India slaps more restrictions on Chinese businesses amid soured ties

27, Jul. 2020

Army vehicles move toward Leh along the Manali-Leh highway in northern India, amid the ongoing India-China border dispute on July 22, 2020. (PTI)
Army vehicles move toward Leh along the Manali-Leh highway in northern India, amid the ongoing India-China border dispute on July 22, 2020. (PTI)

By Atul Ranjan

NEW DELHI, NNA - India has tightened bidding rules for government contracts and e-commerce regulations in moves seen as curbing China’s business interests in the country.

According to a new government order issued last Thursday, any bidder from a country sharing a land border with India can bid for contracts of goods or services only if the bidder is registered with the industry department.

The order also made it mandatory for bidders to get political and security clearance from the country's ministries of external and home affairs.

The South Asian country said it made the decision in order to “strengthen the defense of India and national security”.

Although China was not named in the amendment, it was largely seen as a move to counter the communist giant which shares a contentious border with India.

On Sunday, government officials told the media in a clarification that a bidding process already underway for a contract will not be scrapped just because of a Chinese company’s participation. This is to avoid any unnecessary delays in the implementation of key projects.

However, it will be scrapped only if one of the technically qualified bidders is a Chinese company and it is also the lowest bidder, said the officials who spoke on condition of anonymity.

In a separate development, India has made it mandatory for e-commerce companies to display the 'country of origin' of products listed on their platforms.

India shares a land border with China, Nepal, Bhutan, Bangladesh, Myanmar and Pakistan.

The first order, however, does not apply to neighboring countries receiving lines of credit (LOC) or development assistance from India. Official data shows that except China and Pakistan, the rest of these countries have either received LOCs or development assistance from India.

“The Indian government’s move is obviously aimed at China,” Madhav Nalapat, a professor of geopolitics at India's Manipal University, told NNA on Sunday, adding that the country’s recent decisions targeting Chinese businesses in the country indicated that it was not going to be business as usual between both countries amid the ongoing border tension which saw a deadly clash June.

In a tweet, Brahma Chellaney, professor of Strategic Studies at the New Delhi-based Center for Policy Research, also feels that India is bent on restricting Chinese access to its large public procurement market.

“India's new public-procurement rules on tenders by bidders from nations sharing land borders with it have been carefully framed so as not to run afoul of WTO (World Trade Organization) rules. Exempt from the rules are neighbors that get Indian aid. So, without naming China, the rules clearly target China,” Chellaney said on Twitter.

Last Thursday, the Indian government ruled that under the 'Consumer Protection (E-Commerce) Rules, 2020', it is mandatory for e-commerce companies operating in India to display 'country of origin' on their products, among other requirements.

“Every marketplace e-commerce entity shall provide details about the sellers offering goods and services, including the name of their business, their geographic address…for enabling consumers to make informed decisions at the pre-purchase stage,” the order said.

In June, the Indian government made it compulsory for sellers to show the ‘country of origin’ of their products before listing on the government procurement portal GeM or Government e-Marketplace, amid heightened calls to boycott Chinese products in the country following a savage brawl which resulted in the deaths of 20 Indian soldiers and scores injured at the border.

India had already banned 59 Chinese apps including popular video-sharing app TikTok and also tightened customs checks on imports from China.

Tensions between the two Asian powers continue to simmer after weeks of a border stand-off in the Himalayas led to bloody fist fights which included rocks and rods between Indian and Chinese soldiers on June 15 in the disputed Galwan Valley in eastern Ladakh.

“The border clash in which 20 Indian soldiers were killed marks a watershed in Sino-Indian relations, in that the situation on the border can no longer be insulated from commercial links,” Nalapat said.

“India will be reducing its dependence on China. Unless the Chinese side shows that a serious effort is being made by them to resolve the border question in three to five years, the Sino-Indian relationship will return to what it was in the 1970s - volatile,” he added.

Meanwhile, India and China have agreed to hold another round of high-level military talks to set in motion a disengagement process along the disputed border area called Line of Actual Control (LAC) to resolve frictions.