Draft bill shows India plans to open the retail electricity sector to private companies nationwide

A draft bill from the federal ministry of power showed that India intends to open its retail electricity market nationwide for private companies, ending the dominant role of state-run distribution in the majority states.

This move will enable private companies like Adani Enterprises (Tata Power), Torrent Power (CESC) and Tata Power to increase their presence in the country.

State distribution companies reacted with opposition to a similar attempt in 2020.

As the rules don't specifically allow it, only a few of India's distribution zones for electricity -- such as the National Capital Region, Odisha and industrial states Maharashtra, Gujarat and Gujarat -- have been privatised.

The vast majority of these are still under state control, and they have suffered severe financial losses.

New Delhi has been pressing state-run utilities to cut losses, improve their balance sheets and upgrade aging infrastructure.

In early this year, Uttar Pradesh, the most populous state in India invited bids for privatising two of its four electricity distribution companies.

According to the Institute for Energy Economics and Financial Analysis, as of June 2025 state utilities owed power generation companies about $6.78billion, creating a severe cash crunch for independent producers and, in turn, stifling lending flows into the sector.

The draft proposal of the power ministry also seeks to allow multiple private players to participate in the retail electricity sector, something that the Electricity Act currently does not permit. Reporting by Sethuraman NR, Sarita Singh and Mrigank Dahniwala; Editing by Sonia Cheema & Mrigank Dahniwala

(source: Reuters)