Parallel Licensing Can Help Build Energy Backbone for India's Next Growth Phase

Reliable electricity is no longer just a utility service. It is an essential economic infrastructure, and the quality of power distribution will increasingly shape investment decisions.

June 26, 2026. By News Bureau

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India's next wave of growth will be driven by artificial intelligence, data centers, advanced manufacturing, and global capability centers. What these industries need most is round the clock, reliable and quality power supply.

As business districts expand and new growth hubs emerge, the quality of electricity distribution will increasingly shape investment decisions. The shift is already visible. Andhra Pradesh recently allowed large data centres to secure deemed distribution licences, with Google among the first beneficiaries. It is, thus, evident that reliable power is increasingly becoming central to attracting AI and digital investments.

For several decades, state-owned power distribution companies have built and managed the ‘last mile connectivity’ across India. Considering that power is the bedrock that will propel India from developing to developed economy, it is time that states explore options to strengthen power distribution with focus on reliability, easy access and zero outages. Parallel licensing, for example, offer states a ready framework to build on this theme.

What is Parallel Licensing?

Section 14 of the Electricity Act, 2003 allows more than one distribution licensee to operate in the same area. Parallel licensing is a consumer choice framework that Parliament put in place more than two decades ago to ensure consumers have access to dependable power, better service standards and more choices in how they meet their energy needs. However, this is yet to take off in a meaningful manner.

India's peak power demand reached a record 270.82 GW this year. While investments on the generation side have significantly increased, the need to prioritise the modernisation of the distribution network has never been greater.

Parallel licensing can play a key role in attracting necessary investments in grid modernisation, digital technologies and network upgrades. When consumers have choices, utilities would have to compete on reliability, responsiveness and customer experience. This would thereby lead to greater accountability through increased investments and adoption of modern technologies.

Reliable electricity is no longer just a utility service. It is an essential economic infrastructure, and the quality of power distribution will increasingly shape investment decisions. Recent geopolitical tensions around the Strait of Hormuz have exposed the vulnerabilities of oil importing economies. For India, strengthening domestic power networks will be critical for energy security and long-term economic competitiveness as the world shifts from an oil dependent economy to an electrostate economy.

India’s financial capital, Mumbai has already shown the way. The island city’s electricity ecosystem operates through multiple distribution licensees under the oversight of the Maharashtra Electricity Regulatory Commission. Today, utilities including Tata Power,

Adani Electricity and BEST have developed one of India's most reliable urban energy networks.

Sustained investments in grid modernisation, digital technologies and consumer services have enabled Mumbai to meet peak demand of around 4,500 MW while supporting the needs of India's financial capital, where businesses and households depend on uninterrupted electricity. Mumbai's experience is a testament to how consumer choice and strong regulatory oversight can go hand in hand to deliver better outcomes.

Can this model be implemented across India’s emerging growth corridors?

The diverse developmental priorities across India’s states mean that parallel licencing can unlock multi-layered value at different stages of their growth journey. Certain geographies increasingly exhibit characteristics that make them suitable candidates for parallel licensing sooner rather than later.

These include large metropolitan regions, industrial corridors, advanced manufacturing clusters, data centre hubs, airport-led economic zones, renewable-energy parks and rapidly urbanising districts where electricity demand is growing faster than traditional distribution infrastructure can be upgraded.

As India expands its digital economy, electricity distribution is evolving from a public utility function into a strategic economic enabler. AI infrastructure requires not only adequate power but also higher standards of reliability, resilience and service responsiveness.

In such locations, parallel licensing can serve as a mechanism to attract fresh capital, accelerate network modernisation and introduce technology-led service improvements while continuing to operate under the oversight of state electricity regulators. At the same time, reliable electricity is key to meeting growth aspirations for semi urban and rural areas, where the focus is on skilling, education, agriculture, traditional businesses, and setting up small and medium enterprises.

While several southern states have demonstrated the benefits of sustained investment in distribution modernisation and service quality, many rapidly expanding urban and industrial corridors across northern India are now confronting a different challenge: demand growth that is outpacing the pace of network upgrades. This is where policy instruments such as parallel licensing could become increasingly relevant.

Lessons for Other States

The lessons from Mumbai are particularly relevant for states like Haryana where more districts and zones emerge as potential growth hubs, boosted by diverse economic drivers. For example, Haryana unveiled its Global Capability Centres (GCC) Policy-2026 earlier this month, which is a targeted intervention to reverse a visible slowdown in new

GCC investments in the state. Haryana currently hosts over 270 GCCs, with global majors from Google to American Express, Oracle, Mastercard and Fidelity already operating out of Gurugram. Under the new policy, the state has set a target of attracting over 100 new GCCs and generating more than 30,000 jobs. It is obvious that quality and reliable power supply will form the bedrock of this initiative and will require the need to open-up the distribution sector for more participation.

HERC is currently hearing a petition from Gurugram based Eleven Power, which has applied for parallel licensing in electricity distribution in districts of Gurugram and Nuh. The districts represent two sides of the state’s growth story. Nuh brings into focus the need for dependable and responsive electricity supply across households, farms and small businesses. Meanwhile, Gurugram has emerged as one of India's leading hubs for multinational companies, global capability centres and digital businesses. As investment in AI and digital infrastructure accelerates, the state’s demand for reliable electricity will continue to grow.

As part of its plan, Eleven power has proposed an investment of INR 4,717 crore in Gurgaon and Nuh. Eleven Power has committed to round the clock quality power, with 80 percent of supply coming from renewable sources. This will translate into significantly lower carbon footprint. The petitioner will also implement new technologies to sharply reduce technical and commercial losses with cost effective pricing of power. Further, Eleven Power proposed to phase out diesel generators, which have been a bane for Gurugram. This will lead to substantial reduction in emissions. The company will also usher in underground cables as part of its captive network and offer 24X7 call centre to address consumer complaints.

A new entrant like Eleven Power will bring fresh capital and new technologies for boosting green and reliable power infrastructure. This also underscores the growing industry interest in strengthening electricity distribution.

India's next phase of growth will rely on talent, technology and infrastructure working together. Reliable electricity will be central to that effort. The legal framework already exists. The opportunity now is to put it to work.