BHEL, Thermax, GE Power may be hit as govt eases pollution control norm for coal plants

Companies like BHEL, Thermax, L&T Power, ISGEC Heavy Engineering, GE Power, Techno Electric, and Power Mech are likely to take a hit after the government unexpectedly eased a decade-old mandate requiring coal-based power plants to install Flue-Gas Desulphurization (FGD) systems, a key air pollution control technology.

The move, announced via a notification by the Union Ministry of Environment, Forest and Climate Change (MoEF&CC) on July 12, 2025, is set to drastically shrink the addressable market for FGD players and casts doubt over the execution of existing order books.

Under the new rules, thermal power plants located outside a 10-km radius of cities with populations of over 1 million are now exempt from installing FGDs.

These plants account for around 79% of India’s operational thermal capacity.

For plants within the 10-km radius, implementation will be evaluated case by case.

The original FGD installation deadline of December 2027 remains mandatory for plants in the NCR and 1 million+ cities.

This marks a sharp departure from the earlier blanket requirement introduced nearly a decade ago, which mandated FGD installation across all coal-based units to reduce sulphur dioxide emissions and improve air quality.

The sudden policy dilution has left engineering companies exposed, with large investments, bids, and project execution plans now at risk.

In its Q4 FY25 earnings call, Thermax, which has an FGD order book of ₹467 crore, said, "The FGD space has become messy; projects are not happening... FGD has been a bloodbath for everyone."

Of its current orders, only ₹350 crore is expected to materialise in FY26.

Similarly, Techno Electric has an FGD backlog of ₹1,450 crore and had been targeting ₹500 crore in revenue from this vertical in FY26, as part of its overall guidance of ₹3,500 crore. That projection now appears uncertain.

Beyond these two, listed players such as BHEL, L&T Power, ISGEC, GE Power, and Power Mech are also expected to face near-term pressure, as opportunities in the FGD segment dry up and project viability comes under question.