Context

• For more than a century, industrial growth has been driven by the combustion of fossil fuels. Coal, oil, and gas supplied heat and motion through molecules, shaping factories, transport systems, and global trade.
• This paradigm is now being replaced by one centred on electrons, delivered through electricity networks.
• The shift toward electrification is no longer only an environmental objective; it is a defining factor in economic competitiveness, trade access, and resilience.
• Countries that rapidly electrify production, particularly with clean power, are better positioned to attract capital and jobs. In this emerging landscape, China has moved decisively ahead, while India faces a pivotal moment in determining its industrial future.

Conceptual Framework: Molecules versus Electrons

• The contrast between molecules and electrons offers a clear framework for understanding the energy transition.
• Molecules such as coal, oil, and gas are burned directly in engines, furnaces, and boilers. Electrons, supplied through the grid, power electric motors and digitally controlled processes.
• Electrification delivers significant efficiency gains: electric motors convert over 90% of energy into useful work, compared with less than 35% for combustion engines.
• These gains enable higher automation, better process control, and faster decarbonisation as electricity generation shifts toward cleaner sources.
• As a result, each incremental increase in electrification displaces a disproportionately large amount of fossil fuel use.

China’s Electron-First Industrial Strategy

• China’s approach demonstrates how electrification can be used as a deliberate industrial strategy.
• Nearly half of its industrial energy consumption now comes from electricity, with a growing share sourced from renewables.
• This transformation has been enabled by sustained investment in generation capacity, ultra-high-voltage transmission, flexible substations, and grid-scale storage.
• Rather than relying on on-site fuel combustion, factories are designed to run on reliable grid power.
• Sectoral outcomes illustrate this shift. In steel production, electric arc furnaces have expanded rapidly through policies supporting scrap recycling and preferential electricity tariffs.
• In cement, electrification of grinding, materials handling, and advanced controls has reduced fuel intensity, while waste heat recovery supplies a meaningful share of energy demand.
• Although process emissions remain unavoidable, pilots for carbon capture indicate long-term planning.
• Together, these measures strengthen manufacturing competitiveness in markets where carbon intensity increasingly influences trade decisions.

India’s Starting Point and Structural Constraints

• India has expanded electricity capacity rapidly and is a global leader in annual solar additions.
• Despite this progress, industrial electricity accounts for only about one quarter of energy use, while green electricity remains a small fraction of final demand.
• Three structural constraints explain this gap. First, legacy reliance on on-site combustion continues to lock firms into molecule-based systems. Second, uneven power quality discourages all-electric process design.
• Third, policy has prioritised generation capacity more than industrial adoption of electricity.
• Without addressing these constraints, Indian industry risks falling behind as global markets tighten carbon standards.

Sectoral Pathways for India’s Transition

• India nevertheless has viable pathways to accelerate the transition. Around one-third of steel production already uses electric arc furnaces, providing a foundation for expansion.
• Improving scrap collection and linking incentives to clean power could raise this share, particularly as the European Union’s CBAM reshapes global trade.
• In cement, support for electrified kilns, large-scale waste heat recovery, and carbon capture hubs could significantly reduce fuel use per tonne over the coming decade.
• For MSMEs, which often depend on coal boilers and diesel generators, the challenge is access rather than technology.
• Concessional finance for electric boilers, pooled procurement of renewable power, and technical assistance are essential.
• Embedding digitalisation in new industrial clusters can further reduce energy waste, enable demand response, and generate auditable emissions data demanded by international buyers.

Strategic Importance Beyond Climate Goals

• The shift from molecules to electrons extends beyond climate mitigation. Low-carbon production is increasingly central to exports, influencing buyer preferences and supply-chain contracts.
• Electrification enhances energy security by reducing exposure to volatile imported fuel prices.
• It also strengthens economic sovereignty, allowing industries to locate based on skills and logistics rather than proximity to fossil fuel resources.

Conclusion

• The emerging industrial race is defined by the speed and quality of electrification.
• China’s experience shows that directing clean electricity into industry delivers durable advantages in productivity and trade. India must respond with equal ambition.
• Future efforts must focus not only on adding capacity but on ensuring that electricity flows into factories, workshops, and industrial parks.
• Accelerated grid investment, mandated electrification in new clusters, and targeted support for smaller firms are critical.
• The next phase of global industry will be written in electrons rather than molecules, and India’s ability to compete will depend on how decisively it acts now.