India’s electrical equipment industry could emerge as a $235-billion manufacturing opportunity by 2035, driven by rising power demand, renewable energy expansion, grid modernisation and electrification, but the country risks a production shortfall exceeding $130 billion and import dependence rising above 70% without a rapid domestic manufacturing scale-up by 2035, according to a report by McKinsey & Company.
The report comes at a time when India is witnessing record electricity demand, rapid renewable energy capacity addition, large-scale transmission expansion and accelerating investments in electric mobility, battery storage and industrial electrification.
India’s domestic electrical equipment consumption has already reached around $59 billion in FY25, growing at an annual rate of 11% over the past five years. However, import dependence has simultaneously surged from 22% in 2020 to 33% in 2025, highlighting the widening gap between domestic demand growth and manufacturing capability.
According to the report, India’s domestic production currently stands at around $50 billion, while the country imported nearly one-third of its electrical equipment requirement in FY25.
McKinsey estimates India’s domestic electrical equipment production could rise to $195-235 billion by 2035, while domestic consumption may increase to $170-205 billion as electricity infrastructure investments accelerate across the economy.
Exports could cross $60 billion by 2035, enabling India to capture nearly 5% of global electrical equipment trade, the report said.
The sector is expected to grow at a compound annual growth rate (CAGR) of 11-13% over the next decade, supported by transmission expansion, renewable energy integration, energy storage deployment and rising electrification across transport, buildings and industry.
$130 Billion Shortfall
India’s transmission infrastructure requirement alone is rising sharply. The country plans to add tens of thousands of circuit kilometres of transmission lines by FY30 to support its target of achieving 500 GW of non-fossil fuel capacity by 2030, significantly increasing demand for transformers, switchgear, cables, conductors and power electronics.
The report warned that without substantial domestic manufacturing expansion, India could face a production gap exceeding $130 billion by 2035, forcing import dependence to rise above 70% in critical electrical equipment categories.
High-growth segments such as renewable energy equipment, advanced cables and power electronics could together represent a global market opportunity exceeding $500 billion by 2035, creating a major export opportunity for Indian manufacturers.
Domestic consumption of power electronics alone could exceed $17 billion by 2035, the report noted.
McKinsey said India could sharply reduce import dependence from around 33-34% currently to below 14-17% through aggressive localisation across key segments including batteries, solar PV cells and modules, power electronics and critical sub-components.
Overcoming Raw Material Bottlenecks
The report identified heavy dependence on imported raw materials and sub-components, limited backward integration, manual manufacturing processes and imported production equipment as some of the biggest constraints facing the sector.
It also highlighted the need for large-scale investments in electrical steel, precision manufacturing, automation, smart grid technologies and workforce upskilling to improve competitiveness.
“In sectors such as IT services and auto components, India has already demonstrated that global leadership is achievable when policy, entrepreneurship and innovation align,” said Amit V Gupta, Senior Partner at McKinsey & Company and co-author of the report.
“Adapting a similar approach to the electrical equipment sector could support the country’s transition from being a major consumer of electricity to becoming a significant player globally in the technologies that enable its delivery,” he added.
The report said India has already started gaining export competitiveness in select segments. Indian manufacturers currently account for nearly 20% of non-European transformer imports into the UK market.
“Business-as-usual will not be enough,” said Bhavesh Mittal, Partner at McKinsey & Company and co-author of the report.
“Without a step-change in domestic manufacturing, India could face a $130 billion production shortfall and import dependence above 70% by 2035,” he said.