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India-China Trade: India again punches china where it hurts the most

India has decided to toughen rules on investment from neighbouring countries. The decision announced on Thursday is seen as India’s latest attempt to corner China and punch where it hurts the most – trade and business.

According to reports, bidders from bordering countries eyeing government contracts would need prior registration and security clearances. The restrictions would apply to tenders issued by several entities including public sector banks, financial institutions and government enterprises.

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.

The statement also mentioned that political and security clearance from the Ministries of External and Home Affairs respectively will be compulsory. 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 exasperated Chinese businesses which have major interests in India. Beijing called the policy discriminatory. Chinese goods and services have faced a boycott in India after the deadly clashes in Galwan valley which resulted in the death of 20 Indian soldiers. 59 Chinese applications including TikTok remain banned in India.