Newspaper Summary - 031125

 Financial Markets and Regulation in November 2025 are characterized by regulators implementing accountability measures and pausing ambitious reforms while the broader market anticipates an earnings revival spurred by recent policy changes.

The Securities and Exchange Board of India (SEBI) has indefinitely paused its plan to expand the T+0 settlement cycle, citing negligible investor interest, low pilot volumes in the 25-stock trial, and concerns that running a dual settlement system would fragment market liquidity. This pause comes despite most qualified stock brokers (QSBs) being 60-70% ready for implementation. Separately, regulatory steps taken by SEBI to cool the equity derivatives segment (EDS) are showing results, as the participation of small investors has fallen by nearly half. The number of investors trading less than ₹10,000 in index options premium turnover decreased by 48% by September 2025, following a SEBI study that revealed 9.6 million retail traders suffered substantial losses in FY25.

In the Asset Management sector, SEBI has proposed comprehensive changes to mutual fund regulations, including a provision for enabling optional performance-linked expense ratios for AMCs and aiming to lower Total Expense Ratios (TER) across open-ended and close-ended schemes. Furthermore, the sector saw significant M&A activity with the promoter of IndusInd Bank, IndusInd International Holdings Ltd (IIHL), and Invesco completing their joint venture for the asset management company (AMC) as of November 2, 2025.

In Banking and Credit, regulatory comfort, including the RBI’s increase in the Loan-to-Value (LTV) ratio to 85% in June 2025, contributed to the retail gold loan segment reaching ₹1 lakh crore in net portfolio growth in H1 FY26. Meanwhile, the microfinance sector is beginning a tentative recovery in the second half of FY26 after experiencing credit stress and policy reforms. Overall, market experts see enough triggers—including the government’s recent cuts to income tax and GST, coupled with the RBI front-loading repo rate cuts and easing credit norms—to kick-start growth in the second half of the fiscal year and lead to an earnings revival, moving the markets out of a consolidation phase.

The Indian business environment in November 2025 is marked by anticipation of a consumption boom following recent tax relief, despite some turbulence in immediate GST revenue collections and manufacturing activity.

The Goods and Services Tax (GST) revenue intake for October 2025 reached ₹1.96 trillion, reflecting a 4.6% growth year-on-year (y-o-y), based on activity in September. However, official data showed that twenty out of 38 States and Union Territories registered degrowth in GST collection in October. Despite this volatility, large states generally remained positive, with Karnataka and Telangana both recording 10% gains (October 2025 vs. October 2024), while Kerala witnessed a 2% decline, and West Bengal a marginal 1% decline. Experts project that the overall GST revenue for FY26 will ultimately be higher than Budget Estimates. Furthermore, collections for November are expected to be higher due to festival demand and the increased volume of supplies offsetting the impact of the rate reductions.

The government's recent GST rate cuts (effective late September), which largely reorganized the four main tax rates into two (5% and 18%), provided key market triggers.

• Consumer Demand and Auto Sector: Early retail indicators show broad-based demand across autos, apparel, FMCG, and electronics, reflecting renewed consumer confidence. The auto industry benefited immediately: the tax cuts led to the wholesale off-take of passenger vehicles clocking 470,000 units in October, a 17% y-o-y increase. Specifically, Maruti Suzuki saw small car bookings double during the festive season because rates for those vehicles were slashed from 29–31% to 18%. This sentiment extended to fuel consumption, with petrol sales surging to a five-month high and diesel consumption rising to a four-month high in October due to festive travel.
• FMCG and Transition Issues: The GST rate rationalization led to short-term trade disruptions in the FMCG sector throughout October as retailers cleared old inventory. Companies faced challenges in introducing new product packs and pricing. FMCG management, including Hindustan Unilever, anticipates that normal trading conditions will stabilize starting early November, paving the way for gradual market recovery as price streamlining occurs.
• Economic Outlook: Market analysts believe that the confluence of GST cuts, income tax reductions, and the RBI’s easing of monetary and credit norms should kick-start growth in the second half of the fiscal year and drive the expected earnings revival. However, there are mixed indicators; manufacturing growth slowed to its lowest in 22 months in October, with the Nikkei Manufacturing PMI falling to 50.7, indicating softened domestic demand. Furthermore, states are taking time to meet conditions for the Central government’s Special Assistance for Capital Investment (SASCI) loan scheme, though disbursements are expected to accelerate between November and March to sustain public investment momentum.

