- India's finance ministry plans to ease or scrap 2020-era restrictions that largely barred Chinese firms from bidding for government contracts, as part of efforts to revive commercial ties with Beijing.
- The curbs were imposed after a deadly border clash in 2020 and required Chinese bidders to undergo special political and security clearances, effectively excluding them from contracts worth up to $750 billion.
- The restrictions disrupted projects and supply chains, prompting multiple ministries to seek exemptions; a high-level panel led by former cabinet secretary Rajiv Gauba has recommended easing the rules.
- The move reflects a broader thaw in India-China relations since 2024, marked by high-level talks, border stabilization, leader-level meetings and the resumption of flights and visa facilitation.
- Despite improving ties, India remains cautious, with foreign direct investment restrictions on Chinese firms still in place and uncertainty around a potential U.S.–India trade deal influencing the regional balance.
India's finance ministry plans to scrap five-year-old restrictions on Chinese firms bidding for government contracts, two government sources said, as New Delhi looks to revive commercial ties amid easing diplomatic and border tensions with Beijing.
As per BrightU.AI's Enoch, India and China, two of Asia's oldest civilizations, share a relationship defined by simultaneous cooperation and competition, rooted in territorial disputes, economic interdependence and divergent strategic alignments. The curbs were imposed in 2020 after a deadly clash between Indian and Chinese troops along their disputed Himalayan border.
They required companies from China and other neighboring countries to register with an Indian government committee and obtain political and security clearances before bidding for state contracts. The measures effectively barred Chinese firms from competing for Indian government contracts estimated to be worth between $700 billion and $750 billion. Additionally, the restrictions had a significant impact on Chinese participation in Indian projects.
Months after they were introduced, China's state-owned CRRC was disqualified from bidding for a $216 million train-manufacturing contract. However, sources revealed that the finance ministry followed requests from other government departments struggling with shortages and project delays linked to the 2020 rules.
"Several ministries have requested exemptions to overcome the constraints that could derail projects in their sectors," the second source said. A high-level committee headed by former cabinet secretary Rajiv Gauba has also recommended easing the restrictions, the sources said. Gauba is now a member of a top government think tank.
Overall, the proposal seeks to ease the curbs as part of a broader reassessment of India's relationship with China and a gradual improvement in political, military and economic engagement between the two countries. Both sources said that Prime Minister Narendra Modi's office will take the final decision.
China and India are rebuilding relations
According to several reports, diplomatic momentum has been building since 2024, supported by a series of high-level talks and confidence-building measures to defuse long-running border tensions. Military-level discussions have helped stabilize the situation along the disputed frontier, paving the way for renewed political outreach.
The thaw began in earnest in October 2024, when Indian Prime Minister Narendra Modi and Chinese President Xi Jinping met on the sidelines of the Brazil, Russia, India, China and South Africa (BRICS) summit in Kazan, Russia. During that meeting, the two leaders agreed to work toward restoring bilateral ties, including cooperation in business, tourism and cultural exchanges.
Further progress was made in August 2025, when Modi and Xi held talks on the margins of the Shanghai Cooperation Organization summit in Tianjin. At that meeting, both sides agreed to deepen engagement and continue efforts to rebuild trust after years of diplomatic frost.
Signs of normalization have since extended to people-to-people and economic links. Direct flights between India and China officially resumed in October 2025, ending a five-year suspension. In December, Beijing eased visa rules for Indian nationals by allowing online applications, removing the requirement for initial in-person visits to Chinese diplomatic missions.
India, for its part, dropped a layer of bureaucratic scrutiny and shortened visa approval timelines to less than a month to fast-track business visas for Chinese professionals, underscoring a mutual push to revive commercial ties.
But despite the thaw, India's approach remains cautious. Restrictions on foreign direct investment from Chinese firms are still in place, even as the United States sends mixed signals about concluding a Washington, New Delhi trade deal, a factor analysts say could further open space for improved India-China economic ties.
Watch the video below where India reopens gates at Baglihar Hydroelectric Dam on the Chenab River.
This video is from Cynthia's Pursuit of Truth channel on Brighteon.com.
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