To increase domestic power generation equipment manufacturing capacity, the Centre is planning to restrict overseas equipment manufacturers from bidding for Indian projects unless they have a manufacturing base in India.
While the decision may come as a dampener for overseas companies, particularly those from China, which have been pretty active in the Indian power sector, it would mean immense benefits for Indian players such as Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd.
“We have had discussions with Power Finance Corp. and the sector officials and the focus is now on the domestic manufacturing. Whatever orders have been given have been given. Apart from the three ultra mega power projects that have already been awarded, this will be applicable for all future powerprojects in the country effective after 30 April,” Jairam Ramesh, minister of state for power, said.
“We are very happy for the support extended by the power ministry,” said K. Ravi Kumar, chairman and managing director, Bhel.
A New Delhi-based analyst, who did not want to be identified, said, “It is pretty regressive. The government cannot force companies to set up shop in the country unless they have a firm order for supplies. Why will the Chinese set up shop in India if it is much cheaper for them to manufacture there?”