The government's decision to allow four Chinese entities with manufacturing facilities in India to participate in critical power transmission projects is expected to improve equipment availability without materially altering the sector's favourable outlook. With strict localisation requirements mandating 50-60% domestic content and restrictions on direct imports, the move is aimed at addressing supply bottlenecks rather than intensifying price competition.
The transmission sector continues to benefit from robust demand and persistent supply constraints, particularly in the extra-high-voltage (EHV) transformer segment. Transformers have emerged as the key bottleneck in project execution, delaying the commissioning of substations despite the availability of other equipment. Improved domestic manufacturing capacity is therefore expected to ease execution delays across the broader transmission value chain, benefiting suppliers of switchgear, automation systems and other grid equipment alongside transformer manufacturers.
