India Relaxes Chinese Equipment Import Curbs for Power, Coal Amid Project Delays

Why It Matters

Easing Chinese import bans helps India avoid costly project overruns and supports its 500 GW non‑fossil capacity goal, while balancing security concerns over foreign competition.

Key Takeaways

• India permits limited Chinese power equipment imports
• Waiver targets transmission components, possible coal exemptions
• Project delays forced policy shift amid equipment shortages
• Chinese bids fell 27% after 2020 curbs
• Exemptions require case‑by‑case security clearance

Pulse Analysis

The 2020 border clash prompted New Delhi to tighten procurement rules, effectively cutting Chinese manufacturers out of a market worth up to $750 billion. While the policy aimed to protect domestic industry and national security, it also created a supply vacuum for critical power‑transmission components. Utilities reported a 40 percent shortfall in transformers and reactors, forcing project timelines to slip and inflating costs. By allowing limited imports, the government seeks to unblock bottlenecks without fully reopening the market, a nuanced approach that reflects both economic urgency and geopolitical caution.

For India’s manufacturing sector, the partial waiver is a double‑edged sword. On one hand, it restores access to proven, cost‑effective technology, enabling faster deployment of renewable‑energy infrastructure and supporting the country’s 2030 clean‑energy targets. On the other, it raises concerns among domestic producers about price undercutting and loss of market share, especially if Chinese bids remain substantially lower. The inter‑ministerial panel’s case‑by‑case clearance process is designed to mitigate these risks, ensuring that imports are limited to items where no viable Indian alternative exists and that security vetting remains rigorous.

The policy shift also signals a broader thaw in India‑China commercial relations after years of tension and reciprocal trade measures. While the United States continues to impose tariffs on Indian goods, both Asian giants are cautiously rebuilding ties, recognizing mutual benefits in trade and technology exchange. Analysts expect that if the exemptions prove successful, they could pave the way for a more systematic review of the curbs, potentially reshaping the competitive landscape for infrastructure contracts across the subcontinent. The outcome will likely influence how other emerging markets balance strategic autonomy with the practical demands of large‑scale development projects.

India relaxes Chinese equipment import curbs for power, coal amid project delays

Restrictions since 2020 caused shortages, slowing key projects · Updated · February 18, 2026 at 03:39 PM · New Delhi, February 18

India has begun easing its restrictions on buying Chinese equipment after a deadly 2020 border clash, allowing state‑run power and coal companies to start limited imports as shortages and project delays mount, two government officials told Reuters. This is the first significant easing of five‑year‑old curbs that have largely shut Chinese firms out of India’s $700 billion‑$750 billion government contract market.

Reuters reported in January that India is examining broader relaxations on Chinese bidders for government contracts as border tensions ease. Since the 2020 clash, New Delhi has required Chinese bidders to register with a government panel and secure political and security clearances before competing for any state contract.

Inter‑ministerial panel to decide future exemptions

India has now allowed state‑run entities to procure a power‑transmission component from China without government approval. It is weighing a similar, time‑bound exemption for key coal‑sector equipment, the two officials said. The exemption was granted in the “national interest,” as blocking Chinese imports would hurt India’s manufacturing capability, one of the officials said. A panel of top bureaucrats has approved the waiver, with a formal order expected soon, the two sources said.

The easing follows repeated requests from government departments facing shortages and project delays under the 2020 restrictions, both officials said. India may allow case‑by‑case imports of critical Chinese equipment rather than fully reopen procurement, the officials said.

Strict rules hit capacity addition

Since the border standoff, strained India‑China ties have slowed the exchange of capital, technology and talent. New project awards to Chinese bidders fell 27 per cent to $1.67 billion in 2021 from a year earlier, a 2024 Observer Research Foundation report said. India aims to add 500 GW of non‑fossil capacity by 2030, but execution delays and transmission bottlenecks persist. Power transmission projects face a roughly 40 per cent shortfall in transformers and reactors over the next three years, the second official said.

Shift comes as India, China rebuild commercial ties

Such time‑bound exemptions would follow talks with ministries and security agencies, given concerns that low Chinese bids could undercut domestic firms, they added. The finance, external affairs, industries, home, power and coal ministries did not immediately respond to Reuters’ requests for comment.

The calibrated shift comes as India and China work to rebuild commercial ties, after US President Donald Trump imposed a 50 per cent tariff on Indian goods.

Published on February 18, 2026