FDI In Thermal Power Sector— Procedures, Fees, Documents Required

Updated on May 06, 2025 02:36:56 PM

The revolutionary belief to turn the modern world towards the era of technology is immensely seen in the current scenario. From running heavy operations to automating heavy tasks which may not be possible to handle by humans alone, technology enables continuous management of work within a short period. Yet, for running such tech-oriented appliances, there is a giant demand for the power which gives rise to voltage in the circuit across the world that has connected the various countries together.

Economic expansion is a key cause of rising energy demand. Global economic growth is fueling an increasing need for energy. This is particularly true in emerging nations where the population is expanding and the level of life is rising. The middle class will see an increase in energy use as more people use it for things like cooking, heating and cooling their homes, and transportation.

In India, there is 48.5% coal installed with the total capacity to hold over 429.96 GW. The hydro installed capacity is over 11% followed by wind, solar and other RE installed capacity which share 31.25% in the Indian economy. The largest nuclear plant in Maharashtra will have a capacity of 9900 MW. India has 240.43 GW of total thermal installed capacity, of which 208.18 GW comes from coal and the remaining amounts from petrol, diesel and lignite.

India's performance, by concern over thermal power outlook, has been transformed its perspective over the course of years by the government intervention. NTPC Ltd, India’s largest integrated power generator, has registered the highest-ever power generation of 400 BU in FY23, a growth of 10.80% via-a-vis previous year.

The Rourkela Steel Plant (RSP) established the 250 MW project of NTPC-SAIL Power Company Ltd to supply steady power to the steel plant, which is essential for economic growth. To help the country to achieve its decarbonisation objectives, NTPC has set the target of using renewable energy sources to account for half of its installed capacity by 2032. The company's non-fossil portfolio saw growth of 24.24% during the fiscal year, FY 23. By 2032, about half of NTPC's portfolio will consist of power capacity that is not based on fossil fuels.

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Objectives Of FDI In Thermal Power Sector

Following are the objectives of FDI in thermal power sector:

  • To transmit heat for industrial purposes.
  • To construct new thermal power plants, thereby helping a developing nation deal with its temporary electricity shortage.
  • To advance cleaner coal technologies and efficient operation of nuclear/thermal power plants.
  • To increase a country's reliance on imported fossil fuels, leaving it subject to price volatility and supply interruptions.
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Component Permitted Under FDI In Thermal Power Sector

100% FDI allowed under FDI in thermal sector through automatic sector in

  • generation of all energies (except atomic energy)
  • transmission and distribution of electric energy
  • Power trading

49% FDI is permitted in Power Exchanges registered automatically under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010.

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Documents Required For FDI In Thermal Power Sector

Many documents are required for FDI in the renewable sector which are as follows:

  • List of names, addresses, and identification proof of all foreign collaborators of the investor company/entity
  • From both investor/investee entities- Certification of Incorporation and MoA
  • Copy of joint venture agreement/ shareholders agreement/technology
  • Copy of downstream intimation
  • Copy of relevant past FIPB/SIA/RBI joint with the current proposal
  • Copy of Downstream Intimation
  • An affidavit to ensure all documents are relevant
  • Valuation certification approved by a certified chartered accountant
  • CS Certificate
  • Declaration by the Authorized Representative of the Indian Company/LLP
  • Pre and post-shareholding pattern in the Indian company
  • Copy of the order of the High Court on the scheme of merger/ demerger/ amalgamation (if applicable)
  • RBI approval on the amount of refund concerning the amount of the issue (if applicable)
  • Valuation certificate
  • Approval letter (if non-compliant with the guidelines – if applicable)
  • Relevant RBI approvals for an issue of equity shares against funds payable to the foreign investor
  • FIRC/ Debit statement
  • Know Your Customer (KYC)
Documents Required For FDI In Thermal Power Sector
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Procedure Of FDI Approval (Government)

Following are the procedures which required at the time of FDI in the healthcare sector:

Step 1: FILLING APPLICATION FORM ONLINE

Applicants must fill out the online application form along with the relevant documents for making out the proposal for Foreign Direct Investment

Step 2: SENDING APPLICATION TO POTENTIAL AUTHORITY

Filing the proposal for FDI online within two working days, DIPP then will address the concerned administrative ministry to transfer the proposal of applicants electronically

Step 3: SUBMIT REQUISITE PHYSICAL DOCUMENTS

Collect all the requisite documents for continuing the process of the investment proposal. In case documents may be found incorrect, applicants will be held responsible in case of any deviation found.

Step 4: PROCESSING AND APPROVAL/ REJECTION OF APPLICATION

The DIPP along with potential authorities will process the application internally and recognize various ministries for adding several comments such as the Ministry of Home Affairs, Reserve Bank of India, Ministry of External Affairs, Ministry Of Finances, etc.

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What Are The Conditions For Procedure Of FDI Approval?

There are conditions tapping for the procedure of FDI approval which must be understood by investors.

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Key Advantages For Investors In India

Following are the key advantages for investors who invests in thermal power sector:

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Benefits Of FDI In Thermal Power Sector

Following are the benefits of FDI for the investors who invests in thermal power sector:

  1. Industrial Expansion - Increased industrial production will increase the need for electricity.
  2. Growing population - Population growth in cities and rural areas will probably increase demand for energy.
  3. Market advantage - The energy sector will benefit from rising per-capita power consumption.
  4. Increasing investments - Aspiring initiatives throughout the value chain are increasing the need for power.
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Conclusions

Historically, developing nations have used foreign direct investment (FDI) in thermal power plants to meet their short-term energy demands and obtain access to cutting-edge technologies. The effects of thermal electricity, especially coal plants, on the environment, however, are a big worry. Better uses for foreign direct investment would be in clean technology modernization of already-existing thermal facilities or even in renewable energy sources like wind and solar. This change would support a greener and more sustainable future for the world while guaranteeing energy security for the host nation.

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Attention Investors

Several other factors to consider for investors while investing in medical industries are listed below:

  • Before involving huge investments, applicants must be prerequisites to check the kind of companies the government allows them to invest in. Because investment in the stock market is volatile and may not recover your loss, leading to unwriggled investment which will not recover at the time of redemption of company loss.
  • Additionally, before application applicants need to inspect and ensure that all the requisite documents are submitted online without discovering any omissions and incorrect information within the documents. FDI is largely inspired to bring investors forth along with certain advantages that benefit sectors.
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What Are The Eligibility Requirements For FDI In India?

Investors must also need to check eligibility criteria for buying investment in India in sectoral companies.

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