Shares of Siemens declined 4% in early trade, tracking investor caution after reports that India’s finance ministry is planning to scrap restrictions imposed on Chinese firms bidding for government contracts.
According to sources cited by Reuters, the finance ministry is working to remove a five-year-old registration requirement that mandated companies from bordering nations, including China, to seek political and security clearances before participating in government tenders. These curbs were introduced in 2020 following a deadly border clash and effectively limited Chinese participation in Indian government contracts estimated to be worth between $700 billion and $750 billion.
As per the same report, the final decision on easing the restrictions will rest with the office of Prime Minister Narendra Modi, the sources said. Officials involved in the discussions noted that several ministries have sought relaxation of the rules due to equipment shortages and project delays linked to the restrictions imposed since 2020.
The impact of the curbs has been significant over the past few years. China’s state-owned CRRC was disqualified from bidding for a $216 million train manufacturing contract months after the rules came into force. Data from a 2024 report by the Observer Research Foundation showed that the value of new projects awarded to Chinese bidders fell 27% year-on-year to $1.67 billion in 2021.
The power sector has been among the worst affected. Restrictions on importing Chinese equipment have slowed India’s plans to expand thermal power capacity to around 307 GW over the next decade, prompting multiple government departments to seek exemptions to prevent delays in critical projects.
A high-level committee chaired by former cabinet secretary Rajiv Gauba, now a member of a leading government think tank, has also recommended easing the restrictions. However, both the finance ministry and the prime minister’s office have so far declined to comment on the reported plan.