Centre Plans Nationwide Opening Of Power Retail Market

The move will enable major private sector players — including Adani Enterprises, Tata Power, Torrent Power, and CESC — to expand their presence across the country’s electricity distribution landscape.

A similar reform attempt in 2022 had faced strong opposition from state-run distribution companies (discoms), which currently dominate most states.

At present, only a few regions — such as the National Capital Region, Odisha, Maharashtra, and Gujarat — have privatised electricity distribution, while the vast majority remain under state control. These state-run utilities are often financially distressed, weighed down by operational inefficiencies and years of mounting losses.

The Centre has been pressing state utilities to reduce losses, improve financial discipline, and modernise ageing infrastructure. Earlier this year, Uttar Pradesh, India’s most populous state, invited bids to privatise two of its four power distribution companies, signalling growing state-level acceptance of private participation.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), as of June 2025, state power utilities owed power generators nearly USD 6.78 billion, creating a liquidity crisis for independent producers and constraining credit availability across the energy sector.

The new draft Electricity (Amendment) Bill also proposes to allow multiple private distributors to operate within the same geographical area, introducing competition where the existing Electricity Act does not currently permit it.

The reform aims to encourage market efficiency, reduce tariff distortions, and enhance service reliability, while promoting investment in modern grid infrastructure. However, implementation will require coordination with state governments and regulators, many of whom remain cautious about the implications for revenue-sharing and social tariff structures.

If approved, the proposed amendment would represent one of the most significant liberalisation measures in India’s power sector in over two decades, aligning with the Centre’s broader vision of competitive, consumer-driven electricity markets.