Investments in Indian power sector rising

Private firms invest US$61 billion over four fiscal years.

Private sector investments in the power sector have not narrowed down in the past few years, said Power Minister Jyotiraditya Scindia.

"The projected investments by the private sector during the current fiscal stand at Rs 85,578 crore (US$16 billion)," he said.

Government data show private sector investments of US$10 billion during fiscal 2009-10, US$16 billion in while in fiscal 2010-11; US$19 billion in 2011-12 and US$16 billion in 2012-13.

India allows up to 100% foreign direct investments in the power sector under the automatic route for generation, transmission and distribution.

It also permits the issue of tax-free bonds to finance infrastructure projects. External commercial borrowings (ECBs) to partly finance rupee debt of existing power projects are also allowed.

The government has reduced the withholding tax on interest payments on ECBs from 20% to 5% for three years to provide low cost funds to infrastructure sectors, including power.