Material Insights · Understanding the Material World

Distribution grids, mini-grids and interconnectors and Electrical equipment

Distribution grids are among the largest buyers of transformers, switchgear, cables and meters, so grid spending programmes such as India's RDSS translate directly into order books for electrical equipment makers, while those makers in turn run on grid power.

Distribution grids, mini-grids and interconnectors (energy) and Electrical equipment (industry): 4 relationships.

How they are linked

1. Grid capex buys equipment

Physical flow · Strong · Distribution utilities buy from electrical equipment makers

Building and upgrading local networks means buying distribution transformers, switchgear, cables, conductors and meters, so utility capital spending is demand for the equipment industry.

  • nearly 40% transmission and distribution share of India's electrical equipment market, 2025
  • US$59 billion India's electrical equipment consumption, 2025
  • about US$400 billion world annual grid investment in 2025, which the IEA says must rise about 50% by 2030

In India the main programme is the Revamped Distribution Sector Scheme, whose loss-reduction works include upgrading distribution transformers and substations. Orders follow sanctions with a lag and depend on utilities' finances, so slow execution can delay demand even when funds are approved.

Sources: Saur Energy International; McKinsey and Company; IEA

2. RDSS and smart meters

Policy · High in India · RDSS → meter, transformer and switchgear orders

RDSS pays part of the cost of smart meters and network upgrades, and sets local content rules, so it shapes both the volume and the origin of distribution equipment bought in India.

  • ₹3,03,758 crore RDSS outlay, with ₹97,631 crore of central support
  • 20.33 crore smart meters sanctioned under RDSS by June 2025, against 2.27 crore installed under it
  • 16.16% national AT&C losses, FY2025, down from 21.91% in FY2021

Smart meter installation has run far behind sanctions, which spreads meter orders over several years. Meters must carry 60% domestic value addition, but McKinsey finds over 60% of their subcomponents are still imported, so local assembly has outpaced local component supply.

Sources: Outlook Business; Saur Energy International; McKinsey and Company

3. Equipment costs and lead times

Cost and price · Strong · Equipment prices and queues → grid project costs

Grid components are a large part of network capex, so when transformer and cable prices rise or delivery slows, the cost and timing of grid expansion change with them.

  • nearly doubled prices of key grid components over the past five years (IEA, 2026)
  • about 75% real rise in power transformer prices since 2019
  • up to 4 years procurement time for large power transformers

The IEA figures are mostly for transmission, but the same factories and materials, such as electrical steel and copper, serve distribution equipment. Long queues favour makers with spare capacity and encourage utilities to order earlier and in larger frame contracts.

Sources: IEA; IEA

4. Industry input

Physical flow · Medium · Distribution grids → electrical equipment factories

Equipment makers run electricity-hungry rolling mills, test bays, ovens, extrusion and wire-drawing lines from the grid; the site rates grid supply 5 of 5 on criticality for electrical steel producers.

  • 5 enterprise types in electrical equipment that depend on distribution grids
  • 5 of 5 criticality for CRGO and CRNO electrical steel producers (rolling mills)

This is the reverse flow: reliable local supply matters to factory uptime and testing schedules. Transformer and cable makers rate it 4 of 5, as outages delay test bays and extrusion lines.

Enterprise types that depend on it:

  • Electrical steel (CRGO and CRNO) producers: rolling mills (criticality 5 of 5)
  • Power and distribution transformer makers: test bays and ovens (criticality 4 of 5)
  • Power cable and wire makers: extrusion lines (criticality 4 of 5)
  • Copper and aluminium rod, conductor and winding-wire makers: grid power for drawing (criticality 3 of 5)
  • Utilities, transmission companies and renewables developers: distribution networks (criticality 3 of 5)

Sources: Material Insights

For investors

Key learnings

  1. Grid capex is the main demand driver for transformers, switchgear, cables and meters, with transmission and distribution nearly 40% of India's equipment market.
  2. RDSS has sanctioned far more smart meters than have been installed, so meter demand depends on execution pace rather than on new approvals.
  3. Higher component prices and lead times of up to four years for large transformers favour makers with capacity, while India's import share of electrical equipment rose from 22% in 2020 to 33% in 2025.

What to track

  • Smart meters installed under RDSS: Pace at which sanctioned meter orders turn into revenue (Monthly · Ministry of Power, National Smart Grid Mission dashboard)
  • Transformer and cable lead times and prices: Tightness of equipment supply and pricing power (Quarterly · IEA, company results)
  • IEEMA electrical equipment production data: Volume trend in Indian electrical equipment output (Monthly · IEEMA)

For policymakers

Key learnings

  1. Distribution reform and equipment industrial policy are linked: RDSS sets demand while local content rules decide how much of it is met in India.
  2. Local value addition rules on meters have not yet pulled component making into India, so component support may be needed beyond assembly.
  3. Lower AT&C losses improve utility finances, which is what keeps equipment orders and payments flowing.

What to track

  • AT&C losses and ACS-ARR gap: Utility ability to fund and pay for network equipment (Yearly · Ministry of Power, PFC reports)
  • Import share of electrical equipment: Progress on domestic manufacturing (Yearly · DGCI&S trade data)
  • RDSS funds released against sanctions: Execution of distribution upgrades (Quarterly · Ministry of Power)

India

India consumed about US$59 billion of electrical equipment in 2025, with imports at 33% of demand, up from 22% in 2020; RDSS, with an outlay of ₹3,03,758 crore, is the main source of distribution orders, led by smart meters and transformer upgrades.

Sources

  1. Electrical equipment: materials, Material Insights (2026)
  2. 3.46 crore smart meters installed across India, says government, Outlook Business (2025)
  3. India reduces AT&C losses to 16.16% in FY25: Power Ministry, Saur Energy International (2025)
  4. Wired for growth: India's electrical-equipment opportunity, McKinsey and Company (2026)
  5. Electricity 2026: grids, IEA (2026)
  6. Rising component prices and supply chain pressures are hindering the development of transmission grid infrastructure, IEA (2025)