Kanohar Electricals

Transmission capacity must expand ahead of generation because new renewable parks, industrial corridors and load centres require evacuation infrastructure and grid stability. The National Electricity Plan therefore creates a large multi-year equipment and EPC opportunity across lines, substations, transformation capacity and inter-regional links, supporting sustained demand for power transformers and reactors.

The key drivers are:

• Transmission network: India's 220 kV-and-above transmission-line network increased from roughly 413,407 circuit km in FY19 to about 494,374 circuit km by March 2025 and is projected to reach approximately 659,000 circuit km by FY32

• Transformation capacity: 220 kV-and-above transformation capacity increased from about 900 GVA in FY19 to approximately 1,349 GVA in FY25 and is projected at roughly 2,377 GVA by FY32

• Investment requirement: The industry report cites transmission investment of approximately INR 425,220.0 Cr for FY22-FY27 and INR 490,920.0 Cr for FY27-FY32, aggregating to roughly INR 916,140.0 Cr.

• Inter-regional capacity: Inter-regional power-transfer capacity is planned to increase from about 112,250 MW in 2022 to approximately 167,540 MW by 2032, requiring additional high-voltage equipment and substations

Renewable capacity changes the engineering requirement of the grid because generation is geographically dispersed and variable. Large solar/wind additions require evacuation lines, pooling substations, reactive-power compensation, higher transformation capacity and more sophisticated grid-control equipment. This directly supports demand for high voltage transformers, shunt reactors, GIS and turnkey transmission solutions.

The key drivers are:

• Non-fossil target: India is targeting 500 GW of installed non-fossil-fuel capacity by 2030, materially increasing the volume of new generation that must be connected to the transmission system

• RE integration plan: The transmission plan incorporates approximately 278 GW of additional renewable capacity and requires around 50,890 circuit km of lines and 433,575 MVA of transformation capacity

• Green-transmission investment: CareEdge cites approximately INR 244,000.0 Cr of transmission investment linked to renewable-energy integration and associated grid strengthening

• Green Energy Corridors: Phase I covers about 9,767 circuit km and 22,689 MVA for 24 GW of RE, while Phase II targets roughly 10,750 circuit km and 27,500 MVA for 20 GW, with Phase II project cost around INR 12,031.0 Cr.

Transformer demand is rising with grid expansion, but the more important value driver is the shift toward higher ratings and specialised applications. EHV systems require larger engineering content, rigorous type/short-circuit testing and stronger execution credentials. These qualification barriers can support pricing and margin differentiation for manufacturers able to address 400 kV-class power transformers, reactors and railway-specific designs.

The key drivers are:

• Total transformer market: India's transformer market is estimated to increase from approximately USD 4.9 Bn in CY25 to about USD 6.8 Bn by CY30, implying roughly 6.7% CAGR

• Power-transformer market: The Indian power-transformer segment is projected to grow from approximately USD 2.25 Bn in CY24 to USD 3.66 Bn by CY30, an approximately 8.4% CAGR

• EHV mix: The 400 kV transformer market is projected from roughly USD 524.2 Mn in CY24 to USD 891.5 Mn by CY30, while 765 kV-and-above transformers are projected from about USD 84.0 Mn to USD 140.6 Mn

• Shunt reactors: The Indian shunt-reactor market is projected to increase from approximately USD 871.8 Mn in CY24 to USD 1,155.4 Mn by CY30 as long-distance lines and renewable integration increase reactive-power management needs

The transmission-equipment cycle has strong structural demand, but it remains exposed to tender timing, commodity inputs, long qualification cycles and project execution. Large power transformers are engineered-to-order products with long manufacturing lead times, and utilities frequently require bank guarantees, inspection, retention and milestone billing. Sector profitability can therefore diverge from order-book growth when copper/CRGO prices, supplier credit, testing schedules or project clearances move unfavourably.

The key risks are:

• Raw-material availability and pricing: Copper, CRGO electrical steel, transformer oil and fabricated components are major cost inputs; CRGO remains import-sensitive and global shortages can delay deliveries or compress margins

• Working-capital intensity: Utility/EPC orders require inventory funding, performance guarantees, margin deposits and milestone receivables; high order growth can therefore absorb cash even when reported profitability is strong

• Tender and project-cycle risk: Award schedules, right-of-way, land, approvals and site readiness can delay transmission projects, shifting equipment deliveries and revenue recognition across periods

• Qualification / testing risk: Short-circuit testing, vendor registration, RDSO approvals and utility-specific qualification requirements take time and capital; failure or expiry can restrict bidding eligibility for high-value orders

• Competitive capacity additions: Major incumbents are expanding aggressively; the report cites around INR 2,100.0 Cr of planned Hitachi Energy India investment, INR 712.0 Cr for CG Power's new transformer plant and INR 460.0 Cr of Siemens expansion

• Execution and warranty exposure: Large transformers and GIS are mission-critical assets. Design defects, testing failures, delivery delays, liquidated damages or warranty claims can have disproportionate effects on project margins and reputation

Government support is primarily demand-led through grid expansion, renewable integration, distribution reform, railway electrification and quality/testing infrastructure rather than a direct subsidy to individual transformer manufacturers. The policy framework increases the addressable project pipeline while also raising technical and localisation expectations for suppliers.

The key policies are:

• National Electricity Plan: The transmission plan supports approximately INR 916,140.0 Cr of investment across FY22-FY32, creating long-duration demand for lines, substations, transformers, reactors and GIS

• Green Energy Corridor: GEC-I and GEC-II fund dedicated transmission for renewable-rich states; GEC-II has a project cost of about INR 12,031.0 Cr with 33% central financial assistance

• Revamped Distribution Sector Scheme (RDSS): The INR 300,000.0 Cr scheme supports loss reduction, smart metering and distribution-system strengthening, indirectly driving replacement and modernization demand for transformers and switchgear

• Railway / metro electrification: Continued railway electrification and metro expansion create demand for traction and Scott-connected transformers, substations and associated EPC; RDSO certification serves as a formal qualification mechanism

• Domestic manufacturing / specialty steel: Make in India and policy initiatives for domestic specialty steel/CRGO capacity are intended to reduce import dependence in a critical transformer input and strengthen local electrical-equipment supply chains

• Testing and standards ecosystem: CPRI/NHPTL short-circuit testing, BIS/CEA standards and utility vendor-registration requirements improve product reliability while favouring manufacturers with certified high-rating designs and established track records

• Electricity Act / grid-modernisation policy: The Electricity Act, Tariff Policy and CEA safety/technical regulations support investment in grid efficiency and modern equipment, including higher-specification GIS and automated switchgear