Reimagining India’s power future: Reform beyond legislation

India’s power sector is at a pivotal moment. The release of the Draft Electricity (Amendment) Bill, 2025, marks more than a policy update. It presents a once-in-a-generation opportunity to reshape the nation’s electricity landscape in alignment with the vision of Viksit Bharat 2047: an India that is energy-secure, climate-resilient, and globally competitive.

This reform arrives amid three transformative forces: the clean energy transition, digital innovation, and evolving consumer expectations, all converging to redefine electricity’s role in India’s economic and social development.

Strengthening financial foundations for sustainability

Financial viability is the bedrock of lasting reform. India has made remarkable strides in achieving near-universal electricity access and building one of the largest generation capacities globally. The next challenge is to ensure this infrastructure remains commercially sustainable and attractive to investors.

Key measures such as cost-reflective tariffs, timely subsidy disbursement, and transparent accounting practices are essential to restoring financial health and investor confidence. This marks a shift in perception from electricity as a fiscal burden to electricity as a strategic growth driver.

The focus must now be on institutionalising fiscal discipline, enhancing operational efficiency, and fostering predictable financial environments where utilities, regulators, and consumers operate within clear performance frameworks.

Modernising distribution: Toward a market-responsive system

Distribution reform is emerging as the next frontier. The phased introduction of competitive retail supply and Distribution System Operators (DSOs) signals a transition toward a decentralized, consumer-focused model.

However, digital infrastructure must precede market liberalization. Smart grids, advanced metering, and transparent data systems are critical to building trust, reducing losses, and enabling consumer choice. Over time, DSOs can evolve into neutral network managers facilitating peer-to-peer energy transactions, integrating renewable sources, and ensuring grid reliability.

This transformation reimagines distribution utilities as agile service providers balancing efficiency, equity, and sustainability.

Clean energy as a driver of economic competitiveness

A standout feature of the reform is its positioning of clean energy as a strategic economic asset. By embedding non-fossil energy obligations into regulation, India signals that decarbonization is not just an environmental goal but a competitive imperative.

In a global economy increasingly shaped by carbon costs, India’s ability to deliver reliable, low-carbon electricity will directly influence its manufacturing competitiveness and appeal to international investors.

Accelerating investments in renewables, energy storage, and flexible transmission infrastructure supported by market mechanisms and risk-sharing frameworks will be key to scaling green energy in a financially viable way.

Governance, trust, and collaborative execution

The credibility of reform hinges on institutional strength. Time-bound adjudication, enhanced accountability, and transparent regulatory processes are essential to sustaining investor trust. Predictability in decision-making is as vital as the direction of policy.

The proposed National Electricity Council offers a promising platform for Centre-State collaboration, ensuring consistent implementation across jurisdictions while respecting federal diversity. Successful reform will be defined not by uniformity, but by cooperative execution.

Five priorities for effective implementation

To translate legislative intent into meaningful outcomes, execution excellence is critical. Five strategic priorities stand out:

1. Digital Infrastructure First – Deploy nationwide smart grid and metering systems to enable real-time data, efficient billing, and informed consumer choices.

2. Financing the Transition – Innovate funding mechanisms such as blended finance and green bonds to de-risk investments in renewables and grid modernisation.

3. Regulatory Capacity and Agility – Equip state commissions with digital tools, training, and performance benchmarks for timely, evidence-based decisions.

4. Consumer Empowerment – Build trust through reliable service standards, transparent tariffs, and effective grievance redressal systems.

5. Centre-State Reform Compact – Align fiscal incentives and performance metrics across government levels through cooperative federalism.

The Draft Electricity (Amendment) Bill, 2025, sets a transformative course for India’s power sector, one that balances fiscal discipline, sustainability, and consumer interests. Its success will depend on the seamless integration of digital systems, robust regulatory institutions, and innovative financial frameworks.

If implemented with the same resolve that fueled India’s renewable energy revolution, this reform could redefine electricity from a production cost to a pillar of national competitiveness. India’s power journey is now shifting from expansion to excellence, lighting the way toward Viksit Bharat 2047.

(The writer is Partner and Energy Tax Leader, EY India)

Raju Kumar