What are the new Electricity (Amendment) Bill 2025 reforms set to modernise India’s power sector: All you need to know

The government on Saturday, November 22, unveiled major reforms under the Electricity (Amendment) Bill 2025, aimed at modernising India’s power sector, improving competition, restructuring tariffs and strengthening regulatory oversight.

Why was a revamp needed?

India’s power sector has long grappled with chronic distribution losses, inefficient billing, high AT&C leakages and a lack of competition. Consumers are tied to a single discom, limiting service quality, while industries face inflated tariffs due to cross-subsidy burdens that weaken manufacturing competitiveness. The Bill seeks to break this cycle by creating a transparent, market-responsive ecosystem.

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How will competition change in power distribution?

The Bill allows multiple distribution licensees to operate in the same area, using shared infrastructure to avoid costly duplication. This marks the biggest shift in the sector since liberalisation, giving consumers - including households - the choice of suppliers. A Universal Service Obligation ensures every licensee must provide uninterrupted supply, preventing cherry-picking of profitable customers.

What happens to subsidies and cross-subsidy?

The government emphasised that subsidised users - including farmers and low-income households will continue to receive protected tariff support. However, industrial consumers such as manufacturing units, the Railways and metro systems will see cross-subsidies phased out within five years, making electricity pricing more competitive and cost-reflective.

What new powers do regulators get?

State Electricity Regulatory Commissions will gain authority to impose penalties, enforce service standards and determine tariffs if discoms delay filings. A new Electricity Council will improve Centre–State coordination, allowing smoother policy alignment in a sector crucial to economic growth.

What about energy storage and future technologies?

For the first time, the Bill recognises Energy Storage Systems and formally integrates them into the electricity ecosystem. This paves the way for battery storage, renewable balancing and grid modernisation, making India’s power system future-ready.

What does this mean for consumers?

Consumers are expected to benefit from improved service quality, quicker grievance redressal and competitive pricing. With regulated competition, discoms must improve performance or risk losing customers. The move also protects farmers and low-income households from tariff shocks through direct, budget-backed subsidies.

Why the Bill matters now?

As India expands renewable energy capacity and pushes for electrification across transport, industry and households, an updated legal framework became essential. The Bill aims to align India’s power sector with global standards while ensuring reliability, affordability and fairness across all consumer segments.