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Domestic Production Set for Major Leap
McKinsey & Company's report, 'Wired for Growth: India's Electrical Equipment Opportunity', projects a substantial increase in India's domestic electrical equipment output. Production could climb to between $195 billion and $235 billion by 2035, a significant rise from an estimated $50 billion in 2025. The report also anticipates domestic consumption reaching $170 billion to $205 billion in the same period, with exports potentially exceeding $60 billion.
Key Factors Driving Expansion
The sector's growth, forecast at 11-13% annually until 2035, is fueled by several factors including increased national electrification, a faster shift to renewable energy sources, growing demand for power electronics, and strong export prospects. McKinsey notes India's past success in sectors like IT services and auto components as a sign of its potential in electrical equipment manufacturing.
Tackling Rising Import Dependence
While domestic consumption has grown to $59 billion in FY2025, the report points to rising import reliance, expected to increase from 22% in 2020 to 33% in 2025. McKinsey warns that without action, imports could surpass 70% by 2035, leading to a production shortfall of over $130 billion. To counter this, the report recommends a five-fold expansion in domestic manufacturing for key items like power electronics, batteries, air-conditioner compressors, solar photovoltaic cells and modules, transformers, and cables.
Strategic Localization Potential
McKinsey identifies segments such as power electronics, batteries, solar PV, and various subcomponents as prime opportunities for localization, which could significantly reduce import dependency. The report estimates that aggressive localization can lower overall import reliance to under 14% by 2035. Bhavesh Mittal, a McKinsey partner and co-author, stated that current approaches are inadequate and a substantial boost in domestic capacity is essential.
Future Growth Opportunities
Emerging areas poised for growth include renewable energy equipment, high-end cables for specialized applications like subsea and high-speed rail, grid stabilization technology, and power software. The renewable energy equipment and high-end cables market alone could present a global opportunity of $350-$400 billion by 2035. The report advocates for collaboration among policymakers, industry players, and investors to improve cost competitiveness, technological capabilities, R&D, and export infrastructure, aiming to establish India as a global manufacturing hub for electrical equipment.