PSU capital goods stocks as well as railways stocks were under pressure today. BHEL’s stock saw a sharp 10% slide. Other shares like L&T, ABB, Siemens also saw sharp losses This came in after a Reuters report indicated that the government plans to scrap five-year-old restrictions on Chinese firms bidding for government contracts.
Stocks fall on reports of India curbing China’s restrictions
Following the report, not only did the BHEL share price plunged over 10%, the share price of SAIL too fell 3%.In the power generation sector, BHEL competes with Chinese contractors and serves as a primary contractor for government infrastructure projects.
Shares of several private sector capital goods firms also took a hit. Hitachi Energy India share price fell over 6% while Siemens saw a 4% cut. L&T and ABB also saw sharp cuts between 4-6%.
Shares competes with China’s CRRC for railway contracts. Earlier, the Chinese company had been disqualified from bidding for government contracts. Shares of RVNL were also down by over 4%. The company is the execution arm of the Ministry of Railways.
The restrictions on Chinese bidders were imposed following geopolitical tensions between the two countries’ troops. After this, Chinese bidders were required to register with an Indian government committee and obtain security clearances.
“Officials are working to remove the registration requirement for bidders from bordering nations,” Reuters quoted one government source as saying. The final decision lies with the Prime Minister’s Office (PMO), the report added.
According to the report, India’s plans to raise its thermal power capacity were impacted after curbs were imposed on Chinese imports of power equipment.
A committee headed by former cabinet secretary Rajiv Gauba had also recommended easing the import restrictions.
Reuters said in its report that the Prime Minister’s Office did not respond to its requests for comment. FinancialExpress.com has not been able to independently confirm the report either.
India-China easing relations amid tariff concerns
India’s Prime Minister Narendra Modi visited China last year and said the visit was productive. Further, both countries are currently subject to 50% tariffs.
With US President Donald Trump warning of fresh tariffs on Indian goods, many industry observeers here see a growing possibility that India and China could foster deeper ties.
India and China also resumed direct flights last year after a gap of nearly five years.