India’s expanding power transmission network and rising demand from data centres are expected to create significant growth opportunities for the engineering and capital goods sector, with High-Voltage Direct Current (HVDC) technology emerging as a key driver, according to a report by 360 ONE Capital.
The report highlighted that India’s HVDC capacity is expected to increase from 34.5 GW in FY27 to 55 GW by FY32, with an additional 78 GW of HVDC pipeline identified by the Central Electricity Authority (CEA) until FY36.
The expansion of renewable energy integration, grid modernisation and rising electricity demand from data centres are expected to support demand for power equipment in the coming years. However, project delays, higher input costs and uncertainty surrounding global investment in artificial intelligence infrastructure could affect the pace of growth.
According to the report, HVDC projects are becoming increasingly important as India expands its transmission infrastructure to integrate renewable energy and strengthen the power grid. The sector’s relatively concentrated supplier base and the successful execution of projects are also important factors for manufacturers seeking to qualify for future orders.
Data centres are expected to provide another source of demand for the sector. India’s existing data centre capacity remains below 2 GW, while capacity is projected to reach 13–18 GW by 2030, the report said. These facilities require reliable power supply and advanced grid equipment, including transformers, switchgear and grid management systems.
The report estimated that equipment suppliers could address a meaningful share of data centre investment, creating additional opportunities alongside conventional transmission projects. Rising electricity demand and the expansion of digital infrastructure could further broaden the sector’s growth drivers beyond traditional utility spending.
Manufacturing capacity expansion and increased domestic production of specialised transmission equipment are also expected to support sector growth. The report noted that the localisation of high-voltage equipment could reduce dependence on imports and improve supply-chain control.
However, the sector faces several risks. Delays in large project awards and execution could affect revenue timing, while rising commodity prices may put pressure on margins, particularly where contracts do not fully protect manufacturers against higher input costs. Uncertainty surrounding export orders and global data centre investment could also influence near-term performance.
The report stated that the scale and timing of transmission projects, progress in domestic manufacturing and continued investment in data centres would be important factors in determining how effectively the engineering and capital goods sector capitalises on these emerging opportunities.
