Several capital goods stocks, including Hitachi Energy India, Bharat Heavy Electricals Limited (BHEL), and Cummins India, experienced notable declines in the stock market today. This downturn, with losses reaching up to 6.5%, can be primarily attributed to reports suggesting that the Indian government may be considering easing restrictions on Chinese firms bidding for government contracts.
The potential policy shift has triggered concerns about increased competition in the capital goods sector. The restrictions, imposed in 2020 following border tensions, required Chinese bidders to undergo a stringent registration process and obtain security clearance, effectively barring them from participating in Indian government tenders estimated to be worth $700–750 billion.
Reports indicate that the Finance Ministry is planning to scrap these five-year-old restrictions to revive commercial ties amid eased diplomatic tensions. This has led to fears of greater competition and pricing pressure, especially in PSU-led tenders for power equipment, transmission, and railway projects.
BHEL, a major public sector undertaking (PSU), experienced a significant stock decline. On January 8, 2026, BHEL shares plunged nearly 14%. Today, the stock continued its downward trend, falling almost 6% to ₹258.30 apiece on the BSE. This extends a three-day losing streak, with an overall slump of 15%. The volume of BHEL shares traded doubled compared to the monthly average, signaling intense selling pressure. Despite the recent slump, BHEL shares have delivered impressive returns over the past few years, including multibagger returns of 566% in the last five years.
Hitachi Energy India also faced substantial losses. On January 9, 2026, the stock cracked 5.6% on the BSE, adding to a 5.8% slide from the previous day. Today, Hitachi Energy India fell over 5%.
Cummins India experienced a similar downturn. The stock was down between 2% and 4% today. Earlier, in May 2025, Cummins India shares dropped 7% after its parent company, Cummins Inc., suspended its full-year revenue guidance due to market uncertainties. This was further impacted by an 11% drop in revenue for Cummins India's PowerGen business in the March quarter.
Other capital goods companies, including Kirloskar Oil Engines, Apar Industries, Thermax, Siemens, Siemens Energy India, ABB India, Titagarh Rail Systems, Inox Wind, Zen Technologies, Suzlon Energy and Larsen & Toubro also experienced declines, ranging from 1.57% to 4%.
Analysts anticipate that the easing of restrictions on Chinese firms will likely lead to increased competitive intensity and pricing pressure, particularly in government tenders. Companies heavily reliant on government orders may face margin compression and reduced bid competitiveness. However, some analysts suggest that capacity constraints within the sector could limit the immediate impact on earnings and market pricing. The focus remains on the government's official clarification and potential policy changes.
