(Image Source: The Times of India)
India’s Finance Ministry is looking at a major policy change to let Chinese firms bid on government contracts. Reuters reported on January 8, 2026 that officials are considering this shift. The move would reverse rules set in 2020 that blocked Chinese companies from competing for government work worth an estimated ₹700 billion to ₹750 billion.
Currently, companies from bordering countries, especially China, must get permission from the Ministry of External Affairs and the Ministry of Home Affairs before bidding on government tenders. The Finance Ministry wants to scrap this registration requirement. Prime Minister Narendra Modi’s office will make the final decision.
Why is India Easing Rules on Chinese Firms Bidding for Government Contracts Now?
India and China are working to repair trade and business ties after the 2020 border fighting. Recently, PM Modi visited China for the first time in seven years. Direct flights between the countries resumed, and visa processing for business travelers was expedited.
Indian government departments are pushing for the change because they face project delays and supply shortages. The power sector is struggling most, unable to expand thermal power capacity to 307 gigawatts as planned.
Several ministry heads asked for exemptions from the rules to get projects moving:
- Power plants and thermal expansion work have stalled
- Roads, ports, and manufacturing jobs lag due to fewer companies bidding
- Chinese state firm CRRC was blocked from a $216 million train contract
- Orders to Chinese firms fell 27% in 2021 to just ₹1.67 billion per year
- Many sectors have no other suppliers able to do the work
What Happens if Chinese Firms Bidding for Government Contracts get approved?
If the rule changes, Chinese companies could bid directly on government tenders without asking for permission first. This would open work in power, roads, telephones, and manufacturing.
A top government committee led by former Cabinet Secretary Rajiv Gauba backed the idea. Multiple ministries agreed, saying the current ban hurts projects they need to finish.
India Still Protects Its National Security on Chinese Investment
Even if government contract rules ease, India is keeping tight controls on Chinese money coming into the country. Defence, space, and nuclear sectors still have strict limits on Chinese investment. Secretary of the IT ministry S Krishnan said Chinese investors must still follow all FDI rules and pass security checks. Companies that follow the rules will not be blocked just because they are Chinese.
India is trying to balance two goals: letting companies compete fairly while keeping the country safe from risks to critical sectors and infrastructure.
