Scenario of Power Sector in India
Infrastructure refers to all those services and facilities that constitute the basic support system of an economy. The development of an adequate infrastructure is essential for sustainable growth of the Indian economy. Power is one of the most important components of infrastructure that affects economic growth and well-being of nations.
India is the fifth largest electricity producing nation in the world. Power generation has grown over 100 fold since independence. The total installed capacity in India is above 1, 50,000 MW, of which majority of capabilities is with public sector companies. Only 15 per cent capacity is from the private sector, though this is now starting to increase.
The power sector is normally divided into three sub-systems:
Generation: It is done at power plants or stations that convert some form of mechanical, chemical, or nuclear energy into electrical energy.
Transmission: It is the process of transferring the generated power to a distribution system.
Distribution: It is the final stage in the delivery of electricity to end users. It involves providing the transmitted power to individual homes, commercial areas, etc.
Growth and Performance
The Indian Ministry of Power has set a goal, “Mission 2012: Power for all”. Along with providing cent per cent access to electricity, the main aim is to provide reliable and good quality power to enhance commercial feasibility.
Due to rapid urbanisation and industrialisation, there is a huge demand for power in India. This creates enormous opportunities for private players because of high energy shortage. Government is inviting private investment in power infrastructure in India by providing various incentives to set up power plants, according to research report of Indian Power Sector Analysis.
A massive capital investment of around US$ 200 billion is required to meet Mission 2012 targets. The Indian electricity sector, will add nearly 45,000 megawatt (MW) to its total installed capacity by 2013-14, to the existing production, according to a RNCOS research report. This has welcomed several global companies to establish their operations in India under the public-private partnership programs.
Investment Policy
Government of India has initiated several reform measures to create a favourable environment for investment in the country. Some of the measures are:
India is the fifth largest electricity producing nation in the world. Power generation has grown over 100 fold since independence. The total installed capacity in India is above 1, 50,000 MW, of which majority of capabilities is with public sector companies. Only 15 per cent capacity is from the private sector, though this is now starting to increase.
The power sector is normally divided into three sub-systems:
Generation: It is done at power plants or stations that convert some form of mechanical, chemical, or nuclear energy into electrical energy.
Transmission: It is the process of transferring the generated power to a distribution system.
Distribution: It is the final stage in the delivery of electricity to end users. It involves providing the transmitted power to individual homes, commercial areas, etc.
Growth and Performance
The Indian Ministry of Power has set a goal, “Mission 2012: Power for all”. Along with providing cent per cent access to electricity, the main aim is to provide reliable and good quality power to enhance commercial feasibility.
Due to rapid urbanisation and industrialisation, there is a huge demand for power in India. This creates enormous opportunities for private players because of high energy shortage. Government is inviting private investment in power infrastructure in India by providing various incentives to set up power plants, according to research report of Indian Power Sector Analysis.
A massive capital investment of around US$ 200 billion is required to meet Mission 2012 targets. The Indian electricity sector, will add nearly 45,000 megawatt (MW) to its total installed capacity by 2013-14, to the existing production, according to a RNCOS research report. This has welcomed several global companies to establish their operations in India under the public-private partnership programs.
Investment Policy
Government of India has initiated several reform measures to create a favourable environment for investment in the country. Some of the measures are:
- There is no requirement of licenses to set up new power plants in India. According to the Ministry of Power, 100 per cent FDI is permitted in generation, transmission and distribution system of power sector in India.
- Indian Government provides income tax holiday for a block of 10 years in the first 15 years of operation and waiver of capital goods' import duties on mega power projects (above 1,000 MW generation capacities).
- Power procurement is permitted through a transparent bidding process. There is no customs duty on the import of capital goods for mega power projects.
- The Government of India has also constituted independent regulatory commissions in 22 states, so that each State has its own electricity regulatory commission. Distribution reforms have been initiated with distribution being privatised in few states like Mumbai, Orissa and Delhi.
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