Infrastructure and industry trends in India in November 2025 reflect a strategic government focus on critical national projects, significant private investment in future-forward sectors like AI and renewable energy, and concurrent challenges stemming from regulatory compliance and global supply chain disruptions.

Key Infrastructure and Public Investment

The government is prioritizing capital expenditure, signaling continuity in its infrastructure-led growth strategy. The allocation for the Special Assistance to States for Capital Investment (SASCI) interest-free loan scheme, despite having disbursed only about one-third of the ₹1.5 trillion outlay by October, is expected to accelerate significantly between November and March. Furthermore, the Centre is likely to raise the SASCI allocation by up to 15% in the next financial year (FY27). In logistics infrastructure:

• Aviation and Urban Hubs: Delhi International Airport (IGIA) is undergoing a major expansion to become a global hub, converting Pier C of Terminal 3 from domestic to international use to boost international traffic capacity to 3.2 crore passengers per annum by December 2025. The civil aviation regulator (DGCA) also introduced a structured grievance redressal system for passengers with disabilities, effective October 29, 2025, emphasizing accountability and accessibility standards.
• Maritime and Ports: The Dredging Corporation of India Ltd (DCIL) received a substantial capital infusion of ₹4,000 crore under the Maritime Amrit Kaal Vision to upgrade its fleet and capabilities. India is also exploring simplified entry procedures for tourists, planning to offer group e-visas for cruise ship passengers from mid-2026 to help double cruise traffic to one million by 2029.
• Regulatory Acceleration: The Ministry of Environment, Forest and Climate Change (MoEFCC) implemented a reform granting a "zero period" for the validity of Environmental Clearances (EC) for projects stalled due to legal or insolvency proceedings (NCLT/courts), a move intended to unlock stalled investments in infrastructure and industrial projects.

Strategic Industries and Defense

India is strengthening its capacity in defense, space, and critical material production:

• Space Capabilities: ISRO successfully launched the Indian Navy’s GSAT-7R (CMS-03) communication satellite, the heaviest communication satellite from Indian soil to date, demonstrating commitment to atmanirbharta. Hyderabad-based Ananth Technologies supplied several critical subsystems for the CMS-03 satellite.
• Critical Materials: India is increasing its investment in domestic capacity for rare earth magnet manufacturing, planning to nearly triple its incentive program to more than ₹7,000 crore. This scheme aims to support five magnet manufacturers, requiring investments of at least ₹200 crore, to reduce reliance on China for materials crucial to electric vehicles (EVs) and defense. Global players like Lynas Rare Earths, Iluka Resources, and Rainbow Rare Earths have expressed interest in supplying rare earth oxides to prospective bidders under this plan.
• Energy Transition: The new chairman of state-run Coal India Ltd (CIL) called for an overhaul of its business model to include diversification into renewable energy (solar and wind power) and coal gasification, acknowledging the need to adapt to global energy shifts. Adani Solar achieved a milestone by shipping over 15,000 MW of solar modules, becoming the first and fastest Indian manufacturer to reach this feat, and plans to more than double its production capacity by the next fiscal year.

Manufacturing and Technology Challenges

While high-tech infrastructure investment is strong, traditional manufacturing sectors face supply chain volatility:

• Auto Supply Chain: Indian carmakers, including Maruti Suzuki India Ltd and Hyundai Motor India Ltd, are on alert due to a new semiconductor chokepoint caused by Dutch action against the Chinese-owned chipmaker Nexperia, which restricts the supply of critical components. This situation was temporarily eased following an agreement between US and Chinese leadership to loosen export restrictions for eligible cases.
• IT Services and AI: TCS is making a substantial shift by investing $6.5 billion over seven years to establish a 1GW AI data center in India, targeting locations like Mumbai, Hyderabad, and Pune. This foray into an asset-heavy business, HyperVault AI Data Centre Ltd, is expected to yield lower Return on Equity (RoE) than its typical IT services business. This activity supports the overall market bullishness on AI and data centers, seen as a significant opportunity for India.
• Steel Industry: Domestic steel makers are petitioning the government for additional measures to check the rising tide of steel imports, particularly from China.

