Former NITI Aayog CEO Amitabh Kant has issued a stark warning: India's ambition for energy independence cannot be realized without a radical overhaul of its financially struggling electricity distribution companies (DISCOMs). Kant emphasized that while electrification, renewable energy, and storage are crucial, the persistent losses within the DISCOM sector remain a significant impediment.
Hormuz Crisis Underlines Urgency
Kant's remarks come in the wake of renewed conflict in West Asia, which has intensified concerns over the Strait of Hormuz. With the collapse of the US-Iran ceasefire and Tehran's strikes on ships in the strategic waterway, India's heavy reliance on imported fossil fuels, largely transported through Hormuz, has been brought into sharp focus. India imports approximately 87 percent of its crude oil requirements, making energy security a paramount national concern.
"The Hormuz crisis was a wake-up call. Energy independence is paramount, and electrification, renewables, and storage are the way forward. But India cannot get there until we radically overhaul our loss-making DISCOMs," Kant stated on X.
AI: A Revolution for DISCOM Reform India
To address the deep-seated issues within the power distribution network, Kant advocated for an "AI revolution" in India's DISCOMs. He believes artificial intelligence offers a unique opportunity to significantly improve operational efficiency and drastically reduce Aggregate Technical and Commercial (AT&C) losses.
"AI gives us a once-in-a-lifetime shot at this: predictive maintenance, lower AT&C losses, smarter capex planning," Kant explained. He specifically highlighted Bengaluru-based startup Pravāh, founded by Mohak Mangal and Dhruv Suri, praising their frontier AI models for the energy sector. Kant urged DISCOMs to engage with such innovative startups, suggesting they could transform the sector within a year.
However, Kant also pointed out a critical bottleneck: government procurement rules. He argued that stringent L1 (lowest bidder) tender processes often hinder startups from contributing their cutting-edge solutions. "We need more founders across the energy stack building such bold solutions. But the government must also fix public procurement; with L1 tenders, startups will never make it," he asserted.
Persistent Financial Challenges for DISCOMs
Despite a reported turnaround where DISCOMs collectively posted a profit of Rs 2,701 crore in FY25, following substantial losses in previous years, structural challenges persist. A September 2025 study by Prayas (Energy Group) for the Sixteenth Finance Commission estimated accumulated DISCOM losses at a staggering Rs 7.08 lakh crore, growing at an average annual rate of 8 percent.
The study identified rising working capital borrowings, high interest costs, and persistent operational inefficiencies as primary contributors to the sector's financial distress. These findings underscore the urgent need for long-term, systemic reforms to ensure the financial viability and operational efficiency of India's power distribution companies, which are vital for the nation's energy independence goals.