NEW DELHI - India plans to allow state-run power utility NTPC Ltd to sell around a tenth of its capacity at market-determined prices, which could boost its profit by up to 40 percent, the Economic Times reported on Thursday.

The power ministry had agreed to the proposal and a final decision would be taken by the cabinet by mid-January, the paper said, citing an unnamed government official involved in the process.

The Economic Times said 85 percent of NTPC's capacity is sold to states via long-term agreements, which set at below market prices, and the government decides whether to give the remaining output to states with a shortage of power.

NTPC could be permitted to sell part of this 15 percent capacity in the open market to bulk consumers such as sugar mills, chemical manufacturers and steel plants, the paper said, citing another unnamed official familiar with the government move. (Reporting by Devidutta Tripathy; Editing by John Mair)