Why Cheap Power Is Key To India's Manufacturing Future | Govindraj Ethiraj

ELI5/TLDR

India wants to become the world’s factory, but a factory needs cheap power and many Indian manufacturers are paying two to three times what they should — 8 to 12 rupees a unit when it could be 3.5 to 4. The head of TKIL (the old thyssenkrupp Industries India, now Indian-owned again) argues that fixing the boring stuff — power costs, steel quality, factory-floor efficiency — matters more than chasing flashy targets. He’s bullish on India making its own transport fuel from sugarcane (ethanol) and from green hydrogen, partly to avoid swapping one import dependence (crude oil) for another (batteries from a handful of countries). The recurring theme: India has a big enough home market to get lazy, and lazy is the real risk.

The Full Story

Govindraj Ethiraj of The Core sits down with the MD and CEO of TKIL Industries, a capital-goods company most people have never heard of because it builds the machines that build the stuff — coal-handling plants, cement plants, sugar plants, boilers, mining equipment. None of it is consumer-facing. All of it is a decent proxy for what the industrial economy is actually doing.

A company that went full circle

TKIL started in 1947 as an Indian firm, partnered with a German sugar-equipment maker (Buckau Wolf), got absorbed into the German conglomerate thyssenkrupp, and then — when thyssenkrupp exited mining worldwide in 2024 — got sold back to its long-standing Indian shareholders. So “Thyssen Krupp Industries India” became “TKIL.” The guest frames the German decades as formative: a conglomerate’s discipline embedded a “technology and value creation” mindset into the company’s DNA. The interesting business shift is that ten years ago TKIL sold products and was “shy to get into full-blown EPC” (engineering, procurement, construction — i.e. building the whole plant, not just one part). Now it bundles. In a thermal power plant there are two halves: the boiler-turbine-generator, and “everything else,” called the Balance of Plant (BOP). TKIL has consolidated the BOP packages — coal handling being the largest piece — into one offering worth 25–40% of plant value.

Why the industrial floor is busy when the headlines say “uncertainty”

“If you look at media in general, there’s a lot of talk about uncertainty… But when it comes to the industrial space in India, actually this is an amazing time.”

The numbers he throws out: roughly 80 gigawatts of new thermal power coming (which drags coal mining along with it), steel capacity set to more than double (which drags iron-ore mining), and a sugar sector transformed by ethanol from loss-making to highly profitable.

Mining: the truck problem

A nice concrete mechanism. Indian mining mostly uses “truck and shovel” — trucks haul ore out. The catch: a loaded truck goes A to B, then comes back B to A empty, so it spends half its life moving dead weight. Overall efficiency lands around 30–35%. Swap trucks for conveyor belts (in-pit crushing and conveying) and efficiency jumps to ~80%. Conveyors also electrify cleanly, which means they can run on green power. And — the part that connects to those panicky “thermal plant has 2 days of coal left” headlines — conveyors don’t care about weather. A heavy monsoon shower slows or stops truck movement; a conveyor keeps going. So India’s periodic coal “shortages” aren’t about running out of coal underground. They’re about not being able to dig it out fast enough when it rains.

“Once you bring technology into mining operation… you could have sustained operations, hazard-free operations, safer operations, same throughput no matter the weather.”

He also flags blast-free mining (cutting machines that skip explosives), which lets a mine run continuously instead of shutting down sections every time it blasts.

Sugar is becoming a chemistry company

This is the line he keeps returning to:

“Sugar is changing from being a sugar agri business to a biochemicals organization.”

The reframe: stop thinking of sugarcane as the thing that goes in your tea and gives you diabetes, and start thinking of it as feedstock for a chemicals industry. India is roughly as big a sugar producer as Brazil. The downstream products: ethanol (already happening, blended into petrol), CBG (compressed bio-gas, made from sugar waste), lactic acid (which becomes bioplastics), and SAF (sustainable aviation fuel, now mandated for blending in India and globally).

But the upstream is shockingly inefficient. India’s cane yields trail Thailand and Australia. Worse, the gap between cutting cane and crushing it — “cut to crush” — is measured in days in India versus hours at best-in-class operations. Cane dries out after it’s cut, and dry cane means lost sugar. So the country is leaking value before the plant even starts.

On ethanol, his read is that “wave one” is done — India is now over-supplied with ethanol. The bottleneck moved to the demand side: you need flex-fuel vehicles that can run E85 and E100 (85% and 100% ethanol blends) on the road before you build more supply. SAF and lactic acid he calls genuinely nascent — “a drop in an ocean” today — but the industries of the next decade.

