NEW DELHI — January 8, 2026
India’s finance ministry is preparing to roll back restrictions imposed five years ago that effectively barred Chinese companies from participating in government contracts, according to two senior government sources familiar with the matter.
The rules were introduced in 2020 following a deadly clash between Indian and Chinese troops along the disputed Himalayan border. Under the policy, bidders from countries sharing land borders with India were required to register with a government committee and obtain political and security clearances — a process that largely excluded Chinese firms from public tenders worth an estimated $700 billion to $750 billion.
Officials said the government is now drafting changes to remove the mandatory registration requirement, citing easing border tensions and growing pressure from key ministries facing supply shortages, rising costs, and project delays. The proposal is awaiting final approval from Prime Minister Narendra Modi’s office.
A high-level committee chaired by former cabinet secretary Rajiv Gauba has recommended relaxing the curbs, government sources said. Several departments have argued that the restrictions disrupted infrastructure timelines and reduced competition, particularly in railways, power, and manufacturing.
One notable case involved the disqualification of China’s CRRC from a $216 million train manufacturing contract, despite the company meeting technical criteria. According to a 2024 report by the Observer Research Foundation, the value of Indian projects awarded to Chinese companies fell 27% to $1.67 billion in 2021 following the restrictions.
The limitations have also affected India’s power sector. Restrictions on Chinese equipment suppliers have slowed thermal power capacity expansion, which currently stands at about 307 gigawatts, according to industry data.
The policy shift follows a gradual thaw in bilateral ties after Modi’s visit to China in 2025. Since then, direct flights between the two countries have resumed, and India has fast-tracked business visas for Chinese technical experts. However, restrictions on Chinese foreign direct investment in sensitive sectors remain in place.
Indian stock markets reacted negatively to the development, with shares of infrastructure firms such as Bharat Heavy Electricals Ltd. and Larsen & Toubro falling amid concerns over increased competition if Chinese companies re-enter public procurement.
