China has introduced new export restrictions on construction equipment, specifically targeting tunnel-boring machines. This development is poised to have significant implications for India’s infrastructure projects, particularly as the country relies heavily on Chinese machinery for its construction needs.

The restrictions encompass specialised equipment used for creating tunnels for various transport networks, including roads and railways. Beijing has justified these measures by highlighting the dual-use nature of such equipment, which can serve both military and civilian purposes.

The Chinese government has warned that regions with ongoing disputes with China will face heightened scrutiny and stricter export regulations, according to reports from Bloomberg. The new controls are set to come into effect later this month and will also cover essential components, raising concerns about not only new acquisitions but also the maintenance of existing machinery currently in operation.

Significance of Restrictions for India

India is a major consumer of tunnel-boring machines, with China accounting for approximately 70 per cent of the global market for this type of equipment. The leading Chinese manufacturer, China Railway Engineering Equipment Group Co Ltd, has its machinery deployed in 36 countries, including Denmark and France. Past experiences have shown that India has faced delays in acquiring Chinese-made tunnelling equipment, which could be exacerbated by these new restrictions.

In 2024, China had previously stalled efforts by German manufacturer Herrenknecht AG to sell tunnel-boring machines for critical projects such as the Ahmedabad-Mumbai bullet train and the Delhi Metro. A spokesperson for Herrenknecht has indicated that the company is currently assessing the implications of the latest Chinese export controls.

The restrictions may also hinder the supply of spare parts, which are essential for maintaining existing machinery. Ajay Srivastava, founder of the Global Trade Research Initiative in New Delhi, noted that while India could potentially reallocate equipment between priority projects, the limitations on components could pose challenges for machinery already in use.

India’s Efforts to Reduce Chinese Dependency

In light of these developments, India is actively working to bolster its domestic manufacturing capabilities for high-value construction and infrastructure equipment. The Indian government is contemplating a $1.2 billion incentive scheme aimed at manufacturers of tunnel-boring machines, firefighting systems, and elevators. This initiative is expected to attract approximately $1.8 billion in new investments over a seven-year period.

The proposed programme was outlined in the 2026-27 Union Budget and aims to enhance local production of technologically advanced machinery. State-run BEML and private firms like Larsen & Toubro and Johnson Lifts are anticipated to benefit from these incentives, as India’s infrastructure expansion is projected to drive demand for specialised equipment.

Larsen & Toubro is currently developing its own tunnel-boring machine prototype, with the potential for future manufacturing if the project proves successful. However, R Shankar Raman, the company’s president, cautioned that India’s manufacturing sector remains in its nascent stages, while Chinese manufacturers enjoy the advantages of large-scale production.

Bloomberg Economics has indicated that these export restrictions could decelerate certain infrastructure projects, particularly those along the disputed Himalayan border. Nevertheless, the tighter Chinese export controls may simultaneously strengthen India’s position as an alternative manufacturing hub, encouraging foreign equipment manufacturers to establish operations within the country.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store – https://apps.apple.com/in/app/newspin/id6746449540

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share