Recently while addressing the US-India Economic Opportunities and Synergies Indian Power Minister, Shri Shinde said India offered lucrative investment opportunities in power sector and the US investors should come forward to benefit from that opportunity. He said that hundred percent foreign direct investment is permitted to facilitate private investment on automatic route for the projects of power generation, transmission and distribution, India targets at capacity addition of almost 100,000 MW during the 12th Five Year Plan (2012-17) and half of it would be done by the private firms. Hon,ble is stated to have said that while the present installed generation capacity in India is nearly 1,81,000 MW, over 80,000 MW of new power capacity is under construction. The funding requirements in power sector during the current five year plan (2007-12) are estimated at $230 billion and similar investment would be required in the next five year plan period. The government has liberalized norms to attract private investment, especially foreign direct investments, in power sector.
An independent regulatory framework in India now provides business confidence to power companies and a fairly lucrative rate of return on equity of 15.5 percent per annum. Almost one-third of investment in power sector during the 11th plan period came from private sector. The share of private investment in power sector is likely to go up to 50 percent in the 12th plan period. In the last five years, per capita consumption of electricity in India has gone up from 600 kwh to 785 kwh.