SIX YEARS AFTER India tightened restrictions on Chinese firms following the Galwan Valley clash—where 20 Indian soldiers were martyred—the central government has rolled back on its strict restrictions as it allowed four China-linked companies to bid for key government power projects. The move has triggered sharp political criticism, with the opposition accusing the Modi government of abandoning its tough post-Galwan stand because of economic reliance on our neighbour.
According to reports, the Department of Expenditure under the Ministry of Finance issued an order on June 24 granting a two-year exemption to TBEA Energy India, Nanjing Electric India, New Northeast Electric India and Taikai Electric (India) from public procurement restrictions. The four companies, which have manufacturing facilities in India, will now be eligible to participate in tenders for critical power infrastructure, including transformers, high-voltage switchgear, gas-insulated switchgear, and transmission line projects.
The exemption came after the Ministry of Power approached the Finance Ministry in January 2026, saying several important transmission and renewable energy projects were getting delayed due to restrictions on Chinese companies. The proposal was examined by the Committee of Secretaries before being cleared on the recommendation of the Department of Promotion of Industry and Internal Trade (DPIIT) registration committee.
However, the Finance Ministry also clarified that the exemption has been granted only for two years and "may not be considered as a precedent" for future bids. The decision has now reopened the debate over India's China policy, with opposition questioning whether over reliance on China are overtaking the government's national security narrative.
The restrictions on Chinese companies were introduced in 2020 after the deadly Galwan Valley clash between Indian and Chinese troops along the Line of Actual Control (LAC), in which 20 Indian soldiers lost their lives.
Following the clash, the government introduced Press Note 3 (PN3), making prior government approval mandatory for companies from countries sharing a land border with India. Strict procurement rules were also put in place, requiring security clearances from the Ministries of Home Affairs and External Affairs before such firms could participate in sensitive government projects.
The move was part of a broader push that also saw bans on several Chinese mobile apps and repeated calls for Atmanirbhar Bharat (Self-reliant India) and reducing dependence on Chinese imports.
However, the government might have underestimated the influence of China on India. Chines companies have been supplying equipment to India's power sector since the early 2000s. Companies like China Dongfang Electric Group, Shanghai Electric Group, and Harbin Electric Group became major suppliers for thermal power projects across the country.
After the 2020 restrictions, participation by Chinese firms reportedly fell sharply. Data cited from the Observer Research Foundation (ORF) claimed that projects involving Chinese participation dropped by around 27%. At the same time, India's dependence on Chinese industrial imports has remained high. Nearly 60% of India's around $112 billion imports from China consist of engineering goods and electronic components that are critical for Indian manufacturing.
The Confederation of Indian Industry (CII)—one of India's largest industry representatives—have also flagged problems faced by companies under the Production Link Incentive (PLI) scheme. In several cases, imported Chinese machinery reportedly remained unused because technicians from China could not travel easily due to visa restrictions.
The Power Ministry reportedly argued that continued restrictions were slowing important transmission and renewable energy projects, increasing the risk of delays and affecting critical power infrastructure in order to get clearance from the Finance Ministry.
The exemption has drawn immediate political reactions. Congress leader and Rajya Sabha MP Jairam Ramesh called it a "calibrated capitulation" before China. He said the decision comes despite continued border tensions, China's repeated claims over Arunachal Pradesh, Beijing's hydropower projects in Tibet, and its close strategic ties with Pakistan.
The issue has also sparked debate on social media, with many users questioning the government's shift from its post-Galwan stance. Critics pointed out that the Centre had strongly promoted "Boycott China" campaigns and self-reliance after 2020, but is now allowing China-linked companies to participate in strategic infrastructure projects.
Others raised concerns over permitting firms with Chinese links into India's power sector, arguing that critical infrastructure should remain insulated from potential security risks.
According to The Indian Express, queries sent to both the Finance Ministry and the Ministry of Power did not receive any response.
[HP]
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