India is planning to open its retail electricity market to private companies across the country, ending decades of dominance by state-run distributors, according to a draft bill released by the federal power ministry on Friday.

The proposal would enable private firms such as Adani Enterprises, Tata Power, Torrent Power, and CESC to expand their operations nationwide. A previous attempt to introduce such reforms in 2022 faced strong opposition from state-run power distribution companies.

Currently, only a few electricity distribution zones — including the National Capital Region, Odisha, and industrial states such as Maharashtra and Gujarat — have been privatised, as the existing laws do not explicitly permit wider private participation. The majority of India’s power distribution remains under state control, with utilities burdened by heavy financial losses.

The central government has been urging state power boards to reduce losses, strengthen their finances, and modernise outdated infrastructure. Earlier this year, Uttar Pradesh, India’s most populous state, invited bids to privatise two of its four power distribution companies.

As of June 2025, state utilities owed power generators around Rs 566 billion (USD 6.78 billion), creating severe liquidity constraints for independent power producers and limiting credit availability across the sector, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).

The draft bill also proposes allowing multiple private players to operate within the same distribution area — a move that would break the existing monopoly structure under the Electricity Act. If implemented, the reform could mark one of the most significant overhauls of India’s power sector in decades, potentially improving competition, service quality, and financial efficiency.