India’s Power Sector at Crossroads: Impact of Easing Curbs on Chinese Equipment Suppliers
Brokerages are turning cautious on India’s power capital goods space as reports suggest the government may scrap the five-year-old curbs on Chinese companies bidding for government contracts. Stocks such as BHEL, L&T and Siemens are seen at the centre of this debate, as easing restrictions could reshape competition, pricing and execution timelines across power generation and transmission projects.
Background and Implications
Projects awarded to Chinese bidders had already fallen sharply after 2020, declining 27% year-on-year in 2021. However, with ministries flagging shortages, rising costs and project delays, the government appears more open to easing curbs to support infrastructure build-out. For investors, brokerages agree that while easing restrictions could pressure certain domestic equipment players like BHEL, it could also lower costs, accelerate execution and support India’s long-term power capacity goals.
CLSA’s Perspective
According to CLSA, the potential rollback of the Chinese import ban stems from India’s attempt to revive commercial ties amid easing diplomatic and border tensions. The brokerage notes that tariff and non-tariff barriers imposed by the Modi government have led to supply shortages in critical infrastructure segments like power generation. Limited competition has resulted in double-digit inflation in equipment prices, squeezing developers and hurting India’s growth ambitions and capacity addition plans.
CLSA believes this backdrop explains why policymakers are considering easing restrictions. It flags BHEL as the biggest risk, particularly in thermal power, where Chinese suppliers such as Dong Fang, Shanghai Electric and Harbin have historically competed aggressively in state and private genco tenders.
L&T and Siemens: Positioned for Less Impact
In contrast, CLSA advises investors to view any correction in L&T stock as a buying opportunity, highlighting that L&T is globally competitive and often wins against Chinese suppliers in markets like the Middle East. The brokerage adds that L&T typically bids only for NTPC tenders where Chinese firms are not qualified and largely avoids state genco projects, limiting the downside impact.
Furthermore, the solar ecosystem, including module and cell manufacturers such as Waaree and Premier, could face renewed competitive pressure if the ban is lifted fully. In power transmission, players like Siemens Energy, Hitachi Energy, GE Vernova, CG Power, BHEL and TRIL, along with several transformer and reactor manufacturers, may see pricing pressure if Chinese competition returns, though the extent would vary by segment.
Jefferies and Bernstein’s Views
Jefferies echoes the view that restrictions imposed since 2020 may be relaxed, but it sees the impact differing sharply across sectors. The brokerage believes defence will see the least impact, followed by Cummins, while L&T, Afcons and BHEL are likely to face the highest exposure. It adds that ABB and CG Power could also see some pressure.
From Bernstein’s perspective, industry checks suggest that some form of relaxation is increasingly likely, especially in areas where shortages are acute. It highlights thermal power equipment and high-voltage transmission as segments facing the most supply constraints, making them ideal candidates for selective easing. Bernstein believes equipment manufacturers will be more impacted than construction-heavy players, and while the move could be marginally negative for L&T, the impact is expected to be small.
IIFL’s Nuanced View
Adding nuance to the debate, IIFL points out that any easing may be calibrated rather than broad-based. Citing clarification from a senior industry expert, IIFL notes that Chinese player TBEA is likely to be allowed to participate in Power Grid tenders, particularly for reactors, for supplies starting April–May 2026. The brokerage stresses that restrictions are being lifted on a case-to-case basis and for specific products, and does not expect bulk imports from China in the near term.
Conclusion
The potential easing of curbs on Chinese power equipment suppliers presents a complex scenario for India’s power sector. While it may bring short-term benefits such as lower costs and faster project execution, it also poses significant risks to domestic manufacturers like BHEL. As the situation unfolds, investors should closely monitor developments and consider the implications for their portfolios, exploring opportunities in stocks like L&T that are seen as relatively insulated from the impact of Chinese competition.