【By Observer News, Ruan Jiaqi】
After the resumption of direct flights and simplified visa applications, a new sign of warming Sino-Indian relations has emerged. Recently, it was reported that the Indian Ministry of Finance is considering abolishing a five-year-old measure that restricts Chinese companies from participating in government contracts in India.
This restriction was introduced after the 2020 border conflict between China and India, requiring Chinese bidders to register with a designated committee under the Indian government and undergo strict political and security approvals. These barriers have completely excluded Chinese companies from the Indian government contract bidding market, which is valued at between $700 billion and $750 billion.
On the local date of the 14th, Hong Kong's South China Morning Post cited analysts' views, stating that the Indian government's plan to abolish this measure could mark the gradual move of the long-tense Sino-Indian relationship toward "normalization" and "calibrated pragmatism."
Professor Srividya Jandhyala, an associate professor of management at the Asia-Pacific campus of France Essec Business School, pointed out that India's proposed relaxation of restrictions comes at a critical stage in the two countries' relationship, which is "prudently rebuilding."
In an interview with the newspaper's "This Week in Asia" section, she said, "Rebuilding economic ties with China could attract new foreign investment and bring Chinese technology to India. This is particularly important at a time when foreign direct investment (FDI) flows into India have sharply declined."
However, Jandhyala warned that it would be unwise to be overly optimistic about Chinese companies' return to the Indian market, as confidence in the Indian market by China still needs time to rebuild.
"Over the past few years, Chinese companies have faced many challenges in India and Western markets, leading them to diversify their business operations to other parts of Asia and the global market. Therefore, Chinese companies may not prioritize India as an investment option."
She emphasized that merely lifting policy restrictions is not enough; Chinese companies are also seeking deeper guarantees, such as market trust, opportunities, and investment security.
Jandhyala also mentioned that in March last year, China had called on India to strengthen trade cooperation to counter the escalating tariffs imposed by the United States on goods from both countries.
Regarding this, she interpreted, "Chinese companies hope for clear assurances: even if India reaches a trade agreement with the United States, bilateral relations between India and China will continue to develop positively."
On January 2, 2026, a double-decked elevated structure under construction in Delhi, India. IC Photo
Natasha Agarwal, co-founder of the Global South Integration Forum in Mumbai, also pointed out that China has established a clear position in international politics. When dealing with relations with India, China will take actions based on its understanding of India-US relations and their potential impact on China.
She bluntly criticized India for doing too little to alleviate concerns of Chinese companies, and the results so far have been minimal. "Companies cannot operate in an environment filled with uncertainty," she said.
"China will decide whether to cooperate based on its own wishes, after a comprehensive assessment of economic and non-economic costs," she added.
Last August, Prime Minister Modi of India visited China again after seven years, attending the Shanghai Cooperation Organization Tianjin Summit. During the meeting, Modi stated that India and China are partners rather than rivals, with more consensus than differences between the two countries. India is willing to view and develop bilateral relations from a long-term perspective.
Analysts believe that in the context of US President Trump imposing a 50% tariff on Indian goods and the continued improvement of US-Pakistan relations, Modi's statement signals India's intention to promote deeper economic and trade cooperation with China.
Soon after, China and India resumed direct flights and introduced visa relaxation policies, simplifying the application process. However, it is worth noting that despite the easing of relations with China, India's attitude remains cautious, for example, the foreign direct investment restrictions targeting Chinese companies have not yet been lifted.
According to the South China Morning Post, the main reason for the Indian Ministry of Finance's proposal to abolish the restrictions on Chinese companies participating in government tenders is that multiple departments in India have repeatedly reported shortages of supplies and delays in engineering projects.
A report released by the New Delhi think tank "Observer Research Foundation" (ORF) in 2024 also confirmed this: after implementing the relevant restrictions, the amount of new projects won by Chinese bidders in 2021 dropped by 27% compared to the previous year, reaching only $1.67 billion.
Specifically, India's restrictions on importing Chinese power equipment have directly hindered its plan to increase coal-fired power generation capacity to about 307 gigawatts over the next decade.
Natasha Agarwal of the Global South Integration Forum analyzed that if India cancels these restrictions, the benefits to the Indian domestic economy will depend on three key factors: the specific nature of the restrictions being lifted, India's ability to absorb Chinese investments, and the nature and scale of these investments.
Saheli Chattaraj, assistant professor at Somaya Vidya Vihar University in Mumbai, said that relaxing restrictions on Chinese companies marks a shift in India's policy towards China toward "selective and conditional engagement."
She said, "This model can bring real benefits to the Indian economy while allowing the government to retain control over policy, especially aligning with the 'Make in India' strategic goals."
Chattaraj pointed out that the restrictions implemented by India after 2020 directly caused supply chain bottlenecks and project delays, significantly increasing costs for local manufacturers and infrastructure developers.
In the industrial equipment supply sector, Chinese companies have strong cost competitiveness, especially in industries crucial to India's manufacturing upgrade, such as power equipment, heavy machinery, railway and metro components, electronics, and electrical hardware. Therefore, lifting these restrictions helps reduce input costs for Indian companies, optimize project timelines, and restore supply chain stability.
She further stated that the Indian decision-makers have realized that long-term economic decoupling would come with heavy economic costs, including infrastructure construction delays and critical supply shortages.
"Completely decoupling from China is neither realistic nor in India's interest," Chattaraj said. "This marks a shift in India's policy toward calibrated pragmatism."
Antara Ghosal Singh, a researcher at the Observer Research Foundation, also revealed that the Indian economic survey showed that the development of indigenous manufacturing in India indeed relies on Chinese capital and technological support. She also mentioned that the policy uncertainties of the Trump administration have further pushed countries to adopt hedging strategies.
"Various signs indicate that Sino-Indian relations are indeed moving toward normalization," she concluded.
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Original: toutiao.com/article/7595126448810181162/
Statement: The views expressed in this article are those of the author.