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

New Delhi [India], 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.

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