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Power Equipment Stocks Correct on Chinese Supplier Exemption

ICICIdirect Research 03 Jul 2026 DISCLAIMER

Sharp sell-off across the power equipment space: Capital goods and power equipment stocks declined 4–10%, led by GE Vernova T&D, Hitachi Energy, CG Power, Siemens Energy, BHEL and TARIL, after the government granted procurement exemptions to four Chinese-linked manufacturers for critical power projects.
Government grants limited procurement exemption: The Ministry of Finance granted a two-year exemption from Public Procurement Order No. 4 (Rule 144(xi) of GFR, 2017) to TBEA Energy India, Nanjing Electric India, New Northeast Electric India and Taikai Electric India, all of which have manufacturing facilities in India.
Concerns over higher competition: The announcement triggered concerns over increased competitive intensity in the transmission and substation equipment segment, as the exempted companies manufacture power transformers, GIS switchgear, insulators and related T&D equipment, potentially intensifying competition in select government tenders.
Companies with meaningful exposure to these product categories, including GE Vernova T&D, Hitachi Energy, CG Power, Siemens Energy, BHEL, ABB India and TARIL, could face incremental pricing pressure in select tenders if the exempted players actively participate.
Exemption remains narrowly defined: The relaxation is limited in scope, applying only to four specified entities, critical power projects, and remains valid for two years. Importantly, the Office Memorandum explicitly states that the exemption shall not be treated as a precedent, indicating that it does not represent a broader easing of procurement restrictions.
View: We believe today's decline is largely sentiment-driven rather than a material change to sector fundamentals. Domestic manufacturers continue to benefit from a strong capex cycle, robust order books and India's multi-year transmission and power infrastructure expansion. The key monitorable will be whether similar exemptions are extended to other foreign suppliers or become a broader policy trend.

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