India's potential policy shift regarding Chinese firms' participation in government contracts may not significantly alter the power sector's competitive dynamics, according to industry expertise from former leadership.

Policy Impact Assessment

Bharat Heavy Electricals former CMD K. Ravi Kumar has provided insights on India's consideration to scrap five-year-old curbs that currently restrict Chinese firms from bidding for government contracts. His assessment indicates that removing these restrictions would be unlikely to change the existing competitive landscape in the power equipment sector.

Market Position Analysis

The evaluation suggests that Indian power sector companies have established strong market positions over the restriction period. The five-year timeframe during which Chinese firms faced bidding limitations appears to have allowed domestic manufacturers to consolidate their presence in government contract segments.

Competitive Landscape Outlook

According to the former BHEL leadership perspective, the structural advantages and market positioning achieved by Indian power equipment manufacturers may provide sufficient competitive strength to maintain their market share even with potential policy changes. This assessment reflects confidence in the domestic industry's ability to compete effectively regardless of regulatory modifications concerning Chinese firm participation.

The insights from former industry leadership provide valuable perspective on how policy changes might interact with established market dynamics in India's power equipment sector.

Bharat Heavy Electricals (BHEL) shares remained in focus as brokerages assess the potential implications of relaxed restrictions on Chinese companies bidding for Indian government contracts, while fresh order wins provide fundamental support to the stock.

Market Performance and Sector Impact

BHEL shares surged nearly 5% to ₹284.10 on the NSE at 10:24 am on Friday, recovering from the lower circuit of ₹261.50 hit on January 8, 2026. The broader industrial sector showed mixed performance, with L&T rising 1% to ₹4,081.80, while Afcons Infrastructure and Siemens Energy India declined 2% to ₹368.35 and ₹2,477.40 respectively.

Brokerage Views on Policy Changes

Jefferies highlighted differentiated impact across companies from potential policy relaxation. The brokerage expects defence sector to see minimal impact, while companies like L&T, Afcons and BHEL could face relatively higher competitive intensity. ABB and CG Power may also experience some impact, though transmission and distribution players like Siemens Energy and Hitachi Energy could remain largely insulated due to national security priorities.

Bernstein adopted a cautious stance, expressing surprise if the government completely removes existing frameworks without constraints. The brokerage anticipates segment-specific relaxation or additional compliance requirements for Chinese firms, noting that multinational equipment suppliers would face greater impact than construction-heavy companies.

UBS Maintains Positive Outlook

Despite policy uncertainty, UBS reiterated its 'buy' rating on BHEL with a target price of ₹375. The brokerage emphasized BHEL's recent ₹54 billion coal gasification and raw syngas cleaning plant order win, bringing the company to approximately 60% of its targeted FY26 order inflows.

Technology Advancement and Strategic Projects

UBS highlighted an order awarded by BCGCL, the joint venture between Coal India and BHEL, for a coal-to-ammonium nitrate project. This project represents the first commercial deployment of BHEL's proprietary pressurised fluidised bed gasification technology, marking a significant transition from research and development to execution phase.

Market Outlook

According to PL Capital, while BHEL and L&T could face incremental competitive pressure in the BTG segment if Chinese players gain bidding access, Chinese participation will likely remain limited due to strategic sensitivity and control risks in critical infrastructure projects. The company's improving order inflows, technology differentiation and execution pipeline are viewed as key factors that could offset broader sectoral concerns.