India's electrical equipment output may hit $235B by 2035: Report

A McKinsey report predicts India's electrical equipment sector could grow to $235B by 2035. It calls for a five-fold increase in domestic manufacturing to curb rising import dependence, which could otherwise exceed 70% and cause a $130B shortfall.

India's electrical equipment industry could witness transformational growth over the next decade, driven by rapid expansion in high-growth segments, increasing domestic manufacturing capacity, and a sharp reduction in import dependence, according to a report by McKinsey & Company.

Projected Growth and Market Expansion

The report, titled 'Wired for Growth: India's Electrical Equipment Opportunity', said the country's domestic electrical equipment production could potentially rise to USD 195-235 billion by 2035 from around USD 50 billion in 2025.

The report noted that domestic consumption of electrical equipment could grow to USD 170-205 billion by 2035, while exports may exceed USD 60 billion as India strengthens its global manufacturing footprint.

According to the report, India's electrical equipment industry is expected to grow at an annual rate of 11-13 per cent through 2035, supported by increasing electrification, renewable energy adoption, power electronics demand, and export opportunities.

"In sectors such as IT services and auto components, India has already demonstrated that global leadership is achievable when policy, entrepreneurship, and innovation align. 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," said Amit V Gupta, Senior Partner at McKinsey & Company and co-author of the report.

Curbing Import Dependence and Need for Localisation

The report highlighted that India's electrical equipment market has expanded rapidly in recent years, with domestic consumption reaching USD 59 billion in FY2025 after growing at an 11 per cent compound annual growth rate (CAGR) over the last five years. However, rising demand has also increased import dependence from 22 per cent in 2020 to 33 per cent in 2025.

McKinsey warned that under a "business-as-usual" scenario, import dependence could exceed 70 per cent by 2035, potentially leading to a production shortfall of more than USD 130 billion. To avoid this, the report recommended a five-fold expansion in domestic manufacturing capacity, especially in segments such as power electronics, batteries, air-conditioner compressors, solar photovoltaic cells and modules, transformers, and cables and wires.

The report said four segments -- power electronics, batteries, solar PV, and subcomponents -- present major localisation opportunities that could significantly reduce import dependence. It projected that India could lower overall import dependence from 33 per cent currently to less than 14 per cent by 2035 through aggressive localisation efforts and capacity expansion.

"Business-as-usual will not be enough. Without a step-change in domestic manufacturing, India could face a USD 130 billion production shortfall and import dependence above 70 per cent by 2035. Avoiding this outcome will require a five-fold expansion in domestic capacity, especially in power electronics, AC compressors, and the solar value chain," said Bhavesh Mittal, Partner at McKinsey & Company and co-author of the report.

Future Drivers and Global Opportunities

The report also identified high-growth segments such as renewable energy equipment, subsea and high-speed rail cables, grid stabilisation technologies, power electronics, and power software as major future drivers. It estimated that renewable energy equipment and high-end cables alone could represent a global opportunity of USD 350-400 billion by 2035, while the global power electronics market could exceed USD 140 billion.

The report called for coordinated efforts among policymakers, industry leaders, and investors to strengthen cost competitiveness, technology capabilities, research and development, and export infrastructure in order to position India as a globally competitive electrical equipment manufacturing hub. (ANI)

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