Chinese companies won’t be able to invest in India’s power transmission. Here’s why

The Indian government is drafting a new policy in which countries that do not allow Indian investments won’t be able to invest in India either.

India is going to adopt a reciprocity policy in power sector too and won’t allow investments from nations that do not allow investments from Indian companies.

This means, Chinese companies won’t be able to invest in power transmission in India as China does not approve of overseas investments in its electricity grid for security reasons but India allows 100% foreign direct investment (FDI) in the power sector.

If India bars Chinese companies in investing in power transmission, it will help in protection from cyberattacks because the power sector is increasingly software driven with intelligent technology and control systems being used.

In a recent interview, India’s Power Minister Piyush Goyal had told ET that India won't allow power companies to invest from countries where Indian firms are banned.

"Discussions have already been held with the commerce ministry. There should be reciprocity in trade. Other countries should not be allowed to exploit the Indian market while they protect their domestic players and space,” a government official told ET.

Meanwhile, the power ministry is working on a secure management to prevent cyberattacks on the electricity grid.

Domestic power equipment manufacturers have said it could also be a threat to national security as electricity distribution systems carry power to pipelines, water systems, telecommunications and other critical infrastructure, while also serving key government and military facilities.