China-linked power firms get 2-year tender relief: Here's what it means for Indian businesses

The Centre has given a two-year exemption to four China-linked power equipment companies under public procurement rules. The relief will allow these companies to participate in government tenders for critical power projects. However, the benefit is available only if they have a manufacturing base in India.

The move was largely expected by the market. As per Zee Business research the decision is unlikely to have a major impact on Indian power equipment companies such as BHEL, GE T&D India, and CG Power.

Finance Ministry approves exemption

The Finance Ministry has approved the exemption under the Public Procurement Order, 2023. Earlier, China-linked companies faced strict restrictions in government tenders.

The Ministry of Power had proposed this exemption to support critical power projects. After the Finance Ministry's approval, the decision has now come into effect.

The four companies that have received the exemption are TBEA Energy India, Nanjing Electric India, New Northeast Electric India, and Taikai Electric India.

Relief only for companies manufacturing in India

The exemption is available only to companies that manufacture power equipment in India. This condition has been kept to support local manufacturing while ensuring timely supply for critical power projects.

Public procurement is the process of how the government buys goods and services for public projects . For large infrastructure projects , the government invites companies to make bids through a tender . It then selects the company that meets technical standards and offers the best value. The earlier procurement rules had limited the participation of China-linked companies in such tenders.

The exemption is meant to ensure that critical power projects do not get delayed. India is adding new power plants and expanding its electricity transmission network to meet rising demand. These projects need a large amount of equipment such as transformers, switchgear and other high-voltage products. The government believes more eligible companies in tenders will help ensure timely supply of equipment and faster project execution.

The four companies covered under the exemption make equipment used in power transmission and distribution. Their products include transformers, gas-insulated switchgear (GIS), switchgear, circuit breakers and other high-voltage equipment. These products are used in substations and transmission lines. They help carry electricity from power plants to homes, factories and businesses.

What is the impact on Indian companies?

The decision could increase competition in government tenders. It may also put pressure on prices in products such as transformers, GIS, switchgear and other high-voltage equipment.

As per Zee Business research, the impact on Indian companies will be limited. They said the move was already expected and applies to only four companies.

Zee Business also pointed out that the exemption is valid for only two years. It is limited to critical power projects. It is not a blanket relief for all China-linked companies. Only companies that manufacture in India are eligible.

As a result, companies such as BHEL, GE T&D India and CG Power are not expected to see any meaningful impact from the policy change.