Relief for Industries from High Power Tariffs!

Taking forward reforms in the power sector, the government has proposed a historic amendment to the Electricity Act, aimed at implementing mandatory cost-reflective tariffs, reducing high electricity rates for industries, and exempting railway systems and manufacturing companies from the burden of cross-subsidies.

The amendment seeks to establish a robust and forward-looking legal framework to address the financial stress faced by power distribution companies (DISCOMs), which are burdened with losses exceeding ₹6.9 lakh crore. The proposal also aims to curb high industrial power tariffs and promote the adoption of clean energy.

According to the draft of the Electricity (Amendment) Bill, 2025, state governments will continue to have the provision to offer advance subsidies to specific consumer categories to ensure that no consumer group bears an unfair burden.

The draft bill, released today for public consultation, also proposes granting state electricity regulatory commissions the power to determine tariffs suo motu (on their own initiative). It further stipulates that revised tariffs must take effect from April 1 of every financial year, thereby promoting overall financial discipline in the power sector.

The bill notes that high industrial tariffs, cross-subsidies, and rising power purchase costs have weakened the competitiveness of Indian industries, particularly micro, small, and medium enterprises (MSMEs). It states that the proposed amendments aim to rationalize power tariffs, boost demand, and reduce logistics costs, thereby enhancing India’s overall economic productivity.

The bill further highlights that Indian Railways and metro rail systems are subject to cross-subsidies and surcharges on electricity rates, making them more expensive. This, in turn, raises the cost of freight and passenger transport, ultimately driving up prices of goods and services across the economy.

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