BHEL shares plunged 10% to hit the lower circuit limit at Rs 273.20 on January 8, 2026, erasing recent gains after a Reuters report revealed India's finance ministry plans to scrap five-year-old curbs on Chinese firms bidding for government contracts worth $700-750 billion. The restrictions, imposed post-2020 Galwan clash, required Chinese bidders to register and secure clearances, effectively sidelining them from major projects. Other capital goods stocks like L&T (down nearly 3%), Siemens (over 4%), ABB India (4-5%), and Hitachi Energy also tumbled on fears of heightened Chinese competition.
Policy Shift Details
A high-level committee under former cabinet secretary Rajiv Gauba recommended removing registration for bordering nations' bidders, with PM Modi's office to decide. Multiple ministries sought exemptions due to project delays and shortages, signaling eased diplomatic tensions post-October 2025 Ladakh disengagement. Sources noted officials are actively working to lift these barriers to revive commercial ties.
Triggered by Border Détente
The move follows India-China progress since the 2024 BRICS summit, including China's resumption of Kailash Mansarovar pilgrimage in June 2025 and lifting embargoes on fertilizers and machines. India reciprocated by easing Chinese tourist visas in July 2025, amid a tactical pause in border frictions. This détente has paved the way for recalibrating economic policies strained since the 2020 clash.
Power Sector Impact
Curbs on Chinese power equipment have stalled India's thermal capacity expansion to 307 GW over the next decade, with private coal projects (22 GW) on hold due to high domestic costs. Post-2020, Chinese project awards dropped 27% to $1.67 billion in 2021; easing could cut costs by up to 50% per MW. BHEL, key supplier for NTPC and Adani Power, faces direct rivalry from cheaper Chinese alternatives.
Market Reactions
BHEL hit intraday lows before partial recovery but closed 9-10% down, dragging broader indices with IT, metals, and PSUs affected. Investors worry over Chinese dominance in railways (e.g., CRRC's past disqualification from $216M contract) and power, potentially reshaping $700B+ tender landscape. No official confirmation yet; final call with PMO.
