The approval, given to the country's largest spot power market, the Indian Energy Exchange, is for fuel generated from costlier sources like imported coal and gas.

Power plants that use those sources will be allowed to sell on the new market segment to be called 'high-price day-ahead market', the order said.

The regulator last year lowered the cap on the ceiling for all spot power market segments to 12 rupees per unit of electricity from 20 rupees per unit earlier.

($1 = 82.7600 Indian rupees)

(Reporting by Sarita Singh in New Delhi; Editing by Nivedita Bhattacharjee)