India possesses one of the largest power generation capacities in the world (its current ranking is fifth) with an installed capacity of 156,000 MW which is about 4 percent of global power generation. The top four countries, viz., US, Japan, China and Russia together consume about 49 percent of the total power generated globally. The average per capita consumption of electricity in India is estimated to be 704kWh during 2008-09. The power sector has emerged as major focus area for the government both central and state. However, it suffers from power shortages estimated at 14-15 per cent, with the figure higher in the northern and western regions.  

India's generation capacity of 2,300 MW in 1950 expanded to over 116,500 MW including non-utilities at the end 2000-01. The total installed capacity of electric power generation further increased to 141,080 MW in 2007-08 (upto January 2008) compared to a capacity of 128,000 MW during the same period in 2006-07. The Eleventh Plan has targeted a capacity addition of 78,570 MW. The five years (2007-2012) may be the best of times for power equipment makers with the power sector on an expansion spree. With order-book growth expanding over the last three years, there is a good chance that this will continue. Close to 82% of the planned generation capacity for the Tenth Plan was either implemented or was in the process of being implemented. Even assuming a 70% implementation ratio for the Eleventh Plan, close to 55,000 MW will be added. Five ultra mega power projects, totaling 20,000 MW are coming up in 2008. In the transmission sector, for example, Power Grid Corporation is planning a capex of Rs 710 billion by 2010.

Earlier, the shortfalls in achieving the Plan targets of addition to power generation and up-gradation of transmission and distribution had adversely affected the electrical equipment industry. The peak shortage which was over 11% of the requirement in 2003-04 increased to 11.7% in 2004-05 and to over 12% in 2005-06. The shortage further rose to about 14% in 2006-07. In the ten months of 2007-08 the peak shortage had risen to over 15% of the peak demand of 107,010 MW.

The national grid envisage 200,000 MW transmission capacity and 37,700 MW of inter-regional power transfer capacity (current inter-regional power transfer capacity is 20,750 MW) to ensure smooth transfer of power from power –surplus to power-deficit regions.

According to the Power Ministry, the power sector has tied up Rs 2,240 billion worth of investments to build power plants with 70,000 MW capacities in the next three years. The Indian government has set ambitious goals in the 11th plan for power sector owing to which the power sector is poised for significant expansion. In order to provide availability of over 1000 units of per capita electricity by year 2012, it has been estimated that need-based capacity addition of more than 100,000 MW would be required. This has resulted in massive addition plans being proposed in the sub-sectors of Generation Transmission and Distribution. Investment is also expected to flow into different segments of the value chain, covering the segments of power generation, transmission and distribution and allied sectors such as equipment, technology and services. The private sector is expected to play a more active role in investment and capital productivity. The government has undertaken a number of initiatives to facilitate private sector participation.

With some fast moves at launching fast track projects to augment supplies, the Indian industry needs to improve its competitiveness. The Indian market is growing and multinationals with newer technologies are now more active.