Power

A fast-growing economy, India is targeting an ambitious GDP growth of 10% requires power at cheaper cost to set tone for progress. Presently, it has a huge demand-supply gap. To rectify this,  Ministry of Power has to set a goal of adding an additional 100,000 MW of capacity by 2017 as it would require a peak load requirement of 315,000MW MW by then. This offers a US$ 600 billion opportunity in the next 8 years and a further US$ 200 billion opportunity in transmission & distribution projects. 

Current Scenario

Presently, India has more than 144,565MW in installed capacities and a 250,000 ckt.kms in power transmission lines. It is the sixth largest consumer of electricity in the world with rapid rise in consumption growth (avg. Growth rate of consumption around 14%)

After a period of liberalization from 1991, various reform activities have been taken and a significant one is the passage of Electricity Act, 2003 and several policy changes have been initiated 

Highlights 

Automatic approval of foreign equity without any upper limit. Any private player can set up thermal, hydel, wind or solar energy power project without any limitation of size. A five year tax holiday allowed for profits of new industrial undertakings for either generation or distribution of power etc., Private Sector : With the economic liberalization, many of the private and foreign companies had shown active interest in setting up power projects. 

However, of the several projects announced many are yet to take off on account of the financial viability of SEB's who is the major purchaser or delay in signing fuel supply agreements or bottlenecks in clearances from various ministries.

Recent announcement and ease of norms in power based SEZ to distribute power to other SEZ and  earn net foreign exchange (NFE) will also act as incentive.

Industry Advantage:

Despite, several constraints, power sector investment is on the rise as the government tries to reduce power transmission losses with programmes like APDRP, rationalization of tariff, 100% metering, energy audit and so on. 

Further, the advantages like availability of well qualified technical manpower, a well established and vast power transmission network, a huge demand-supply gap and an independent judiciary has made the sector attractive for investment.