Chinese Firms Gain Access to Indian Contracts; Power Stocks Tumble 14%

INDUSTRIAL-GOODSSERVICES
Whalesbook Logo
AuthorVihaan Mehta|Published at:
Chinese Firms Gain Access to Indian Contracts; Power Stocks Tumble 14%
Overview

Indian power and capital goods stocks plunged Thursday after reports surfaced that the finance ministry plans to lift restrictions on Chinese companies bidding for government contracts. Bharat Heavy Electricals (BHEL) led the decline, dropping 14%. The move, aimed at reviving commercial ties, could significantly increase competition for contracts valued at up to $750 billion.

Power Sector Stocks Face Sell-off

Shares of major Indian power and capital goods manufacturers tumbled on Thursday, with some dropping as much as 14%. This sharp correction follows reports that India's finance ministry intends to remove restrictions that have for five years barred Chinese firms from participating in government contract bids. The move signals a potential shift in trade policy, driven by efforts to re-establish commercial ties amidst eased diplomatic tensions.

Bharat Heavy Electricals (BHEL) saw its stock price crash by 14% to ₹261.40 on significant trading volumes, losing ground after recently touching a 52-week high. Other prominent companies also registered substantial losses. Hitachi Energy India plunged 6% to ₹18,330, while ABB and Siemens declined 5% each, trading at ₹5,017 and ₹2,992 respectively. Larsen & Toubro (L&T) also felt the pressure, shedding 4% to ₹3,990.50.

Impact of Reopening Bids

Reuters, citing sources, reported the finance ministry's plan to scrap the five-year-old curbs. These restrictions, put in place after a deadly border clash in 2020, required Chinese bidders to obtain specific government and security clearances, effectively blocking them from competing for Indian government contracts estimated to be worth between $700 billion and $750 billion. The final decision rests with Prime Minister Narendra Modi's office.

The BSE Capital Goods index reflected the broad market sentiment, declining 2.3% by mid-afternoon trade, significantly underperforming the BSE Sensex's 0.91% fall. Despite the day's sharp losses, both L&T and BHEL have outperformed the broader market over the past six months, gaining 12% and 8% respectively, compared to the Sensex's 0.56% rise and the BSE Capital Goods index's 8% fall during the same period.

BHEL's Order Book

Bharat Heavy Electricals previously informed exchanges that its board would convene on January 19, 2026, to approve financial results for the quarter ending December 31, 2025. As of September 30, 2025, BHEL held an outstanding order book of ₹2.19 trillion, with 80% of this value, or ₹1.75 trillion, stemming from the power sector. The remaining ₹44,545 crore comprises industry orders, including exports. The company has highlighted its strategy to meet future energy demand driven by domestic consumption and government infrastructure push.

Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.