Last month, Reuters indicated that India would ease limitations on purchasing Chinese equipment established after a deadly border clash in 2020, enabling state-run power and coal companies to initiate limited imports amid growing shortages and delays in projects. Since then, India has also relaxed investment restrictions on China.
With the updated regulations, Bharat Heavy Electricals, the largest state-owned power equipment manufacturer in India, is allowed to procure 21 types of critical equipment from China, according to the government order. A similar approval has been granted to Steel Authority of India for specific critical components, as well as for the acquisition of coal-gasification equipment by other state-run firms, as stated by a government source.
The violent clashes in 2020 between Indian and Chinese soldiers along the Himalayan border led New Delhi to strengthen regulations on Chinese procurement and investments. However, a global shift in trade, driven by U.S. tariffs, has compelled India to consider a measured reset with China to stabilize supply chains and attract investments.
In August, Indian Prime Minister Narendra Modi visited China for the first time in seven years, where he met with Chinese President Xi Jinping to discuss enhancing bilateral relations. This visit resulted in the resumption of direct flights and a relaxation of visa procedures for Chinese business professionals.
The government order issued this month, as reported by Reuters, exempts Chinese bidders involved in state contracts from the requirement to register with a government committee for political and security clearances.
Additionally, earlier this month, New Delhi eased restrictions on Chinese investments in selected sectors to alleviate a capital crunch, signifying a notable reset of economic relations.
