India’s Power Transmission Sector to See INR 9T Capex by 2032
According to a report by Motilal Oswal Financial Services, India's power transmission and distribution sector is poised for a continual growth phase, supported by an anticipated capital expenditure of approximately INR 9 trillion until 2032.
Despite temporary limitations leading to a decline in ordering activity in FY26, the sector is expected to see significant development in the near future.
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According to the report, the transmission and distribution (T&D) value chain will continue to experience significant financial investments totaling INR9t until the year 2032.
The report also notes that the T&D capex cycle, which commenced in the financial year 2022-2023, has already resulted in substantial growth in order books, revenue, and profit margins for industry stakeholders.
The report emphasized the short-term decrease in activity by pointing out that there were fewer sector-level orders in FY26 (16 schemes awarded) compared to FY25 (45 schemes awarded). This decline was mainly attributed to temporary limitations in bandwidth rather than any long-lasting decrease in demand.
Domestic producers are currently running at full capacity and are placing greater emphasis on the production of higher-voltage transformers. This shift involves longer manufacturing processes and testing schedules, resulting in extended lead times.
Nevertheless, the brokerage expressed an optimistic perspective by stating that there is still potential for the cycle to persist in the coming years, thanks to increases in production capacity and robust demand from both local and international markets.
The report elaborated on India's National Electricity Plan, which details an ambitious investment strategy of approximately INR 9 trillion in transmission infrastructure. This plan is primarily focused on enhancing the integration of large-scale renewable energy sources, resulting in a notable increase in orders in recent years.
In reference to current market trends, it observed that there is a sustained high demand from both local and international markets, leading to challenges in meeting transformer supply requirements. Consequently, this has resulted in extended delivery timelines and a conducive climate for producers.
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The report emphasizes that there is a significant increase in transformer demand in the US and Europe, driven by factors such as renewable energy integration, expansion of data centers, industrial electrification, development of electric vehicle charging infrastructure, and the pressing need to upgrade aging infrastructure.
This surge in demand has resulted in a shortage of supply, leading to a greater dependence on imports and higher transformer prices. It was noted that Indian businesses have a unique opportunity, given that local manufacturers are gaining advantages from India's increasing involvement as a manufacturing hub in global OEM feeder factory networks. The report highlighted potential opportunities in high-voltage direct current (HVDC) projects, noting that approximately 14.5 GW of a 32.3 GW pipeline has already been tendered and awarded.
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It anticipated the issuance of one to two HVDC project awards per year in the future. The report anticipates that major industry leaders will maintain robust profit expansion from fiscal year 2025 to 2028, while also noting that current market values are no longer considered inexpensive. Nevertheless, it suggested that the potential for additional salary enhancements and the emergence of export prospects could uphold these assessments, demonstrating ongoing investor intrigue in the industry.