Hundreds of miners were trapped underground in the eastern state of West Bengal when the lifts failed, metro services were stopped temporarily in the capital and hundreds of trains were held up nationwide.
"The north, northeastern and the eastern grids are down but we are working and we will have them restored shortly," Naresh Kumar, a spokesperson at the Powergrid Corporation of India, told AFP.
Federal Power Minister Sushilkumar Shinde told reporters that the monster outage, which struck in the middle of the working day, was caused by states drawing power "beyond their permissible limits."
There appeared to have been a domino effect, with the northern grid drawing too heavily on the eastern grid which in turn led the northeastern grid to collapse.
"Half the country is without power. It's a situation totally without precedent," said Vivek Pandit, an energy expert at the Federation of Indian Chambers of Commerce and Industry.
Power was gradually flickering back in some areas several hours after the crisis struck, but was not expected to be fully restored until later in the day.
In New Delhi, the metro train system came to a standstill and traffic lights were out, causing chaos for a second day after a failure on the northern grid on Monday which caused the nation's worst outage in more than a decade.
"Drivers of all the metro trains have been asked to stop at the stations. No passengers will be allowed in the metro station until power is restored," said a spokesperson for the network which carries two million people a day.
The city's hospitals and airports, accustomed to the regular outages caused by load-shedding, said they had switched to generators and back-up systems to keep their operations running normally.
About 400 trains on the extensive national railway network were affected by the outage, a spokesperson for the railways told AFP, with all operations stopped in Uttar Pradesh. With nearly 200-million people, this one state alone has a population bigger than Brazil's.
In the east, the massive city of Kolkata went without power as did the surrounding state of West Bengal as the eastern grid, which supplies five states, failed under the stress of over-demand.
"This is the worst power crisis in the region. We were supplying power to the northern grid and this power sharing has led to the collapse," West Bengal Power Minister, Manish Gupta, told AFP.
West Bengal Chief Minister Mamata Banerjee told reporters that "hundreds" of miners had been trapped in mines operated by the government-owned Eastern Coalfields in Burdwan, about 180km northwest of Kolkata.
"All efforts are on to resume power supplies. You need power supplies to run the lifts in the underground mines," she said, while declaring that state employees could go home for the day.
Smriti Mehra, a teller in a Bank of India branch in New Delhi, said the latest outage had caused chaos at work.
Disruption and inconvenience
"Our main server is down. We have had to send back so many of our customers. There is no internet, nothing is working," Mehra said.
"It is a total breakdown of everything in our office," she added.
On Monday, the northern grid collapsed for six hours shortly after 2am, causing massive travel disruption and widespread inconvenience in nine states including the capital New Delhi.
In total, 20 out of 29 states were affected on Tuesday, according to an AFP calculation.
Shinde, the power minister, had called Monday's outage a "failure" but also boasted that India had been quick to restore power, unlike the US which took days to restore electricity after a 2003 blackout on its eastern seaboard.
He and the rest of the government woke up on Tuesday to a barrage of calls for urgent reform of the power sector.
Leading the charge were business lobby groups who said Monday's outage underlined the government's inability to address India's perennial electricity shortfall.
"The increasing gap between electricity supply and demand has long been a matter of concern," said Chandrajit Banerjee, director general of the Confederation of Indian Industry.
The CII, Banerjee said, has "consistently highlighted" the need for urgent steps to improve supplies of coal to thermal power plants and reforming state distribution utilities. – AFP