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India toughens public procurement rules for bidders from bordering nations, seen aimed at China

Credit: REUTERS/Dado Ruvic

India on Thursday said bidders from bordering countries eyeing government contracts would need prior registration and security clearances, a move seen as New Delhi's latest effort to counter China following a border clash between the two nations.

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NEW DELHI, July 23 (Reuters) - India on Thursday said bidders from bordering countries eyeing government contracts would need prior registration and security clearances, a move seen as New Delhi's latest effort to counter China following a border clash between the two nations.

The Indian government's statement said the decision was taken to "strengthen the defence of India and national security". India shares borders with China, Pakistan, Bangladesh, Myanmar, Nepal and Bhutan, but the government statement did not name any specific country.

"Any bidder from such countries sharing a land border with India will be eligible to bid in any procurement whether of goods, services ... only if the bidder is registered with the competent Authority," the government statement said.

"Political and security clearance from the Ministries of External and Home Affairs respectively will be mandatory."

The Chinese Embassy in New Delhi did not immediately respond to a request for comment outside regular business hours.

The announcement comes after India in April issued a similar directive on screening incoming foreign investment from neighbouring countries with which it shares a land border.

India did not name China in that order, but the move irked Chinese businesses which have major interests in India. Beijing called the policy discriminatory.

Chinese firms have faced hostility since a border clash that killed 20 Indian soldiers in June. India has also banned 59 apps of Chinese origin, including ByteDance's TikTok and Alibaba's UC Browser citing security concerns.

In Thursday's late night order, the Indian government said the restrictions would apply to tenders issued by several entities including public sector banks, financial institutions and government enterprises.

"This was expected because public procurement is the strongest lever that Indian government can use to send a strong signal to China," said Santosh Pai, a partner at Indian law firm Link Legal that advises several Chinese companies.

Procurement of medical supplies for containment of COVID-19 global pandemic until Dec. 31, 2020, will be exempted from the new rules, the government said.

(Reporting by Nidhi Verma and Aditya Kalra; Editing by Chris Reese and Alison Williams)

((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters Messaging: nidhi.verma.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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