How Could Relaxation of China Restrictions Reshape India’s Industrial Landscape?
Policy Background
Since 2020, India has maintained restrictions on Chinese companies bidding for government and strategic infrastructure contracts. These measures were primarily driven by national security concerns and the objective of strengthening domestic manufacturing.
Recent brokerage checks, however, suggest that some form of relaxation could be under consideration, though a complete rollback appears unlikely.
Bernstein and Jefferies indicate that any easing is expected to be selective and conditional, potentially segment-based or tied to compliance requirements for Chinese firms.
Key Brokerage Observations
🔹 Full removal of Rule 144 seen as unlikely.
🔹 Partial or segment-based relaxation more probable.
🔹 Push may be coming from multiple ministries.
🔹 Equipment manufacturers likely to be most impacted.
Bernstein believes that if restrictions are eased, equipment suppliers could face pricing pressure as Chinese competition re-enters selectively. In contrast, asset owners and state-owned companies could benefit from lower project costs and improved execution timelines.
Policy-sensitive themes are often navigated using a Nifty Option Call approach to manage volatility.
Likely Winners and Losers
| Category | Impact |
|---|---|
| Equipment Makers | Negative to Neutral |
| Asset Owners (PSUs) | Positive |
|
Strengths
🔹 Lower project costs. 🔹 Faster execution timelines. |
Weaknesses
🔹 Pricing pressure on domestic OEMs. |
|
Opportunities
🔹 Infra acceleration. |
Threats
🔹 Domestic manufacturing dilution. |
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes selective policy relaxation could improve capital efficiency for infrastructure owners while creating near-term pressure on equipment suppliers. Monitoring implementation details will be crucial. More analysis is available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided is for informational purposes only and should not be construed as investment advice.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
