Electricity reform: This time, let's make a go of it

Proposed legislative amendments aimed at fixing what ails this vital sector could help make Indian industry more competitive. Two proposals stand out that spell hope over experience

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The Centre recently proposed legislative changes to “strengthen and reform” India’s electricity sector in keeping with the “evolving industry requirement.” This is an urgent goal, given new pressures on Indian industry to turn more competitive, be it trade headwinds or higher supply chain costs.

Back home, to their detriment, businesses contend with cost and time burdens imposed by protracted statutory approvals and inefficient logistics. In the global arena, on average, our electricity tariffs for industrial use are higher than in China, but lower than what factories in the US pay, and even lower if compared to Europe. We have room to lower this and improve our competitive edge. Barring Gujarat, in industrialized states—like Tamil Nadu and Karnataka—industrial consumers of electricity subsidize household and farm consumers.