How China's new curbs put India's infrastructure projects at risk
What's the story
China's recent export restrictions on tunnel-boring machines and critical components could pose a threat to India's metro, bullet train, and Himalayan infrastructure projects. The new regulations, which are due to take effect later this month, target construction equipment such as these massive industrial devices used for subway construction or drilling roads/railways through mountains. China dominates the global market for this equipment with India being one of its major customers.
Trade impact
Other equipment also affected
China's export controls also apply to other construction equipment, including machines for high-altitude concrete spraying.
The country has cited potential dual-use in military and civilian projects as a reason for the new rules.
"Sensitive countries and regions with disputes with China" will be subject to stricter regulations, according to the Chinese government.
This could directly affect India, given the ongoing tensions along their Himalayan border.
Project delays
Infrastructure projects at risk
The new export restrictions could delay some of India's infrastructure projects, particularly those along the disputed Himalayan border.
India is currently building railway lines and roads in the region to cut down troop mobilization times.
These projects require a lot of tunneling work, which could be affected by China's new rules.
Manufacturing boost
Potential boost for India as alternative manufacturing base
China's tightening export control regime could also bolster India's case as an alternative manufacturing base.
"Controls on specialized construction equipment could slow some infrastructure projects, including strategic construction along their disputed Himalayan border," Chetna Kumar from Bloomberg Economics said.
She added that foreign equipment makers now have an incentive to expand capacity in large markets like India.
Historical context
China previously used leverage against Germany's Herrenknecht AG
China has previously used its dominance in the tunnel-boring machine industry as leverage.
In 2024, it stalled Germany's Herrenknecht AG, one of the manufacturers of these machines, from selling them to India for projects such as the Ahmedabad-Mumbai bullet train and Delhi metro.
Despite this, Ajay Srivastava, founder of the New Delhi-based Global Trade Research Initiative, said that India could shift equipment from other sites for any "priority project."
Manufacturing push
India ramping up domestic manufacturing of tunnel-boring machines
India is also working on boosting its domestic manufacturing capacity for tunnel-boring machines.
Road Transport and Highways Minister Nitin Gadkari has said that the country plans to invest up to $9.6 billion on tunneling over the next five years.
The government is also said to be considering a $1.2 billion incentive plan for construction equipment manufacturers.