The government’s economic response against China may see public sector financiers restricting funding of projects that ise equipment from the neighbouring country, sources said on Monday.
The practice would first be adopted in the power sector, where state-owned Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Indian Renewable Energy Development Agency (IREDA) propose to restrict financing to states that are developing projects in power generation, transmission and distribution that use Chinese equipment.
As bulk of the funds to the power sector is provided by these three institutions, the restriction is expected to be effective in checking large-scale import of Chinese gear. The move is likely to affect solar sector projects the most where Chinese import is to the extent of 80 per cent.
Sources in the Power Ministry said that public sector financiers have been told to devise funding schemes that discourage imports, especially in case of equipment that is being manufactured in the communist country.