China's dispute clause: tunnel-machine curbs test India

<p><em>Special Reporting from LSN News, adapted from today's Power Play Asia episode. <a href="https://youtu.be/LG35mgwIHYM" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>On Monday, 19 October, Beijing added a new tool to its pressure kit: not missiles or ships, but machines. China's commerce ministry announced export controls on tunnel boring machines, the giant drills that dig metro lines, rail tunnels and highway tunnels. One clause matters most. Exports to sensitive countries and regions that have disputes with China will need a licence. And one big neighbour has already felt this squeeze: India.</p><h2>The dispute clause</h2><p>The notice, issued with China's customs administration, takes effect on 18 November. It covers tunnel boring machines, both shield and rock types, and key parts such as cutterheads and main drive systems. It also covers walking excavators built for rough terrain, such as those that can climb slopes of more than 40 degrees, and one very specific machine: wet shotcrete sprayers built for use above 3,000 metres.</p><p>Buyers in the disputed group need a licence. Everyone else registers, but exporters and end users must promise not to pass the machines on to that group without permission. Beijing names no country, and this is not a blanket ban. A ministry spokesperson said the items have clear dual-use characteristics, civilian and military, and that applications meeting the requirements will be approved.</p><p>Ask where in Asia anyone needs to spray concrete inside a tunnel above 3,000 metres. In New Delhi, the answer that comes to mind is the Himalayan frontier. That is LSN's reading, not Beijing's wording.</p><h2>India's exposure</h2><p>The Hindu reports that India depends on imported tunnel boring machines, which are used for city metros, railway corridors and tunnelling projects including in border areas. In 2024, Commerce Minister Piyush Goyal publicly complained that China was blocking the export of machines built in China by a German company. Last year, Germany's ambassador to India, Philipp Ackermann, said Chinese customs had held up at least three Herrenknecht machines bound for India. “It is clear for political reasons,” he told ThePrint, “that the Chinese would not really let them out.” Herrenknecht's answer was to build in India.</p><p>New Delhi's first response is calm. Officials told the Economic Times there would be no large-scale slowdown in highway building, and that a scheme to support domestic manufacturing of such equipment is close to final approval. But one official warned of possible problems importing high-duty engines, heavy cranes and tunnelling equipment, which could hit critical projects, including the bullet train.</p><p>The tunnel machines were not alone. On Monday, Beijing also revised its export controls on drones and drone parts, including drones with a range of 300 kilometres or more, in rules issued with the Central Military Commission's equipment department, Anadolu reports. It adjusted controls on dredger parts too. All this came three days after a draft plan to restrict more than 40 advanced technologies, from solar manufacturing to some AI models. Reuters, citing UN Comtrade data, says China exported about $793 million worth of rock cutters and tunnelling machinery in 2025.</p><p>The timing is pointed. The same day, US Secretary of State Marco Rubio said Washington was very close to finalising a trade deal with India, and he is expected in Mumbai on Tuesday for talks with External Affairs Minister S Jaishankar, the Indian Express reports. All this comes despite efforts by both Asian capitals to normalise ties after the Galwan clashes of 2020.</p><h2>The scorecard and the verdict</h2><p>On leverage, Beijing scores: an informal customs squeeze is now formal regulation, with a licence it can grant or slow. On exposure, India is hurt but not crippled: an industry executive told the Economic Times that general construction equipment is largely made at home, so the pain sits in specialised machines and parts. On time, the advantage is shifting, because every delay pushes makers like Herrenknecht to build in India. On partners, New Delhi has options, and Washington says a trade deal is close.</p><p>LSN's verdict: Beijing wins the short game; India can win the long one. The dispute clause is a message to every neighbour with a quarrel with China: Chinese machines, Chinese terms. But coercion over a product others can make is a wasting asset, and each delayed licence is an advert for factories in India rather than China. Three things to watch: whether licences for Indian projects stall after 18 November, whether New Delhi approves its equipment scheme quickly, and whether Rubio's visit produces the trade deal.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://english.news.cn/20261019/fda010dc392047b29cfc6631d468ec4b/c.html" target="_blank" rel="noopener">Xinhua, 19 Oct 2026</a></li>

<li><a href="https://www.mofcom.gov.cn/zwgk/zcfb/art/2026/art_9ce34ccfa6c040d7a4f7622f89133be5.html" target="_blank" rel="noopener">MOFCOM / GAC Announcement 2026 No. 50, 19 Oct 2026</a></li>

<li><a href="https://www.aa.com.tr/en/economy/china-to-require-permits-for-key-drone-exports-restrict-machinery-sales-to-sensitive-destinations/4093222" target="_blank" rel="noopener">MOFCOM No. 50 (above) — &quot;出口经营者向与中国存在争议的敏感国家和地区出口上述物项应当...申请许可 ... 向全球其他国家和地区的出口，以登记填报信息方式获得出口凭证，出口经营者及最终用户须承诺，未经许可不得向与中国存在争议的国家和地区转移&quot;. Anadolu Agency, 19 Oct 2026</a></li>

<li><a href="https://businessupturn.com/nation/china-imposes-export-curbs-on-tunnel-boring-machines-raising-concerns-for-indias-infrastructure-projects/" target="_blank" rel="noopener">Business Upturn, 19 Oct 2026</a></li>

<li><a href="https://www.chinadaily.com.cn/a/202610/19/WS6ad6327be4b06d4aa05639f8.html" target="_blank" rel="noopener">&quot;applications that meet requirements will be approved.&quot; China Daily (Zhong Nan), 19 Oct</a></li>

<li><a href="https://www.thehindu.com/news/international/china-imposes-export-controls-on-tunnel-boring-machines-sought-by-india-citing-national-security/article71602536.ece" target="_blank" rel="noopener">The Hindu (Ananth Krishnan), 19 Oct 2026</a></li>

<li><a href="https://www.moneycontrol.com/world/china-tightens-exports-of-tunnel-boring-machines-why-india-s-infrastructure-projects-could-feel-the-pinch-article-14055695.html" target="_blank" rel="noopener">The Hindu, 19 Oct — &quot;In October of that year, Commerce Minister Piyush Goyal had publicly raised the issue with visiting German Vice Chancellor Robert Habeck, pointing out that China was blocking the export of TBMs made by a German company in China.&quot; Also Moneycontrol, 19 Oct</a></li>

<li><a href="https://www.businesstoday.in/india/story/china-announces-export-controls-on-tunnel-boring-machines-challenge-for-indias-infra-push-562564-2026-10-19" target="_blank" rel="noopener">Business Today, 19 Oct 2026</a></li>

<li><a href="https://takshashila.org.in/content/blogs/digging-deep.html" target="_blank" rel="noopener">&quot;Herrenknecht decided to establish production facilities in India&quot;. Background: Takshashila Institution (Kumar, Kotasthane), 22 Jan 2025</a></li>

<li><a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/china-curbs-spur-push-for-local-manufacturing/articleshow/135055802.cms" target="_blank" rel="noopener">The Economic Times (ET Bureau), 20 Oct 2026 01:38 IST</a></li>

<li><a href="https://www.devdiscourse.com/article/international/3994627-china-commerce-ministry-announces-export-controls-for-tunnel-boring-machines" target="_blank" rel="noopener">Reuters via Devdiscourse, 19 Oct 2026 14:10 IST</a></li>

<li><a href="https://indianexpress.com/article/business/marco-rubio-india-us-trade-deal-waive-russia-oil-sanctions-uzbekistan-10927851/" target="_blank" rel="noopener">The Indian Express (Ravi Dutta Mishra), 20 Oct 2026 02:00 IST</a></li>

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