Updated – March 14, 2025 at 01:08 PM. | New Delhi
India’s CRGO demand is expected to grow by 10-12 per cent annually, driven by the expanding power sector and the goal to integrate 500 GW of RE into the grid by 2030
Supply chain issues such as limited availability of CRGO steel and High-Voltage Direct Current (HVDC) systems are impacting the manufacturing of transmission capacity, which is adversely impacting the growth of India’s power evacuation infrastructure.
The findings are part of the report by the Parliamentary Standing Committee on Energy on the Power Ministry’s demand for grants in FY26. The panel took oral evidence from the Ministry on February 24, 2025.
Besides, issues such as limited availability of engineering procurement and construction (EPC) contractors and balance of plant (BoP) vendors are hindering the expansion of thermal power plants (TPP) in the country, the report revealed.
According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics, delay in expanding transmission capacity is one of the key issues behind rising under-subscription of RE, which is five times higher in 2024 (8.5 GW) compared to 2023 calendar year.
Supply chain issues
As per the Central Electricity Authority (CEA), pan-India laying of transmission lines (220 KV and above) during 11M FY25 stood at 6,880 circuit km (ckm) against a target of 12,776 ckm. The Ministry established 57,483 MVA (Megavolt-amperes) of transformation capacity in 11M FY25 against a target of 94,645 MVA.
Quizzed by the committee on not being able to meet the targets for FY25, the Ministry said that various challenges are being faced with respect to transmission projects.
“Unavailability/ delay in supply of CRGO electrical steel as it is manufactured by limited foreign countries. Limited number of High-Voltage Direct Current (HVDC) systems manufacturers/vendors leading to higher cost and delayed supply,” it added.
India, which is one of the largest consumers of CRGO steel, is facing a shortfall of 30 per cent of CRGO steel—essential for manufacturing electric motors and transformers, economic think tank Global Trade Research Initiative (GTRI) has pointed out.
According to a December 2024 report by GTRI, India required 400,000 tonnes in FY24. With 50,000 tonnes produced domestically, it had to import 239,200 tonnes from countries like China, Japan, Russia, and South Korea. After exporting 11,400 tonnes, only 277,800 tonnes were available for local use, leaving a shortfall of 12,2200 tonnes, or 30.6 per cent.
India’s CRGO demand is expected to grow by 10-12 per cent annually, driven by the expanding power sector and the goal to integrate 500 GW of RE into the grid by 2030. The demand will also grow as Bureau of Energy Efficiency has mandated a star-label upgrade for distribution transformers starting January 1, 2025, pushing the industry to seek higher-grade CRGO steel, it added.
Crisil Ratings in a February 2025 report said that maintaining an uninterrupted supply chain, especially for substation equipment like transformers as well as HVDC components remain critical for timely execution.
In the case of TPPs, the panel observed that the Ministry is facing challenges in expanding the country’s thermal power capacity.
When asked, the Ministry said that limited availability of EPC contractors and issues in qualifying criteria of the main plant are hindering the progress.
“Genco’s are mainly going for EPC contracts. BHEL, L&T are the two bidders participating as EPC contractors. In the recent tenders, it is observed that L&T is not submitting its bids and utilities are receiving practically single bid only,” it added.
The Ministry also highlighted the limited availability of Balance of Plant (BoP) vendors and issues in qualifying criteria of BoP.
“There were issues in availability of BoP vendors particularly in CHP, AHP, cooling tower areas, etc,” it added.
Balance of Plant includes all supporting components as well as auxiliary systems that are necessary for a power generating unit to function efficiently. It excludes the main generating unit.
As per the CEA, India added 2,840 megawatts (MW) of TPP capacity in 10M FY25 against a target of 15,360 MW.