(EnergyAsia, October 25 2013, Friday) — China’s producers of power equipment and parts are expected to increase their presence and establish plants in India as the two countries look to expand bilateral ties and trade with each other.

Amid its worst power supply crisis, India’s economy is slowing down and scaring off investors including many of its own business groups. Chinese companies are continuing to expand abroad and have identified India as an important market for long-term expansion.

Business groups from both countries are expecting to close major deals following the successful visit to Beijing by India’s Prime Minister Manmohan Singh to meet with his Chinese counterpart Li Keqiang to sign a new border agreement to reduce the risk of conflict.

The two governments also signed eight agreements to expand bilateral ties including energy cooperation and trade.

An agreement signed by Wu Xinxiong, head of China’s National Energy Administration (NEA), and India’s Power Ministry will pave the way for Chinese power companies to invest in India which could help alleviate its electricity supply crisis.

Describing it as a “landmark” deal, Indian officials expect the production and supply of critical equipment and parts in their country will help local power companies upgrade and expand their aging plants.

Chinese firms supply many vital components in the operation of 18GW of thermal power plant capacity in India, with another 40GW being built to use Chinese equipment and services.

Chinese firms would be welcomed to produce the components and parts in India as this would help reduce supply cost and increase their ability to respond to customers’ needs, said Montek Singh Ahluwalia, deputy chairman of India’s powerful Planning Commission.

He expects leading Chinese players like Shanghai Electric and Dongfang Electric to establish service centres and eventually manufacturing plants in India that would contribute to increased economic ties between the two countries.