India’s next industrial shift — electrons over molecules

For over a century, the world’s factories, kilns and trucks have been powered by “molecules” — oil, coal and gas burnt for heat and motion. That age is now giving way to one where competitiveness is increasingly written in electrons: clean and reliable electricity. The nations that move the fastest from molecules to electrons will not only cut emissions but also win supply chains, capital and jobs.

On this score, China has opened a decisive lead. It is not merely adding renewables at record pace. It is redesigning industry itself to run on grid power. In 2024, close to half of China’s industrial energy came as electricity. India is closer to one quarter. The gap directly affects export competitiveness and resilience to fuel price shocks.

Why ‘electrons vs molecules’ is the right lens

Molecules (oil, gas, LPG, coal, biofuels) are combusted directly in engines, boilers and furnaces. Electrons are delivered by the grid. Coal has already shifted role from on-site combustion to centralised power generation. More electrons mean higher automation, better process control and easier decarbonisation.

Electrification also brings a major efficiency dividend. Electric motors convert over 90% of input energy into useful work, while internal combustion engines typically convert less than 35%. This means each percentage point increase in electrons displaces more fuel molecules than raw energy numbers suggest.

This snapshot is revealing. China draws nearly half its industrial energy from electrons and also has the highest share of green electrons. The United States and world average are around 12% while India lags at just 7%. China leads both in the quantity and the quality of electrons even as India remains molecule-dominated.

At the economy level, China, the U.S. and the European Union (EU) all sit near one-third electrification. But China deliberately channels far more electrons into industry than its peers. This reflects strategic intent. As the world’s manufacturing hub, China ensures that factories enjoy reliable power and a rising share of clean electricity. That positioning directly strengthens export competitiveness in markets where carbon intensity is increasingly scrutinised.

China’s transformation; where India is

China’s playbook has been to build the grid, then build electron-first industry. China’s surge did not happen by accident. Since 2010, it has poured massive capital into generation, ultra-high-voltage transmission, flexible substations and grid-scale storage. The result is a structural tilt toward electrons across industry. In steel, electric-arc-furnace (EAF) steel rose from about 44 million tonnes in 2010 to 106 million tonnes in 2024. Though only approximately 15% of output, this shift has been policy driven through scrap recycling and preferential tariffs.

In cement, China has electrified grinding mills, materials handling and deployed digital controls. Waste-heat-recovery systems typically contribute 30-35 kWh per tonne of cement. Calcination emissions remain unavoidable, making CCUS pilots essential. India can follow a similar pathway.

China’s lesson is simple — electrify what can be electrified today, and reserve molecules only for processes that have no immediate alternative.

What is India’s starting line like? India has doubled grid capacity in a decade and is a global leader in annual solar additions. Yet, industrial electrons remain around one-quarter of energy use, and green electrons just 7%-8% of final energy. Three factors explain this gap. First, legacy reliance on on-site combustion locks in molecule use. Second, uneven power quality and reliability discourage firms from designing all-electric processes. Third, policy focuses more on generation than on electrifying industrial processes.

This is a road map to an electron-first industrial decade. In steel, India already produces approximately 30% of steel through EAFs, as compared to approximately 70% in the U.S. Improving scrap collection, standardisation and trading platforms can lift this share rapidly. Renewable-linked EAF incentives are essential, especially with the EU Carbon Border Adjustment Mechanism (CBAM) targeting steel.

In cement, support pilots of electrified kilns, large-scale waste-heat recovery and carbon capture, utilisation, and storage (CCUS) hubs. Target a 20% reduction in molecule use per tonne this decade while preparing CCUS.

On micro, small and medium enterprises (MSMEs), most MSMEs run on coal boilers and diesel gensets. Transition requires concessional finance for electric boilers and induction furnaces, pooled procurement of renewable power purchase agreements, and technical assistance.

When it comes to digitalisation, this must be embedded in new industrial clusters. Advanced controls reduce power waste, enable demand response, and generate auditable carbon data demanded by global buyers.

Why does this matter beyond climate?

First, competitiveness as global buyers increasingly demand low-carbon manufacturing. Green electrons embedded in supply chains decide contract outcomes.

Second, security. Shifting heat and motion to domestically produced electricity reduces exposure to imported oil and gas price shocks.

Third, sovereignty. Industry can locate based on skills and logistics, not fuel availability.

The new industrial race

The global race is not just electrons versus molecules, but also about green electrons versus grey electrons. China has acted strategically. Although its economy-wide electrification (31%) is similar to the U.S. (32%) and the EU (34%), it prioritised industry — nearly half of industrial energy is electrified, with a higher green share than peers. This design gives China a durable manufacturing edge.

India must absorb this lesson. Without a rapid rise in green electrons, India risks CBAM penalties and lost export opportunities, but with bold action, it can seize the initiative.

Policy must aim not just for megawatts of renewables, but for megawatt-hours actually flowing into industry. India should launch a national mission on industrial electrification, significantly raise annual grid investment, mandate electrification in new industrial parks, and provide targeted MSME finance.

The next industrial revolution will be written in electrons, not molecules. India must ensure that it is not left behind.

Shrikant Madhav Vaidya is an energy strategist and a former Chairman of IndianOil Corporation Ltd.

Published – February 04, 2026 12:16 am IST