India’s transmission and distribution (T&D) sector is poised for sustained long-term growth, supported by an estimated capital expenditure of approximately ₹9 trillion through 2032, according to a report by Motilal Oswal Financial Services. Despite a temporary slowdown in ordering activity during FY26, the sector’s overall outlook remains positive, driven by strong domestic demand, expanding global opportunities, and continued infrastructure investments.
The report highlights that the ongoing T&D capex cycle, which began in FY22–23, has already resulted in significant growth in order books, revenues, and margin profiles for industry participants. It notes that the value chain “continues to benefit from a robust capex outlay of ₹9 trillion until 2032,” reinforcing confidence in the sector’s long-term trajectory.
However, near-term ordering activity has moderated. The report points out that only 16 schemes were awarded in FY26 compared to 45 schemes in FY25. This decline is attributed to temporary bandwidth constraints rather than any structural slowdown in demand. High capacity utilisation among domestic manufacturers and extended lead times, particularly for high-voltage transformers, have contributed to the slowdown. These transformers require longer manufacturing cycles and rigorous testing timelines, further delaying project execution.
Despite these challenges, the brokerage maintains that the growth cycle has further headroom over the next few years. Capacity expansion initiatives and sustained demand from both domestic and international markets are expected to support continued momentum.
The report also references India’s National Electricity Plan, which outlines an ambitious investment roadmap of approximately ₹9 trillion in transmission infrastructure. This investment is largely driven by the need to integrate large-scale renewable energy into the grid, which has already led to a structural acceleration in order inflows in recent years.
On the demand side, strong momentum persists across both domestic and export markets. However, transformer supply has struggled to keep pace, resulting in extended lead times and creating a favourable pricing environment for manufacturers.
Globally, transformer demand is witnessing a historic surge, particularly in the United States and Europe. This increase is being driven by renewable energy integration, rapid expansion of data centres, industrial electrification, electric vehicle charging infrastructure, and the urgent need to replace aging grid assets. The resulting demand-supply mismatch has led to higher reliance on imports and elevated transformer prices.
This global scenario presents a significant opportunity for Indian manufacturers, who are increasingly emerging as key players in global OEM supply chains. The report notes that domestic companies are benefiting from India’s growing role as a manufacturing hub within international feeder factory networks.
Additionally, the report identifies emerging opportunities in high-voltage direct current (HVDC) projects. Out of a total pipeline of 32.3 GW, approximately 14.5 GW has already been tendered and awarded. Going forward, one to two HVDC project awards are expected annually, further strengthening the sector’s growth outlook.
Looking ahead, the report projects strong earnings growth for transformer manufacturers over FY25–FY28. While it cautions that current valuations are no longer inexpensive, it adds that potential earnings upgrades and expanding export opportunities could sustain investor interest and support valuations in the medium term.
