India is preparing to table the Electricity Amendment Bill in the upcoming Budget Session of Parliament, a move designed to significantly boost the power sector’s efficiency and regulatory framework. This initiative follows extensive consultations, including a two-day Chintan Shivir with states and discussions with Members of Parliament on the Draft Electricity (Amendment) Bill, 2025. Power Minister Manohar Lal Khattar confirmed the government’s steadfast policy on market coupling.
The bill is deemed crucial for strengthening the legislative foundation of India’s power sector. Despite remarkable progress since the 2003 Act, the distribution segment continues to face financial challenges. To tackle this, the bill mandates cost-reflective tariffs and empowers State Electricity Regulatory Commissions (SERCs) to intervene proactively when utilities delay tariff filings. Khattar clarified that state governments would retain the ability to subsidize priority consumers (domestic and agricultural), ensuring consumer welfare without increasing costs for these groups.
A primary goal is to enhance the economic competitiveness of Indian industries by reducing distortions from cross-subsidies and surcharges. The bill proposes empowering SERCs, in consultation with state governments, to exempt large consumers from distribution company (discom) supply obligations. This enables large consumers to procure power at competitive rates from alternative sources, concurrently easing discoms’ fixed cost burdens. Such consumers would have the option to exit after reasonable notice.
The amendment further promotes increased adoption of non-fossil energy sources through a minimum obligation and by facilitating capacity addition via market mechanisms. It also aims to improve public service delivery, reduce financial and compliance burdens, and foster a more business-friendly environment. Regulatory governance will be fortified by expanding the Appellate Tribunal for Electricity (APTEL) and integrating operational reforms, such as Right-of-Way provisions, directly into the Act. Distribution network sharing is also proposed to avoid duplication and benefit consumers.
Minister Khattar explicitly addressed and dismissed fears concerning privatisation, potential cost increases, or adverse effects on employees, assuring robust protective measures. The bill also envisions establishing an Electricity Council to promote cooperative federalism and forge national consensus on power sector reforms. Additionally, the Central Government will ensure fair compensation for farmers whose land is used for laying electric lines, adhering to market-rate linked guidelines. This comprehensive bill seeks to modernize and streamline India’s electricity landscape for sustained national growth.