The Indian Technology and Artificial Intelligence (AI) landscape in November 2025 is defined by a massive pivot toward AI infrastructure investment alongside intense competition from global Generative AI (GenAI) models, prompting regulatory scrutiny and a focus on domestic capability.

1. AI Infrastructure and Investment The dominant trend is the heavy capital expenditure in the sector, particularly by major Indian IT players. Tata Consultancy Services (TCS) announced plans to invest $6.5 billion over seven years to establish a 1GW AI data center in India through a new business unit, HyperVault AI Data Centre Ltd.. This is a strategic shift for the traditionally asset-light IT services firm. Analysts, however, project that this asset-heavy venture will have a lower Return on Equity (RoE) compared to TCS's core IT business, potentially lowering the company's RoE from approximately 50% to 40% in the next five years. The increasing demand for data centers is driven largely by hyperscalers and AI companies, and TCS is targeting locations like Navi Mumbai, Hyderabad, Bangalore, New Delhi, and Pune for this development.

2. Global Competition and Local Strategy The Indian market has emerged as the second-largest market for major global AI models. Companies like Perplexity, ChatGPT, Gemini, Grok, and Llama are offering free access to their latest models. This strategy is seen as a move to capture market share and acquire valuable Indian contextual data to better train their models. This creates an adverse impact on local GenAI model developers, who face higher user acquisition costs and weaker data collection pipelines. To counter this, local developers are expected to focus on domain-specific models and enterprise AI solutions, such as BharatGPT, which require specialized domain expertise and data residency requirements to serve enterprises and government organizations. The Indian Gen AI market is robust, projected to grow from $1.18 billion by the end of 2025 to $7.81 billion by 2031.

3. Regulation, Cybersecurity, and Market Dynamics The regulatory environment is responding to the rapid growth and associated risks:

• Competition and Pricing: The Competition Commission of India (CCI) is monitoring the growing AI landscape and highlighting challenges, specifically planning to monitor AI-driven pricing strategies to detect potential discriminatory practices or unintended price alignments.
• Digital Divide and Monopoly: India is urging the WTO to work toward addressing the digital divide and promoting secure, interoperable Digital Public Infrastructure (DPI) to prevent monopolistic market segmentation by big tech companies in e-commerce.
• Cybersecurity: Cyber readiness is mandated as critical infrastructure. An IIT-Bombay study documented targeted cyber intrusions during Operation Sindoor by Pakistan-based APT36 using sophisticated malware (Crimson RAT), underscoring the shift toward hybrid warfare. Consequently, the government is preparing a sweeping new cybersecurity framework that could become mandatory for connected devices in critical sectors (e.g., medical scanners, smart meters). However, the initial timeline of 1 January 2027 for this secure device ecosystem policy is expected to be pushed back by three to four years to allow industries time to build capability and capacity.

4. Technology Adoption Across Sectors Beyond foundational AI, technology is driving specific industry changes:

• Automotive: Honda Motor Company is intensifying its Research and Development (R&D) in India, leveraging India’s strength in software development by collaborating with KPIT for global mobility software.
• Healthcare: Medical devices firm Trivitron is revamping its strategy with a focus on investments in AI and digital solutions. Additionally, the world's first indigenous AI-based smart hemodialysis machine, Renalyx, was launched.
• Digital Commerce/Faithtech: Startups in the "faithtech" space (like Sri Mandir, Vama, and Utsav) are successfully packaging Hindu rituals into scalable digital experiences (e.g., live-streamed pujas, online bookings). This market is expanding rapidly, projected to reach $151.9 billion by 2034.