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Chinese Firms in India: Limited Impact on Domestic Power Equipment Sector

A report by Systematix Research indicates that any relaxation of restrictions on Chinese firms participating in Indian government contracts will have a limited impact on the domestic power equipment sector. The easing is seen as a move to address supply-chain bottlenecks rather than increase competitive pressure on local manufacturers. This view is supported by the government's strong localisation drive and the preference of state-owned utilities like NTPC for domestically sourced equipment. Consequently, domestic players with robust order books, such as BHEL and L&T, are expected to remain largely unaffected.

Key Points: Chinese Firms in India: Minimal Impact on Power Equipment

  • Relaxation aims to ease supply chains
  • Govt push for localisation continues
  • State utilities prefer domestic equipment
  • National security concerns limit impact
  • Domestic firms have strong order books
2 min read

Relaxation for Chinese firms unlikely to disrupt domestic power equipment sector: Report

Report says easing restrictions on Chinese firms in Indian power projects will have limited impact on domestic manufacturers due to localisation push.

"the relaxation would be most likely aimed at easing supply-chain constraints and improving project execution, rather than increasing OEM competition. - Systematix Research"

New Delhi, January 12

The reported easing of restrictions on Chinese firms participating in Indian government contracts is expected to have a limited impact on domestic power equipment manufacturers, according to a sector update by Systematix Research.

The report through Industry interactions suggests that any relaxation is likely aimed at addressing supply-chain constraints and improving project execution rather than opening the door to aggressive original equipment manufacturer (OEM) competition.

The report notes, "the relaxation would be most likely aimed at easing supply-chain constraints and improving project execution, rather than increasing OEM competition."

This view is supported by the government's sustained push for localisation, large capital expenditure commitments by Indian power equipment players, and the strategic importance of the national power grid.

The report notes that government-owned utilities such as NTPC and Damodar Valley Corporation continue to prefer domestically sourced equipment, particularly for thermal power projects.

It says, "the higher share of government-owned power utilities (NTPC, DVC and others) suggests continued lower preference for Chinese equipment."

Historically, most large orders awarded to Chinese power equipment suppliers were placed by private sector developers, limiting the potential disruption to state-led projects.

Systematix Research expects minimal impact on segments such as transformers, switchgear, substations and grid automation, citing national security concerns and rising cyber risks associated with critical power infrastructure. Transmission equipment players are therefore unlikely to face significant competitive pressure.

Among domestic manufacturers, BHEL has the highest product overlap with Chinese OEMs, but its order book provides visibility of over seven years, shifting focus towards execution and margin improvement. Other players, including L&T, are expected to see limited impact due to diversified business exposure and existing competition with Chinese firms in overseas markets.

Overall, the report concludes that any policy easing is unlikely to materially disrupt India's power equipment sector in the near term, with domestic players remaining well-positioned amid strong order pipelines and policy support.

- ANI

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Reader Comments

P
Priya S
Good to hear that NTPC and DVC prefer domestic equipment. Our public sector units should lead by example. Supporting BHEL and L&T is crucial for creating jobs and building long-term expertise here.
R
Rohit P
While the report is reassuring, we must remain vigilant. Chinese firms are very competitive on price. Even a small opening could be exploited. The government must ensure this is a temporary, need-based measure only.
S
Sarah B
Interesting read. The cyber risk angle is critical. Power grids are a prime target. It makes complete strategic sense to limit foreign, especially Chinese, equipment in such sensitive infrastructure.
V
Vikram M
BHEL having a 7-year order book is the key takeaway for me. That's solid visibility. It shows the demand for domestic manufacturing is real and not just policy talk. Hope they execute well and improve quality.
K
Karthik V
A balanced move if true. Sometimes project delays cost more than saving money on cheap imports. If this relaxation helps complete projects on time without hurting our manufacturers, it's a win-win. 🤞

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