India eases curbs on Chinese equipment imports for power, coal as projects delayed: sources

India has begun easing ‌its restrictions on buying Chinese equipment after a deadly 2020 border ​clash, allowing state-run power and coal companies to start ⁠limited imports as shortages and project delays mount, two government officials told Reuters.

This is the first significant easing of five-year-old curbs that have largely shut Chinese ‌firms out of India’s $700 billion-$750 billion government contract market.

Reuters reported in January that India is examining broader relaxations on Chinese ‌bidders for government contracts as border tensions ease.

Since the 2020 clash, ‌New ⁠Delhi has required Chinese bidders to register with a ⁠government panel and secure political and security clearances before competing for any state contract.

Inter-ministerial panel to decide future exemptions

India has now allowed state-run entities to procure a power-transmission ​component from China without government approval. It ‌is weighing a similar, time-bound exemption for key coal-sector equipment, the two officials said.

The exemption was granted in the “national interest,” as blocking Chinese imports would hurt India’s manufacturing capability, one of the officials ‌said.

A panel of top bureaucrats has approved the waiver, with ​a formal order expected soon, the two sources said.

The easing follows repeated requests from government departments facing shortages and ⁠project delays under the 2020 restrictions, both officials said.

India may allow case-by-case imports of critical Chinese equipment rather than fully reopen procurement, the officials said.

Strict rules hit capacity addition

Since the border standoff, strained India-China ties have slowed the exchange of capital, technology and talent.

New project awards to Chinese bidders fell 27% to $1.67 billion in 2021 from a year earlier, a 2024 Observer Research Foundation report said.

India aims to add 500 GW of non-fossil capacity by 2030, but execution delays and transmission bottlenecks ‌persist.

Power transmission projects face a roughly 40% shortfall in transformers and reactors over the ​next three years, the second official said.

Shift comes as India, China rebuild commercial ties

Such time-bound exemptions would follow talks ⁠with ministries and security agencies, given concerns that low Chinese bids could undercut ⁠domestic firms, they added.

The finance, external affairs, industries, home, power and coal ministries did not immediately respond to Reuters’ requests for ‌comment.

The calibrated shift comes as India and China work to rebuild commercial ties, after U.S. President Donald Trump imposed a 50% tariff ​on Indian goods.