India’s electrical equipment industry could witness unprecedented growth over the next decade, driven by rising electricity demand, rapid electrification, renewable energy expansion, and strong global export opportunities, according to a new report released by McKinsey & Company in collaboration with the Indian Electrical and Electronics Manufacturers Association (IEEMA).
The report, titled “Wired for Growth: India’s Electrical Equipment Opportunity”, projected that India’s domestic electrical equipment production could rise to between USD 195 billion and USD 235 billion by 2035. In comparison, the country’s production currently stands at nearly USD 50 billion in 2025.
The report said India is entering a phase where electricity demand is expected to rise sharply because of urbanisation, industrial growth, electric vehicles, renewable energy projects, data centres, air-conditioner usage, and digital infrastructure. At the global level too, power consumption is expected to more than double by 2050, crossing 60,000 terawatt-hours. This is likely to create huge opportunities for electrical equipment manufacturers worldwide.
According to McKinsey, India has the potential to emerge as a globally competitive manufacturing powerhouse if it strengthens domestic production, improves technology capabilities, and reduces import dependence.
The report estimated that domestic consumption of electrical equipment in India could rise to USD 170-205 billion by 2035. At the same time, exports could cross USD 60 billion as India expands its global footprint in sectors such as cables and wires, transformers, solar photovoltaic equipment, switchgears, batteries, and power electronics.
It projected that the sector could grow at an annual rate of 11-13 percent through 2035. The fastest growth is expected in areas such as power electronics, batteries, grid management systems, renewable energy equipment, and energy storage technologies.
Amit V Gupta, Senior Partner at McKinsey & Company and co-author of the report, said India has already shown in sectors like IT services and auto components that it can become a global leader when policy support, innovation, and entrepreneurship work together.
“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,” he said.
The report highlighted that India’s electrical equipment market has already grown significantly over the past five years. Domestic consumption reached nearly USD 59 billion in FY2025 after recording an 11 percent compound annual growth rate between 2020 and 2025.
However, the report also warned about rising import dependence. According to the findings, India’s import dependence in electrical equipment increased from 22 percent in 2020 to 33 percent in 2025.
McKinsey warned that if India continues on a “business-as-usual” path, import dependence could cross 70 percent by 2035. This could create a production shortfall of more than USD 130 billion and potentially turn electrical equipment into one of India’s largest import categories, rivaling oil and gas imports.
To avoid such a situation, the report recommended a five-fold expansion in domestic manufacturing capacity by 2035. It stressed the need for major investments in power electronics, batteries, air-conditioner compressors, transformers, solar photovoltaic cells and modules, and cables and wires.
Power electronics was identified as one of the biggest opportunities for localisation. According to the report, the segment is currently more than 90 percent dependent on imports. Domestic production in the segment is still limited, despite growing demand from electric vehicles, charging infrastructure, renewable energy projects, and data centres.
The report said India could significantly improve its position by developing domestic semiconductor manufacturing ecosystems, especially in advanced technologies such as silicon carbide and gallium nitride devices.
Battery manufacturing was identified as another major growth segment. India’s battery market currently has import dependence of more than 60 percent, but domestic production could increase substantially through Production Linked Incentive (PLI) schemes and lithium-ion cell manufacturing expansion.
Solar photovoltaic manufacturing was also highlighted as a strategic opportunity. Import dependence in solar cells and modules currently stands at around 40 percent. The report suggested that India could reduce this sharply by building stronger domestic capabilities across silica mining, ingot manufacturing, wafer production, cells, and modules.
Bhavesh Mittal, Partner at McKinsey & Company and co-author of the report, said India cannot rely on current manufacturing levels if it wants to avoid large-scale import dependence in the future.
“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,” he said.
The report further stated that India already has strong export potential in sectors like cables and wires, transformers, switchgears, solar photovoltaic modules, and generators. India exported nearly USD 12 billion worth of electrical equipment in FY2024.
Still, India’s share in the global electrical equipment trade remains very small. According to the report, China currently controls nearly 30 percent of the global electrical equipment export market, while India accounts for less than 2 percent.
The report states India can increase its global market share by improving cost competitiveness, product quality, certification standards, and supply chain efficiency.
The report also pointed out that Indian electrical equipment manufacturers remain costlier than Chinese competitors in several categories. Indian exports are currently priced 10-20 percent higher in some segments, mainly because of import dependence on raw materials, higher logistics costs, and lower automation levels.
Greater use of advanced manufacturing technologies, automation, AI-based quality control systems, and domestic supplier development can help overcome this. It also called for stronger industry-academia collaboration and more investment in research and development.
The report noted that research and development spending among Indian electrical equipment companies remains less than 0.5 percent of revenues, compared to 1.5-2 percent among Chinese firms.
India also has a major opportunity in emerging sectors such as renewable energy equipment, grid stabilisation technologies, subsea cables, high-speed rail cables, power software, and smart grid systems.
The report estimated that renewable energy equipment and high-end cables alone could create a global market opportunity worth USD 350-400 billion by 2035. Meanwhile, the global power electronics market could cross USD 140 billion, while power software could exceed USD 260 billion.
It further stated that India has a strong talent base in software and semiconductor design, which could help the country emerge as a leader in power software and advanced power electronics technologies if supported by policy and investments.
The report concluded that India now stands at a critical point where coordinated action between industry leaders, policymakers, manufacturers, and investors could transform the country into a major global electrical equipment manufacturing hub.
According to McKinsey, a long-term industrial strategy focused on manufacturing expansion, localisation, exports, innovation, and clean energy technologies could help India reduce import dependence while creating jobs, boosting exports, and strengthening energy security.
The report pointed towards Production Linked Incentive (PLI) schemes, localisation efforts, domestic supplier ecosystem development, and coordinated industrial policies as key drivers that align closely with the broader ‘Make in India’ vision of turning India into a global manufacturing hub.
