India’s expanding power grid and data centre demand could boost capital goods production, a 360 ONE Capital report says.
What Is Driving Growth in India’s Capital Goods Sector?
India’s expanding electricity transmission network, increasing renewable energy integration and rising demand from data centres are expected to create opportunities for engineering and capital goods manufacturers.
According to 360 ONE Capital, grid modernisation and growing electricity requirements could sustain demand for advanced power equipment over the coming years.
The report identified High-Voltage Direct Current (HVDC) technology as an important growth driver, particularly as India strengthens its transmission infrastructure to accommodate renewable energy.
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How Much Could India’s HVDC Capacity Increase?
India’s HVDC capacity is projected to rise from 34.5 gigawatts in FY27 to 55 gigawatts by FY32. The report also highlighted a further 78 gigawatts of HVDC projects identified by the Central Electricity Authority for development through FY36.
These projects are expected to strengthen transmission infrastructure and support renewable energy integration.
However, the report noted that the sector has a relatively concentrated supplier base, making project execution important for manufacturers seeking future orders.
Why Are Data Centres Important?
Data centres represent another potential source of demand for electrical equipment manufacturers. India’s existing data centre capacity remains below 2 gigawatts, while the report projects capacity of 13 to 18 gigawatts by 2030.
Such facilities require reliable electricity supplies, transformers, switchgear and advanced grid management systems. The resulting equipment requirements could create additional business opportunities beyond conventional electricity transmission projects.
Can Domestic Manufacturing Support Expansion?
Greater domestic production of specialised transmission equipment could strengthen India’s capital goods industry. The report suggested that local manufacturing of high-voltage equipment could reduce dependence on imports while improving supply-chain control. Expanding manufacturing capacity would also help suppliers address demand arising from transmission infrastructure and data centre investments.
However, manufacturers’ ability to secure future contracts will depend partly on successfully executing existing projects.
What Risks Could Affect Future Growth?
Despite the favourable outlook, the report identified several uncertainties that could affect revenue and profitability. Delays in project awards and execution could postpone revenue, while rising commodity prices may increase manufacturing costs and reduce margins.
Uncertainty surrounding export orders and international investment in artificial intelligence infrastructure could also influence near-term performance.
The report concluded that project timelines, domestic manufacturing progress and sustained data centre investment would determine how effectively the industry benefits from expanding infrastructure demand.
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