Centre to restrict import from neighbouring nations' power plants with Chinese link

The move is intended to bar import from existing or upcoming plants funded by Chinese companies in neighbouring nations

A new policy introduced by the Modi government has restricted the import of electricity from any power plant which has Chinese investment.

A new policy introduced by the Centre recently has restricted the import of electricity from any power plant in India’s neighbouring countries having investment from entities based in China.

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The new “Procedure for Approval and Facilitating Import / Export (Cross Border) of Electricity” issued by the Ministry of Power this month allows the “designated authority” to approve import from any plant in any of the neighbouring countries, “provided that the generating company is not owned, directly or indirectly, by any natural or legal personality(ies) whose effective control or source of funds or residence of the beneficial owner, is situated in/ citizen of a third country with whom India shares land border and that third country does not have a bilateral agreement on power sector cooperation with India”.

The “designated authority” – i.e. the Member (Power System) in the Central Electricity Authority – will have to obtain consent of, not only the Ministry of Power, but also the Ministry of External Affairs, to relax the restrictions in case of any particular plea for approval for import of electricity from the neighbouring countries.

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The move is intended to bar import of electricity to India from existing or upcoming power plants funded by the state-controlled companies of China in Nepal, Bangladesh or Sri Lanka, although the new policy does not explicitly refer to the communist country.

The Modi government introduced the new policy even as the 10-month-long military stand-off along the disputed boundary between India and China appears to be coming to its end. The two sides earlier this month completed mutual withdrawal of the front-line troops from the Line of Actual Control (LAC) from the northern and the southern banks of Pangong Tso and started discussion to work out a disengagement plan for other face-off points in eastern Ladakh.

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The stand-off took the relations between New Delhi and Beijing to a new low. The Modi government last year banned several apps linked to entities in China, alleging that they were used in activities “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order”.

New Delhi also decided to bar China’s companies from participating in highway construction projects in India. The Bharat Sanchar Nigam Limited (BSNL) and the Mahanagar Telecom Nigam Limited (MTNL) cancelled tender inviting bids from companies for supply of equipment for upgrading its network to 4G – a move, which is apparently aimed at keeping away Huawei Technologies Company and ZTE Corporation of China away from the project and stopping them from expanding footprints in the telecom sector of India.

The Modi government also moved to restrict entities of China from participating in commercial coal auctions in India. It also recently restricted bidders from neighbouring countries from participating in tenders for government procurement without approval from competent authorities – yet another move targeted at the entities of China.

Sources in New Delhi recently stated that although tension along the LAC now simmered down, the government might not immediately reverse its actions taken last year to hurt economic interests of China in India.