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GOVERNMENT OF INDIA
MINISTRY OF POWER
RAJYA SABHA
UNSTARRED QUESTION NO.4144
ANSWERED ON 30.03.2026
COMPARISON OF INDUSTRIAL ELECTRICITY TARIFFS IN INDIA WITH MAJOR
COMPETING ECONOMIES
4144 DR. KANIMOZHI NVN SOMU:
Will the Minister of POWER be pleased to state:
(a) whether Government has conducted any comparison of industrial electricity tariffs in the
country with major competing economies;
(b) the main factors contributing to higher tariffs in the country; and
(c) Government’s roadmap to enhance competitiveness of Indian Industry through lower energy
costs?
A N S W E R
THE MINISTER OF STATE IN THE MINISTRY OF POWER
(SHRI SHRIPAD NAIK)
(a): No specific study has been conducted to compare the industrial electricity tariffs in India
with major competing economies.
(b): As per the provisions of the Electricity Act, 2003, the Appropriate Electricity Regulatory
Commission determines the electricity tariff for supply of electricity by a generating company to a
distribution licensee, transmission of electricity, wheeling of electricity and retail sale of electricity.
Section 61 of the Electricity Act, 2003 and the tariff policy provide the guiding principles for
determination of tariff by the Appropriate Commission.
Industrial electricity tariffs in India are influenced by multiple factors, including the cost of
power generation based on the fuel mix (coal, gas, renewable energy), transmission and distribution
costs, and technical and commercial losses in the system. In addition, cross-subsidization of tariffs,
wherein industrial and commercial consumers subsidize agricultural and domestic consumers,
contributes to relatively higher tariffs for industry.
(c): The Government has undertaken several measures to enhance the competitiveness of Indian
industry through lower electricity costs, as mentioned below:
(i) Liberalized framework for captive power generation by industries.
(ii) Facilitating open access with availability of adequate transmission capacity and
rationalization of open access charges.
(iii) Issuance of guidelines for tariff based bidding process for procurement of electricity under
Section 63 of Electricity Act, 2003 to promote competitive procurement of electricity by
distribution licensees.(iv) Setting up of Power Exchanges to ensure fair, neutral, efficient and robust electricity price
discovery.
(v) The operationalisation of National Merit Order Dispatch with the objective of lowering the
cost of electricity to consumers.
(vi) Reduction of Aggregate Technical & Commercial (AT&C) losses under RDSS to improve
the finances of the utilities, which will enable them to better maintain the system and buy
power as per requirements; benefitting the consumers.
(vii) Introduction of flexibility in utilization of domestic coal by State/Central Generation
Companies (GENCOs).
(viii) Rationalization of linkage sources of State/Central Generating Companies (GENCOs) and
Independent Power Producers (IPPs) with a view to optimize transportation cost.
(ix) Draft Electricity (Amendment) Bill, 2025 and Draft National Electricity Policy, 2026
propose the elimination of cross-subsidy for manufacturing industries, railways and metro
railways within 5 years of the promulgation of the Amendment Act.
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