(TibetanReview.net, Jan09’26) – In yet another major move to normalise business ties with China even as the border issue continues to fester, albeit with reduced tensions, India has decided to let Chinese companies compete for government contracts, reported Reuters Jan 8. The move is seen as borne of necessity and it by no means amounts to full opening of India for business to China.
Citing two government sources, the report said India’s finance ministry plans to scrap five-year-old restrictions on Chinese firms bidding for government contracts, as New Delhi seeks to revive commercial ties in an environment of reduced border tensions.
The curbs, imposed in 2020 after a deadly clash between the countries’ troops in Ladakh’s Galwan Valley, required Chinese bidders to register with an Indian government committee and obtain political and security clearances. The measures effectively barred Chinese firms from competing for Indian government contracts that were estimated to be worth $700 billion to $750 billion.
The restrictions were seen as self-defeating and had a significant impact: months after they were made public, China’s state-owned CRRC was disqualified from bidding for a $216 million train-manufacturing contract. The Ministry of Finance’s plan to ease the curbs followed requests from other government departments that face shortages and project delays due to the 2020 restrictions, the sources have said.
A high-level committee headed by a former cabinet secretary, Rajiv Gauba, a member of a prominent government think tank, was also stated to have recommended easing the restrictions.
Also, curbs on imports from China of equipment for the power sector were stated to have hindered India’s plans to raise its thermal power capacity to about 307 GW over the next decade.
The report noted that last year, Prime Minister Narendra Modi visited China for the first time in seven years and agreed to foster deeper commercial ties with Beijing following US President Donald Trump’s 50% tariff on Indian goods and in light of Washington’s warming relations with Pakistan.
Following the visit, both countries took a series of steps to boost bilateral ties. They restarted direct flights and New Delhi cut red tape to speed up approvals for business visas for Chinese professionals.
However, even though ties between the two Asian giants have improved, India’s approach is cautious as restrictions on foreign direct investment from Chinese firms remain in place, the report noted.