The energy mix is fragmenting (in a good way)

Looking out 10–20 years, he sees energy converging at the point of use (you can cook with electricity or gas; gas can come from a refinery or an oil field) while the sources diversify wildly: coal thermal, solar, wind, coal gasification (gas pulled out of coal seams to feed fertilizer plants), green hydrogen, and significant nuclear including SMRs (small modular reactors). The value of the mix is balance — solar and wind fluctuate, so you need steady “base load” power to keep the grid stable.

Green hydrogen and the chicken-and-egg

This is his pet topic. The cost of green hydrogen has fallen fast — from talk of 500 rupees/kg to 400 to a recent bid near 275. The problem is circular: no one builds hydrogen supply because there’s no demand, and no demand because there’s no fuel. His unblocking idea is pragmatic to the point of slightly heretical: don’t insist on green first. The reason green hydrogen is expensive is that “round the clock” (RTC) green power costs ~4.6 rupees a unit. If you can source RTC power at 3–4 rupees, you get cheap hydrogen — some green, some “gray” (made with fossil power) — but enough volume to seed an ecosystem of hydrogen vehicles. India already has a hydrogen train and hydrogen buses ready. Get the pumps and supply chain built first; switching gray to green later is “an easy switch.”

On the economics he’s candid that consumer cost is the live question. First-gen hydrogen cars do roughly 100 km per kg; at 450 rupees/kg that’s ~42 rupees/km versus ~9–10 for diesel. At the newer 275 rupees, it gets closer to par. Ethiraj presses him — what’s the producer’s capital cost and how many Indian firms can afford it? — and he doesn’t have the number, but his answer is “we have to start somewhere,” betting that committing to demand will pull in dozens of suppliers.

Why not just go all-in on EVs?

His objection isn’t technical, it’s strategic. EV batteries depend on “a very limited set of countries.” India already learned this lesson the hard way with crude oil (~90% imported). Building the whole transport future on imported batteries repeats the same exposure. Ethanol and green hydrogen, by contrast, are made in India — they help the farmer, keep economic output and employment at home, and don’t drain dollars on the balance of payments. He also notes EV charging is “a very urban thing”; range anxiety on a drive out of Delhi or Bombay is real, and a country this vast won’t blanket itself in chargers quickly.

The actual thesis: cheap power and clean-up of factor costs

When pushed on whether India can really hit peak power demand (it just touched 270 GW, straining the grid, with surplus daytime power but a shortage in the evening), he waves the demand worry away:

“I see demand as a very self-created number. If manufacturing went from 13% to 26% as share of GDP, that demand will suddenly zoom up. The important thing is to provide power at competitive rates to industry.”

His core claim, stated as conviction: many of his customers pay 8 or even 12 rupees a unit for power, when captive generation costs 3.5–4. That’s a 50–60% gap. Fix it and “everything can change” — production, scale, exports. He widens this into a general argument about factor costs. India signed free-trade agreements (FTAs) that opened market access, but tariff avoidance alone won’t win: power, steel, raw materials and skilled labour all have to be the most competitive in India. On steel specifically, India makes to Indian standards that don’t match European/US norms — a “simple” fix that nobody touches, because the old policy framework was built to protect India from imports, not to make India an exporter. The mindset hasn’t flipped.

His suggested policy lever is concrete: when building industrial parks, install a low-cost power unit that sells to that cluster at a fair price, rather than cross-subsidizing other segments and inflating industry’s bill. Call it “mission mode.”

The complacency risk

The thread tying it all together is a warning. India’s home market is big and comfortable, and comfort breeds complacency. Manufacturing at 12–13% of GDP is “nothing to be proud of”; it needs to reach 25–30%, and there’s a clock on it — he cites a projection that India’s demographic dividend starts flattening after 2040, leaving maybe 14–15 years.

“The real success for Indian industry will only be when we can become the manufacturing factory for the world. And sometimes I feel the robust Indian market makes people complacent.”

His prescription: every manufacturer should aim to export 20–40% of output, purely to stay benchmarked against the world’s best on quality and cost. Selling poor-quality goods at high prices on a “protected island” hurts even the Indian customer.

