Electricity (Amendment) Bill 2025: India Begins Major Power Sector reshape to Cut Costs and Boost Reliability

Electricity (Amendment) Bill 2025: India Begins Major Power Sector reshape to Cut Costs and Boost Reliability

Government of India has introduced the Electricity (Amendment) Bill, 2025, marking one of the biggest reforms in the power sector in years. The bill aims to make electricity more affordable, reliable, and consumer-focused while strengthening the financial health of the entire industry.

The new Electricity (Amendment) Bill 2025 is designed to help India’s economic growth by lowering hidden cross-subsidies, boosting competition, and encouraging investment in the electricity ecosystem.

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The Bill pushes for cost-reflective tariffs so the power sector remains financially sustainable, but subsidies for farmers and low-income consumers will remain fully protected. The government says the reform will rationalise power costs for industries and logistics, making Indian manufacturing more competitive globally.

For the first time, the Bill promotes shared use of network infrastructure, allowing both public and private distribution companies to operate in the same area without duplicating networks.

This step is expected to reduce system costs and help expand electricity access rapidly. It shifts the model from a monopoly distribution structure to performance-driven supply, where providers compete to offer faster service, fewer outages, and better consumer support.

A key aim of the bill is to address the long-standing financial stress of distribution companies (discoms), which have suffered from high losses and inefficiencies.

The Bill empowers State Electricity Regulatory Commissions (SERCs) to ensure fair tariffs, penalise non-compliance, and even determine tariffs on their own if delayed by distribution companies. The reforms also allow large industrial consumers to directly procure power, reducing dependence on a single supplier.

The Inter-State Transmission System (ISTS) model, which already works smoothly with shared infrastructure and fair redistribution payments, acts as a guiding example for the new policy structure.

The Bill also prioritises storage systems, market development for non-fossil energy, and sustainability requirements — important steps in India’s long-term clean-energy transition.

A new Electricity Council will improve coordination between the Centre and States, ensuring faster and more uniform implementation of policies. At the same time, all licensees will have universal service obligations to prevent discrimination in access and supply.

By combining competition, regulatory accountability, financial clarity, and protection for vulnerable consumers, the Electricity (Amendment) Bill, 2025 positions India for a more efficient, transparent, and future-ready power sector. The reforms are aligned with the national development vision of Viksit Bharat 2047, where both homes and industries benefit from reliable, affordable, and high-quality electricity.

The Bill now moves forward as a landmark step to reshape how India powers its growth — from farms and households to metros, factories, and the digital economy.