"Power is a concurrent subject. This results in inordinate delays as developers are caught between politics of the state and Central government. Constitutional amendment should be sought to make power only a central subject," ABN-AMRO Bank said in a presentation to the power ministry on `Measures to attract FDI in power sector in India'.

Making a case for power to move to the central list, the bank gave the example of the telecom sector which has attracted the highest foreign direct investment (FDI) in the post-reform era.

"A uniform central policy will enable a smooth and efficient transaction process for all parties concerned," DSP Merrill Lynch (DSPML) said in its presentation to the power ministry.

A new scenario is emerging in the power sector requiring a global approach and uniform regulation. Foreign players need to spend considerable time, cost and energy in understanding each state's policy regime which is affecting the interest level, DSPML said.

The government has taken various initiatives to make the power sector investor-friendly, but a lot more needs to be done, both the institutions said.

The power ministry had sought leading FIs' and banks' views to remove hurdles in the way of attracting FDI in the power sector.

ABN-AMRO Bank said that for states which were forming, the government should work with the World Bank and Asian Development Bank (ADB) to provide a partial risk guarantee for raising finance for generation, transmission and distribution (T&D). Most of the FIs have also unanimous views that T&D should have been thrown open for private sector participation either before the generation or simultaneously with generations sector.

The country is losing about Rs 20,000 crore annually on T&D and no foreign investor would be intereted in putting money in the generation sector without have a viable and efficient distribution sector.

India needs an investment of Rs 800,000 crore over the next 12 years for adding one lakh MW of generation capacity along with investments in the T&D. Nearly 50 per cent of this investment has to come from private and foreign investments.

DSP Merrill Lynch also said that each state electricity board (SEB) should be considered as a single entity and should be unbundled as ``one unit'' to attract larger players.