NEW DELHI: In a significant escalation of tension with China, the government late Friday changed rules to enable curbs on bidders from countries that share a land border with India “on the grounds of defence and national security”.
Though the order does not name any country — as in the case of the April 17 order that blocked FDI through the automatic route from the same set of neighbours — it is clearly aimed at scrutinising and imposing curbs on Chinese investments and partnerships in Indian projects.

The new rules seek to block supply of stationery, turbines and telecom equipment as well as award of road and power contracts to companies that have a link with China. The move follows a recent ban on 59 Chinese apps and comes in the backdrop of the continued military stand-off in Ladakh where Chinese forces are dragging their feet over pulling back after partly complying with mutual agreements to disengage. Indian military commanders and top diplomats have unambiguously conveyed to China that status quo must be restored and India will do all it can to safeguard its sovereignty.
The action announced late Friday evening signals increasing impatience with China over its failure to fully implement the “consensus” to disengage and de-escalate. The order, which does not apply to private sector procurement, said, “The new provisions will apply to all new tenders.
In respect of tenders already invited, if the first stage of evaluation of qualifications has not been completed, bidders who are not registered under the new order will be treated as not qualified.”
If the first stage has been crossed, ordinarily the tenders will be cancelled and the process started de novo. The government order amended the “General Fi nancial Rules 2017” to allow the Centre to intervene in matters that directly or indirectly relate to defence and national security.
As per the order any bidder from such countries sharing a land border with India will be eligible to bid only if registered with an authority to be set up by the department of promotion of industry and internal trade. Procurement will include goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the “competent authority”.
Relaxation has been provided in certain limited cases, including for procurement of medical supplies for Covid-19 till December 31, 2020.
Watch After FDI, Chinese companies now face curbs in getting govt contracts


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