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CHINESE COMPANIES FACE CURBS IN GETTING GOVT CONTRACTS

Focus: GS-III Indian Economy, GS-III International Relations

Why in news?

  • The Central Government changed rules to enable curbs on bidders from countries that share a land border with India “on the grounds of defence and national security”.
  • The action signals increasing impatience with China over its failure to fully implement the ‘consensus’ to disengage and de-escalate.

Details

  • Though the order does not name any country, it is clearly aimed at scrutinizing 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 firms with links with China.
  • As per the order any bidder from such countries sharing a land border with India will be eligible to bid only if registered authority to be set up by the department of promotion of industry and internal trade.
  • The government order amended the General Financial 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 in any procurement whether of goods, services (including consultancy services and non-consultancy services) or works (including turnkey projects) only if the bidder is registered with the Competent Authority.

What are General Financial Rules (GFRs)?

  • The General Financial Rules (GFRs) are set of rules that deal with matters that involve public finances. They were first issued in 1947 bringing together all the existing orders. They are instructions that pertain to financial matters.
  • They lay down the general rules applicable to Ministries / Departments, and detailed instructions relating to procurement of goods are issued by the procuring departments broadly in conformity with the general rules, while maintaining flexibility to deal with varied situations.

Recently in news:

  • India mandated government approval for foreign direct investment (FDI) from countries with which it shares land borders.
    Similar to the current move, no country was named explicitly.
  • The curbs aimed to shield Indian companies from predatory investments, particularly those from China—a big hint that policymakers in New Delhi have become ever more cautious of Beijing’s growing role in the Indian economy.
  • Latest data from Global Trade Alert shows China has faced more trade restrictions than any other country since 2019.

Click Here to read more about Restrictions on China and India’s dependence and more

-Source: Times of India

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