Air-cooled condenser makers urge review of Chinese firms' entry into thermal power contracts

New Delhi, India Jul 7, 2026 ALN: New Delhi: Leading manufacturers of air-cooled condenser (ACC) systems in India have approached the Prime Minister's Office (PMO) and key ministries, seeking a review and withdrawal of an exemption that allows companies from countries sharing a land border with India, including China, to bid for government thermal power plant contracts, people aware of the matter said.

ACC systems are critical components in dry-cooling systems at thermal power plants. They play a vital role in ensuring that power generation processes remain efficient and environmentally friendly by minimizing water usage. These systems are typically sub-contracted as part of larger engineering, procurement, and construction contracts, making them integral to the overall functioning and operational reliability of thermal power plants.

The manufacturers, including prominent companies such as Paharpur Cooling Towers, Enexio Power Cooling, and Holtec Asia, have expressed significant concerns over the implications of allowing foreign companies, particularly those from China, to participate in these contracts. In their letters to the PMO, the power ministry, and the Department for Promotion of Industry and Internal Trade (DPIIT), they sought the PMO's intervention to review the exemption and consider implementing a locally-made procurement framework for ACC systems.

The companies argued that procurement decisions should factor in foreign exchange outgo, execution certainty, and lifecycle costs, rather than focusing solely on upfront bid prices. They contend that the initial bid prices can serve as a distorted benchmark, making India-made ACCs appear more expensive than their foreign counterparts. This situation is particularly concerning given that Indian manufacturers have also been supplying ACC systems to global customers, indicating their competitiveness on the international stage.

This representation comes in the wake of the government's decision in March to exempt ACC systems from registration under Rule 144(xi) of the General Financial Rules, 2017. This rule, framed by the Department of Expenditure, restricts participation in government procurement by companies from countries sharing a land border with India on defense and national security grounds. The exemption for ACC systems raises questions about the government's commitment to supporting domestic manufacturing and protecting local industries from foreign competition, particularly from China, which has been a focal point of trade tensions and security concerns in recent years.

The ACC manufacturers have pointed out that the exemption comes at a time when India is planning to add 80 GW of thermal power capacity, which is expected to require nearly 100 ACC units over the coming years. They argue that competition from Chinese suppliers could discourage further investment and jeopardize the substantial investments already made in domestic manufacturing. This concern is not unfounded, as the Indian manufacturing sector has been striving to enhance its capabilities and reduce dependency on foreign suppliers, especially in critical sectors like energy.

In a separate representation to DPIIT, the companies sought intervention under Clause 10(d) of the Public Procurement (Preference to Make in India) Order to safeguard India's strategic manufacturing capability in the ACC sector. This clause allows the government to take reciprocal measures against countries that do not provide Indian companies with fair and equitable access to public procurement opportunities. The ACC manufacturers argue that extending procurement access to suppliers from China places Indian manufacturers at a significant disadvantage, especially since Indian companies often do not receive similar access to public procurement in China.

The implications of this situation extend beyond just the ACC manufacturing sector. The broader context involves India's efforts to enhance its energy security and self-reliance in critical infrastructure. The push for local manufacturing aligns with the government's "Make in India" initiative, which aims to boost domestic production, create jobs, and reduce the trade deficit. However, allowing foreign companies to compete in government contracts without stringent scrutiny could undermine these objectives, leading to a potential loss of jobs and investment in the Indian manufacturing sector.

Moreover, the geopolitical landscape has shifted significantly in recent years, with increasing scrutiny of China’s role in global supply chains and national security concerns. The Indian government has been cautious about foreign investments and participation in sensitive sectors, particularly in light of recent border tensions and trade disputes. The call for a review of the exemption reflects a growing sentiment among Indian manufacturers that the government must prioritize domestic capabilities and protect local industries from unfair competition.

As the Indian continues to recover from the impacts of the COVID-19 pandemic, ensuring a robust domestic manufacturing base will be crucial for sustainable growth. The thermal power sector, being a backbone of the country's energy infrastructure, necessitates a careful balance between fostering competition and protecting local industries. The manufacturers' appeal to the PMO and relevant ministries is indicative of the ongoing struggle between domestic manufacturers and foreign suppliers in a rapidly evolving landscape.

In conclusion, the request for a review of the exemption allowing Chinese firms to bid for thermal power contracts highlights the complexities of balancing foreign competition with the need to bolster domestic manufacturing capabilities. As India aims to expand its thermal power capacity, the decisions made in the coming months will have lasting implications for the ACC manufacturing sector, energy security, and the overall health of the Indian . The outcome of this situation will likely serve as a litmus test for the government's commitment to supporting local industries in an increasingly competitive global market.