Dec 02: India's declining power consumption, Trump's tariff effect

Winter is wintering. Bengaluru's battling mist, Telangana’s bracing for a cold wave, and Puducherry's schools are taking a rain check thanks to Cyclone Ditwah. In all of this, Delhi’s taken this as a competition and is having the chilliest November in five years. Stay warm kids.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 8 mins.

The Indian stock market ended flat for a second straight session on Monday, with the Sensex and Nifty 50 closing lower despite strong Q2 GDP data showing a six-quarter high of 8.2%.

The Core Issue: US tariffs, introduced by US President Donald Trump, have slowed India's manufacturing sector. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to a nine-month low in November. The decline is attributed to reduced sales growth and production amid challenging market conditions. Despite the tariffs, India has managed to cushion the impact somewhat by diversifying its trade partners. Still, the PMI's dip to 56.6 from 59.2 in October suggests a slowdown in manufacturing expansion, according to HSBC's Chief India Economist, Pranjul Bhandari.

What Changed: The tariffs have led to a shift in India's trade dynamics. While the tariffs have been detrimental, Indian companies have been increasing sales to clients in Africa, Asia, Europe, and the Middle East. This expansion has prevented a more significant downturn. However, new export orders have increased at their slowest rate in over a year. The export orders PMI reached a 13-month low in November, raising concerns about the future impact of tariffs and the broader international trade environment.

The Numbers: The PMI, which compiles data from roughly 400 manufacturing purchasing managers, indicates expansion with readings above 50. November's PMI of 56.6 marks the slowest improvement since February. Inflation levels have also decreased, with input expenses and selling prices rising at their slowest rates in nine and eight months, respectively.

Looking Ahead: Indian officials remain optimistic about resolving tariff issues with the US. Commerce Secretary Rajesh Agrawal expressed hope for finalizing a trade agreement framework by the end of the year. Ongoing negotiations aim to address tariff challenges affecting Indian exporters. Despite optimism for future output, confidence among Indian businesses has dropped to its lowest level in three-and-a-half years, driven by competitive pressures, including international competition.

What happened: India's power consumption declined to 123.4 billion units (BU) in November. This represents a decrease from October's 131.07 BU, marking a 5.8 per cent year-on-year drop. The reduction follows a period of increased consumption in September, when 145.66 BU were consumed, compared with 140.61 BU in the previous year. Experts attribute this decline to unseasonal rains in October and the onset of winter in November, which lessened the need for cooling appliances and delayed the widespread use of heating devices.

What Changed: Several factors contributed to the reduction in power usage. Unseasonal rains in October affected cooling needs across various regions, while November's cooler temperatures reduced the immediate demand for heating appliances like geysers and blowers. As winter began, the use of such devices remained minimal, impacting overall consumption figures. This shift in weather patterns played a significant role in the decline observed during these months, indicating how seasonal changes directly influence energy demand in India.

The Stats: The peak power demand in India reached an all-time high of about 250 gigawatts (GW) in May 2024. This surpassed the previous record of 243.27 GW set in September 2023. Despite this, the November consumption figures show a notable decrease. Government estimates predict that peak power demand could rise to 277 GW by the summer of 2025.

Way Ahead: Experts expect power consumption and demand to stabilise in December as temperatures drop further, prompting increased use of heating appliances. As winter progresses, the demand for electricity is likely to rise, reversing the current downward trend. With the anticipated rise in peak demand next summer, the energy sector will need to adapt to these seasonal variations.

Lenskart Profits Surge by 20% in First Earnings Post-Listing: Lenskart announced a 20% year-on-year increase in consolidated profit after tax, reaching Rs 102.22 crore in Q2 FY26, up from Rs 85.47 crore a year earlier. Sequentially, profits rose 67% from the previous quarter. Revenue from operations also grew 20.8% to Rs 2,096.14 crore. The eyewear company’s shares closed at Rs 410, with a market cap of Rs 71,337 crore.

Rupee Hits Record Low Against U.S. Dollar: The Indian rupee fell to a historic low of 89.7575 against the U.S. dollar, surpassing the previous record of 89.49 set two weeks prior. It further dipped to 89.82 on the interbank order-matching platform. A trader noted the central bank's intervention was "mild for now." This decline could affect import costs and inflation, impacting businesses and consumers relying on foreign goods.

Indian Bonds Slip as Growth Dims Rate-Cut Hopes: Indian government bonds fell to a two-month low on Monday, with the 10-year yield rising to 6.5594%. This drop follows India's economic growth reaching an 18-month high of 8.2% in the July-September quarter. The robust growth has led traders to reconsider the likelihood of near-term rate cuts by the Reserve Bank of India, despite record-low inflation.

Paytm Completes Key Acquisitions to Simplify Structure: On November 28, Paytm's parent company, One97 Communications, finalized the acquisition of remaining stakes in three subsidiaries: Foster Payment Networks, Paytm Insuretech, and Paytm Financial Services. This move consolidates these entities as wholly owned subsidiaries and simplifies the corporate structure. The acquisition also brings additional investments under One97's control.

Mahindra SUV Sales Surge 22% in November: Mahindra & Mahindra reported a 22% increase in SUV sales to dealers in November 2025, driven by a tax cut on larger engine vehicles. The recent reduction in goods and services tax from 50% to 40% on SUVs with engines over 1,500 cc has boosted demand. Mahindra sold 56,336 SUVs last month, with around 80% featuring larger engines.