New Delhi

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 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 may affect solar sector projects the most where Chinese import is to the extent of 80 pc. Sources in the Power Ministry said 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.

This could be done by either completely restricting funding to projects based on imports or such projects could command a premium interest rate. “Various things are being worked out that would be conveyed to agencies looking for funds,” said an official source from one of three public sector power financiers.