The Cabinet Committee on Economic Affairs approved an enhanced permissible equity investment limit for Powergrid Corporation (Powergrid), raising the per subsidiary cap from Rs 50 billion (Rs 50 bn) to Rs 75 billion (Rs 75 bn) while retaining the existing cap of 15 per cent of the company's net worth. The decision will allow the state-owned transmission entity to expand its financial commitment to subsidiary companies and accelerate network development. The change supersedes the previous threshold and aligns the investment ceiling with anticipated project financing needs.

The approval is expected to support evacuating renewable energy capacity and to help achieve the national target of 500 GW from non-fossil-based sources. Powergrid will be in a stronger position to back transmission corridors and evacuation schemes that are critical to integrating large-scale wind and solar generation. Officials indicated that greater headroom for equity investment will facilitate timely equity injections and reduce reliance on external funding in capital intensive projects.

The clearance permits Powergrid to participate in bids for capital intensive transmission projects, including Ultra High Voltage Alternating Current and High Voltage Direct Current networks, enabling engagement in UHVAC and HVDC schemes. The government said the change will broaden competition in tariff based competitive bidding for critical transmission works and ensure better price discovery. Improved competition is expected to contribute to more affordable and cleaner electricity supply for consumers over time.

The approval has been granted under the Department of Public Enterprises delegation of powers for Maharatna central public sector enterprises issued on four February 2010. The measure is designed to align policy instruments with the scale of modern transmission programmes and to support large capital outlays required for grid augmentation. Market participants and policymakers will monitor implementation to assess the impact on project delivery, tariff outcomes and progress towards renewable energy targets.