded to Reuters’ requests for comment. Both sources mentioned that the final decision will be taken by Prime Minister Narendra Modi’s office.

The restrictions effectively prevented Chinese companies from participating in Indian government contracts, which were valued at an estimated $700 billion to $750 billion. The impact was notable as shortly after the curbs were introduced, China’s state-owned CRRC was disqualified from competing for a $216 million train-manufacturing contract.

Following India’s curbs, the value of new projects awarded to Chinese bidders dropped 27% compared with the previous year, falling to $1.67 billion in 2021, the Observer Research Foundation's 2024 report noted.

In particular, restrictions on Chinese imports of equipment for the power sector have slowed India’s plans to expand its thermal power capacity to around 307 GW over the next decade.

A high-level committee led by former Cabinet Secretary Rajiv Gauba, now part of a top government think tank, has also recommended relaxing the restrictions.

Following the visit, India and China resumed direct flights. Chinese Foreign Ministry spokesperson Guo Jiakun, speaking at a media briefing, described the development as the latest step in implementing the understanding reached between China and India. He added that it was a positive measure aimed at promoting friendly exchanges between the more than 2.8 billion people of the two countries.

Guo further stated that China is willing to work with India to approach bilateral relations from a strategic and long-term perspective, foster the continued healthy and stable growth of ties, better serve the interests of both nations and their populations, and contribute to peace and prosperity in Asia and globally.

The two countries have undertaken several steps to restore engagement, including the resumption of the Kailash Mansarovar Yatra and New Delhi streamlining procedures to speed up business visa approvals for Chinese professionals.