India’s power ministry is preparing to introduce reforms that would allow private companies to enter and compete in the retail electricity market, breaking the long-standing dominance of state-run distributors.
Under the draft proposal, multiple private suppliers could operate in the same distribution area—something currently restricted by the existing Electricity Act.
This shift could enable players like Adani Enterprises, Tata Power, Torrent Power, and CESC to expand their electricity retail business across states.
Earlier attempts to introduce similar reforms in 2022 were met with pushback from state distribution companies, many of which viewed the changes as a threat to their entrenched position.
At present, only a few distribution zones (such as in parts of NCR, Maharashtra, Gujarat, and Odisha) host private operators, while most regions remain under state-owned utilities facing financial stress.
One of the motivations behind the reform is to address the growing dues owed by distribution companies to power generators—estimated at around USD 6.78 billion as of mid-2025.
The government hopes that introducing competition will force efficiency, better service quality, and improved financial discipline in the power sector.
If passed, the amendments are expected to enhance consumer choice, transparency, and reliability in electricity supply, while encouraging private investment into grid infrastructure and service innovation.
