New Delhi: The chill in India-China relations appears to be thawing, with the two countries moving closer in trade and economic cooperation. Following U.S. President Donald Trump’s tariffs last year, India and China have rekindled economic ties, and the Indian government is reportedly considering a major policy shift. According to Reuters, India may soon reopen government contracts to Chinese companies—a significant move, given that these firms have been excluded from public tenders since 2020.
Proposed Changes
Sources indicate that the Finance Ministry is drafting a proposal to remove rules that required Chinese companies to register with a government panel and obtain security clearance before participating in government tenders. These rules were implemented following violent clashes between Indian and Chinese troops in 2020. As a result, Chinese firms were effectively shut out of government projects worth approximately $700–$750 billion.
Final Approval from PM Modi
Officials are reportedly working on eliminating the registration requirement for bidders from bordering countries. While they have not publicly commented on the matter, sources say the proposal will require final approval from Prime Minister Narendra Modi before implementation.
Long-Lasting Impact of the Ban
The restrictions had an immediate and enduring effect. Shortly after the policy was enforced, Chinese state-owned firm CRRC was barred from bidding on a $216 million train-building contract. According to a 2024 report by the Observer Research Foundation, the value of new projects awarded to Chinese companies in 2021 fell by 27% to just $1.67 billion.
If implemented, reopening government contracts to Chinese companies could signal a significant warming in economic relations between the two Asian giants.
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