India is significantly accelerating its power infrastructure development, adding 4-5 GW of capacity monthly to augment the current power capacity of 514 GW. This rapid expansion comes as national power demand is expected to double by 2040, with the country recently achieving notable milestones by successfully meeting peak power demand of 250 GW during solar hours and 237 GW during non-solar hours.

Smart Meter Initiative and Policy Developments

Union Minister of Power and Housing & Urban Affairs Manohar Lal Khattar announced that India has transitioned from addressing power shortages to ensuring universal energy access. A major component of this transformation includes the nationwide rollout of smart meters with an outlay of $3.03 trillion, specifically designed to reduce losses for distribution companies and help them achieve profitability.

The minister highlighted that the SHANTI Bill will support India's ambitious target of achieving 100 GW nuclear capacity by 2047.

Grid Infrastructure and Renewable Energy Progress

India operates one of the world's largest synchronous grids, featuring an inter-regional transfer capacity of 120 GW. The renewable energy sector has demonstrated remarkable growth, with the country adding over 178 GW of renewable capacity since 2014.

Transmission Infrastructure Expansion

Power Secretary Pankaj Agarwal revealed that India will soon achieve 5 lakh circuit kilometers of transmission lines. The past decade has witnessed substantial infrastructure development with significant additions across multiple categories.

The Power Ministry has identified substantial investment opportunities totaling $345 billion in electricity generation, $68.22 billion in transmission and distribution, and $35 billion in energy storage.

Energy Storage and Future Projects

Under the Inter-State Transmission System (ISTS), renewable energy transmission capacity shows significant progress with 48 GW commissioned, 172 GW under construction, and 18 GW under bidding. The country has identified pumped storage project potential of 258 GW, with 7 GW currently commissioned and more than 17 GW expected to be added by 2030.

To encourage battery storage adoption, India has approved viability gap funding for 43 gigawatt hours. These announcements were made during the curtain-raiser of the Bharat Electricity Summit 2026, scheduled for March 19-22 in New Delhi.

Power sector stocks faced selling pressure amid reports of Chinese firms potentially re-entering the Indian market, but industry analysts suggest the impact may be more limited than feared. Renu Baid Pugalia, Senior Vice President – Research at IIFL Institutional Equities, provided clarity on the situation, noting that while no official government notification has lifted existing restrictions, specific approvals are being granted on a case-by-case basis.

Chinese Participation in Power Transmission Sector

Industry interactions have revealed notable developments in the power transmission and distribution (T&D) space. TBEA, a Chinese manufacturer with manufacturing operations in India since 2014, has reportedly received approval to supply high-voltage reactors to government entities for the next financial year. These components are critical for 400 and 765 kilovolt (kV) high-voltage transmission systems.

The high-voltage transmission segment currently sees active participation from domestic players including Hitachi Energy, GE Vernova T&D, and CG Power. Baid explained that approvals are being granted in the transmission space where players were previously constrained on capacities and average market pricing had increased sharply.

Market Dynamics and Pricing Concerns

Despite the sentiment overhang created by these developments, IIFL does not foresee material impact on earnings or sudden pricing disruptions. The current market environment differs significantly from earlier cycles when Chinese players aggressively undercut prices to gain market share.

Capacity utilization across the transformer and transmission equipment industry remains high, with factories operating at largely full levels. This operational backdrop is expected to prevent the sharp price declines that characterized previous periods of Chinese market entry.

Domestic Capacity Expansion Impact

A more significant factor influencing future market dynamics is the substantial domestic capacity expansion already underway. The transformer industry's manufacturing capacity is expected to nearly double within the next 12 to 15 months, representing a fundamental shift in supply dynamics.

Baid noted that whether TBEA received approval or not, market prices were expected to correct due to this capacity expansion. The domestic industry's growth trajectory suggests that pricing pressures would emerge regardless of Chinese participation, making the capacity expansion a more critical factor than foreign competition.

Current Market Assessment

The analyst emphasized that current restrictions have not been lifted wholesale, with no risk of imports at present. Instead, the development represents a selective approach where Chinese manufacturers with established Indian operations may participate in specific segments where capacity constraints have driven pricing higher.

The power transmission and distribution sector continues to benefit from strong demand fundamentals, while the industry prepares for increased competition from both expanded domestic capacity and selective Chinese participation in coming periods.