India Grants Four Chinese Firms Exemption to Bid in Power Projects
The Finance Ministry has exempted four Chinese power equipment manufacturers with factories in India from certain public procurement rules, allowing them to bid for government tenders in critical power projects. The exemption, issued on June 24 by the expenditure department, is valid for two years and applies to TBEA Energy, Nanjing Electric India, New Northeast Electric India, and Taikai Electric (India).
These firms had been subject to restrictions introduced in 2020 after a violent clash between Indian and Chinese troops along the Line of Actual Control. The rules required entities from countries sharing a land border with India to register with the relevant Indian authority and obtain mandatory political and security clearances from the Ministry of External Affairs and Ministry of Home Affairs.
The Ministry of Power had requested the exemption in January 2023 for certain entities with manufacturing units in India. The decision followed deliberations by the committee of secretaries and a recommendation from the registration committee under the Department for Promotion of Industry and Internal Trade (DPIIT), which oversees registration for applications from such entities.
The four companies manufacture key power sector equipment such as transformers, wires, high-voltage switchgear, and gas-insulated switchgear used in transmission lines. New Northeast Electric India, for instance, lists at least 11 transmission line projects across India on its website.
Chinese companies have been significant suppliers to India's power sector since the early 2000s, particularly for thermal power plant generation equipment. The availability of Chinese technology and expertise has been crucial for Indian industry, especially in generation and transmission projects. Last year, industry representatives sought easing of visa norms for Chinese technicians, citing delays that impacted projects, including in the leather and sports footwear sectors.
The exemption comes nearly three months after the government announced calibrated changes to the Foreign Direct Investment (FDI) policy for investments from land-bordering countries. These changes, introduced through Press Note 3 (PN3) in April 2020, were aimed at curbing potential takeovers during the Covid-19 pandemic-induced slump in equity valuations.
The Finance Ministry order clarified that the exemption should not be treated as a precedent for other companies. Queries sent to the Finance and Power ministries remained unanswered.
