Market Impetus

Key drivers and opportunities in the cable and conductor space

The market for cables and conductors in India has grown exponentially over the years and is bound to increase in the future. Policy and regulatory initiatives and government schemes such as the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), the Integrated Power Development Scheme (IPDS) and Saubhagya have given the market a major impetus in recent years. Besides, Indian Railways’ action plan to electrify 38,000 route km (rkm) has been a key demand driver for the industry. The government’s recently announced Rs 3 trillion reform-linked distribution scheme under the union budget is also expected to provide a major fillip to the industry going forward.

That said, the Covid-19 pandemic has resulted in headwinds for the cable industry in the past year. Transcos and discoms, the key consumers of the cable industry, faced a major decline in their financial health during the pandemic. Due to the pandemic-led lockdown, there was a wave of curtailment in spending by customers, who deferred their procurement schedules. Overseas demand was also impacted due to the lockdown.

A look at some of the key opportunities in the cable industry…

Key demand drivers

In recent years, the government’s focus on power for all, rural electrification, infrastructure augmentation, and household electrification has been driving the demand in the domestic cables industry. Over the past two to three years, there has been a spike in the sale of major electrical equipment including HV and MV cables, primarily due to government schemes for accelerating power connectivity including UDAY, DDUGJY, the IPDS and Saubhagya. There has also been a sharper focus on high voltage transmission lines as the government aims to provide reliable and stable 24×7 power.

In the Union Budget 2021, the finance minister announced that under the proposed Electricity (Amendment) Bill, 2021, the government aims to delicense the distribution business, bring in competition and give the consumer power to choose suppliers. Further, a Rs 3 trillion electricity distribution reform programme to reduce losses and improve the efficiency of discoms was announced. The scheme is aimed at helping discoms trim their electricity losses to 12-15 per cent from the present level and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to zero by March 2025. This can be achieved by improving the reliability and quality of power supply. In addition, the government’s smart cities project is expected to promote large-scale growth in the infrastructure, telecom, power generation, T&D, engineering and automotive sectors. This is an attractive opportunity for the wire and cable industry. One of the key focus areas of the government has been the electrification of railways, which is expected to create several opportunities for equipment manufacturers, especially cable and conductor manufacturers.

The Ministry of Railways is planning for 100 per cent electrification of the broad gauge routes. As of March 2020, 39,329 rkm had been electrified. Over the past few years, there has been an increase in electricity consumption, which can be attributed to the significant increase in route electrification. As of March 2020, the total electricity consumption in traction energy stood at 18.41 billion units (BUs) while the total electricity consumption in non-traction energy was 2.34 BUs.

Given the increasing focus on renewables, the industry is now looking to supply cables to the solar and wind power segments in addition to the oil and gas, railways and other specialised segments. Further, there will be a rise in demand for wires and cables when the electric vehicle (EV) industry picks up pace. Some amount of wire will be required to set up the EV charging infrastructure.

The other factors likely to drive the demand for locally manufactured power cables are the planned investments in other infrastructure sectors, the government’s aim to make India a self-reliant country, and the revised public procurement (preference to make in India) order policy framework for all projects funded by the central government, central PSUs and their owned agencies.


As per CRISIL Research (October 2019 edition) released prior to the outbreak of the Covid-19 pandemic, the size of the domestic power cable industry is projected to grow at a CAGR of 7-8 per cent to reach Rs 335 billion over fiscals 2020 to 2022. This will be driven by a healthy volume growth owing to Powergrid’s focus on system strengthening and green corridors, higher budgetary allocation to centrally sponsored schemes to drive incremental volumes, and high demand from railway and solar projects. However, the industry’s realisation is expected to decline with the decline in the price of key raw materials (polymer, copper and aluminium). Exports are also expected to grow at a healthy CAGR of 11-12 per cent, led by a significant demand from the Middle East, Africa and other Gulf countries. Going forward, fiscal 2021 and onwards, the operating margins of players are likely to stabilise.




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