Capacity addition is a complex process influenced by policy decisions at various levels. Compared to the MoU era of 1990s India has made significant transition towards relying on competitive bidding route to allow private sector investment in generation. Since the enactment of Electricity Act 2003 and notification of the competitive bidding guidelines in 2005, many states have contracted capacity of over 42,000 MW through the bidding route. With the recent policy changes mandating all new capacity to be contracted by distribution companies only through the bidding route, the importance of fair and rational process for this purpose has increased manifold. In the light of these developments, this first ever detailed study of competitive bidding based capacity addition in India by Prayas presents a review of important trends in (coal based thermal) capacity being contracted on long term basis through this route and also analyses competitiveness of the tariffs so discovered. The review highlights that adopting bidding route for capacity addition though a step in the right direction, raises new governance related challenges and concerns. The paper while suggesting certain measures for improvement hopes to contribute to the process of informing the policy and regulatory discourse on capacity addition related issues as well as initiating further rigorous analysis and debate to strengthen the existing framework.