On talent, he thinks industry has done itself “a tremendous disservice” on campuses — civil and mechanical engineers fled to IT for a better future, when industrials now offer multi-decadal growth, cutting-edge tech, and a role in getting India to net zero by 2070. The winners, he says, will be the firms that adopt AI and robotics rather than staying in “the dinosaur age.” On full automation he’s deliberately measured: copy-pasting Australia’s autonomous mines won’t work, because Australia automated out of a labour shortage while India has people to employ. India should bring technology in for safety, quality and productivity, but balance it against a social obligation to create jobs — and treats its labour surplus as a degree of freedom, not a handicap.

Key Takeaways

TKIL Industries is the former thyssenkrupp Industries India, sold back to long-standing Indian shareholders in mid-2024 when thyssenkrupp exited mining globally; originally founded 1947.
It builds capital goods across five areas: mining and bulk material handling (its biggest segment), cement plants, sugar plants, energy and boilers, and new energy.
~80 GW of new thermal power is driving its mining/coal-handling business; steel capacity is set to more than double, pulling iron-ore mining with it.
In a thermal plant, the “Balance of Plant” (everything besides boiler-turbine-generator) is worth 25–40% of plant value; coal handling is the largest BOP piece.
TKIL makes captive-power CFBC boilers up to 150 MW — it is the only Indian player with its own CFBC technology — but does not make supercritical boilers for large plants.
Truck-and-shovel mining runs at ~30–35% efficiency (trucks return empty); conveyor-based in-pit crushing and conveying raises it to ~80% and electrifies cleanly.
India’s coal “shortages” are a mining-throughput problem, not a reserves problem — monsoon stops trucks, conveyors would keep running.
India produces about as much sugar as Brazil; cane yields lag Thailand and Australia, and “cut to crush” takes days here versus hours at best-in-class plants, losing sugar to drying.
Sugar’s downstream chemistry: ethanol, CBG (compressed bio-gas from waste), lactic acid (→ bioplastics), and SAF (sustainable aviation fuel, now mandated for blending).
India is currently over-supplied with ethanol; the bottleneck is demand — flex-fuel vehicles running E85/E100 need to reach the road first.
Green hydrogen cost has fallen from ~500 to ~275 rupees/kg; the unlock is cheap round-the-clock power (target 3–4 rupees/unit vs ~4.6 today), accepting some “gray” hydrogen to bootstrap demand.
First-gen hydrogen cars do ~100 km/kg; at 275 rupees/kg that approaches per-km parity with diesel (~9–10 rupees/km).
The case against EV-first is strategic: batteries come from a few countries, repeating India’s ~90% crude-import exposure; ethanol and hydrogen are made domestically.
Many manufacturers pay 8–12 rupees/unit for power versus 3.5–4 for captive generation — a 50–60% gap the guest calls “insane.”
India’s demographic dividend is projected to flatten after ~2040, leaving roughly 14–15 years to build manufacturing from 12–13% of GDP toward 25–30%.
Indian steel often doesn’t meet EU/US norms, blocking exports; the guest calls aligning standards a “simple” but neglected fix.

Claude’s Take

This is a clean, useful CEO interview — the kind where the guest is selling his book (TKIL builds exactly the plants and conveyors the bullish story requires) but the mechanisms he explains are real and well-articulated. The truck-vs-conveyor efficiency point and the “coal shortage is a throughput problem, not a reserves problem” reframe are the most genuinely clarifying bits; they’re the sort of thing you half-knew but couldn’t have stated cleanly.

Where to apply the BS filter: the green-hydrogen optimism is the softest part. Ethiraj does the right thing and presses on producer capital cost, and the guest’s honest answer is “I don’t know the number, but we have to start somewhere.” That’s a faith argument, not an economics one, and the “let’s accept gray hydrogen to bootstrap” idea quietly drops the entire point of green hydrogen while keeping the green label for marketing. The cheap-power thesis is more solid — the 8–12 vs 3.5–4 rupee gap is a real and well-documented drag on Indian industry — though “demand is a self-created number” is the kind of line that’s true at the margin and dangerous if taken literally by anyone planning grid capacity.

The complacency warning is the most valuable takeaway and the least self-serving: a big protected home market really does let manufacturers coast on mediocre quality, and the export-discipline argument (sell 20–40% abroad just to stay benchmarked) is a sound mental model. Nothing here is revelatory if you follow Indian industrials, but it’s a tidy, concrete tour of the bottlenecks. A 7 — substantive and clearly explained, marked down for being one interested party’s optimism with the hard cost questions left politely unanswered.

Why Cheap Power Is Key To India's Manufacturing Future | Govindraj Ethiraj | The Core Report