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Power: Nov 2012

November, 2012

India is the fifth largest producer and consumer of electricity in the world after US, China, Japan and Russia. Electricity production in India (excluding captive generation) stood at 876.4 terra watt hour (TWh) in FY12. Power is one of the key sectors attracting foreign direct investment (FDI) inflows into India; inflows recorded a compound annual growth rate (CAGR) of 70 per cent during FY06-FY11. Growing population, increasing penetration and per-capita usage has further provided the impetus, in addition to the expansion in industrial activity, to boost electricity generation.

With a large swathe of rivers and water bodies, India has enormous potential for hydro power. Twelfth Five Year Plan (2012-2017) includes additional 30,000 megawatt (MW) of hydro-electric power generation. India currently has 4.4 gigawatt (GW) of net electricity generation capacity using nuclear fuels (across 20 reactors) and aims to increase it up to 20 GW by 2020; with one of the world's largest reserves of thorium, India has huge potential in nuclear energy. Wind energy is the largest renewable energy source in India; projects like the Jawaharlal Nehru National Solar Mission (which aims to generate 20,000 MW of solar power by 2022) is creating a positive environment among investors keen to exploit India's potential. India has large reserves of coal; estimates for FY11 put the figure at about 285.8 billion tonnes. India's proven natural gas reserves measure about 1,074 billion cubic meters.

Major investments earmarked by public as well as private companies across the value chain to install large capacity additions - 100 gigawatt (GW); targeted in the 12th and 13th Five-Year Plans. Power is one of the key sectors attracting FDI inflows into India. The FDI inflows into the sector increased from US$ 87 million to US$ 1,252 million during FY06-FY12. The sector has witnessed a total of 35 mergers and acquisitions (M&A) deals since 2010.

India's installed power generation capacity was 199.9 GW at the end of March 2012. India is set to become a global manufacturing hub with investments across the value chain. About 82 GW worth of generation capacity is set to be added during FY11-FY15; future investments will benefit from strong demand fundamentals, policy support, and increasing government focus on infrastructure.

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