Radical implications of FDI up to 49% in power exchanges
Considering that FDI up to 100%, under the automatic route, is permitted in the power sector (except atomic energy) for generation, transmission, distribution of electricity and power trading, is the recent decision to permit foreign investment up to 49% in power exchanges a forward-looking step? Or, as the present policy does not provide any specific dispensation for foreign investment in power exchanges, is it only a weak attempt to plug this gap?
To answer these questions, we need to take a quick look at what is happening in electricity markets. Development of the market in electricity remains at the heart of power sector reforms, especially after the enactment of the Electricity Act, 2003. The electricity regulators are called upon to play a pivotal role in this endeavour.