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New Delhi: The Narendra Modi government has now imposed restrictions on government departments and state-owned enterprises and banks from buying goods and services from Chinese companies citing national security.

The government Thursday night also placed curbs on Chinese companies participating in infrastructure projects, either through contracting or subcontracting.

The changes are part of amendments to the general financial rules, 2017.

The move comes on the back of the curbs that the government has placed on Chinese investments in India, bringing Foreign Direct Investment (FDI) by such companies under the government approval route rather than under the automatic one. 

The government has also banned 59 Chinese apps from operating in India, following heightened tensions at the Line of Actual Control (LAC) with China, which includes the June clashes at the Galwan Valley that left 20 Indian soldiers dead. 

Virtually impossible for Chinese firms to do business with govt

The new rules, which the government made public Thursday night, will make it virtually impossible for Chinese firms to get any business from the Indian government or state-owned firms. It may also make it difficult for Huawei to participate in India’s 5G auctions, even in partnership with Indian telecom firms.

“As per the order, any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the competent authority,” said a press statement.

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The competent authority will have representation from the Department of Promotion of Industry and Internal Trade, Ministry of Home Affairs, Ministry of External Affairs and any other relevant ministry. A company will not be registered until both the ministry of home and external affairs concur.

The order will not impact countries such as Nepal and Bangladesh as the new rules exempt those countries to which India extends a line of credit or provides development assistance.

The government has provided some relaxations including for procurement of medical supplies for Covid-19 until 31 December 2020.

It has also clarified that the restrictions apply only on public and not on private procurement. The government has also written to the chief secretaries of states to follow these instructions for state procurements.

 

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