India faces endemic electrical energy and peaking shortages. The Power Sector is plagued with mounting commercial losses due various inefficiencies, colossal commercial and technical losses and increasing subsidy burden on the states. These shortages have had a very detrimental effect on the overall economic growth of the country. In order to re-vitalise the sector and improve the techno-economic performance, the Government of India has initiated the reform process in 1991. This paper analyses the pre-reform era and identifies the key concerns which led to the initiation of the reforms. It also analyses the likely impact of the major policy and regulatory initiatives that have been undertaken since 1991 including the provisions of the new enactments which have come into force eventually in the form of The Electricity Act, 2003. This paper details out the key features of the Act and its likely impact on the Indian electricity industry in the emerging scenario. The paper also discusses major issues like power trading, role of regulator in the new regime, issue of open access, introduction of power markets and role of Appellate Tribunal for Electricity in harmonizing the orders of the various regulators.