India's BHEL get stiff competition from Chinese contractors

India's leading domestic equipment supplier BHEL is fast losing its dominance in the power sector due to stiff competition from its Chinese counterparts.

While BHEL may still have the maximum number of Indian thermal project contracts, the contribution of Chinese players towards thermal capacity addition targeted during 12th plan and beyond has shot up to 42.5%, or 39,570 MW out of the cumulative 93,084 MW. This figure is a meager 1,000 MW short of BHEL's share in the thermal sector.

Out of 41 thermal units, aggregating 15,154.3 MW capacity, programmed for commissioning during the ongoing financial year, 21 units come under the purview of BHEL whereas contracts for 16 units have been awarded to Chinese firms.

With the gap between Indian and Chinese offerings narrowing faster than expected, the latter may soon topple the domestic equipment major from its top position and capture more than half of the market share over the next decade.

A factor that has helped the Chinese players gain a strong foothold over the thermal sector is increasing willingness of government owned utilities, besides the private sector developers, to place orders with these companies instead of BHEL.

The bend toward China-based firms is largely owing to the availability of cheaper equipment abroad than that provided domestically. Moreover, the lead time, or the time lag between placement of orders and start of production, is significantly lower for the Chinese.

Although private sector projects form a massive chunk of these contracts, the Chinese firm DongFang Electric Corporation Limited, China is supplying the boiler, turbine and generator package to one state sector project -- 600 MW unit-1 of Tamil Nadu Electricity Board's Mettur thermal power project extension.