Bharat Heavy Electricals Ltd (BHEL) and China's Tebian Electric Apparatus Stock Co Ltd (TBEA) are in talks to manufacture equipment in India, according to the Mint newspaper.
The paper quoted BHEL chairman B P Rao as saying that the Chinese company was interested in working with BHEL.
TBEA manufactures electric power transformers of up to 1,000 KV while BHEL has the technology to make equipment of up to 400 KV, according to the paper.
The paper said a tie-up between the two would allow BHEL to compete with companies like Siemens AG and ABB Ltd in the high-voltage segment.
TBEA is China's largest manufacturer of high-voltage transformers that are used in the power transmission sector.
According to reports, the talks may result in the first India-China public sector undertaking in the power equipment business.