Newspaper Summary - 061125

 The sources indicate that in November 2025, India adopted a landmark AI governance framework emphasizing adaptive regulation over new legislation, while AI's economic impact is driving significant changes in sectors from IT services to manufacturing supply chains.

AI and Tech Governance India’s government unveiled AI Governance Guidelines under the IndiaAI Mission, founded on the principle of "Do no harm". This framework, which may set the tone for India’s regulatory approach, focuses on seven key principles including trust, people first, innovation over restraint, fairness & equity, accountability, and ensuring that humans have final control over AI systems "as far as possible". The approach seeks a middle path, promoting AI as a driver of inclusion and competitiveness while relying on adaptive governance rather than rigid regulation, contrasting with the European Union's binding AI Act.

However, the guidelines require a comprehensive review of existing statutes to identify regulatory gaps. Concerns were raised regarding the definition of "intermediary" and liability protection for AI systems under the Information Technology Act, 2000, as AI systems autonomously generate or transform information. Furthermore, the compatibility of the Digital Personal Data Protection Act, 2023, regarding consent and data usage for training large-scale machine-learning models was also highlighted. To address this, the guidelines propose setting up a specialist body, the AI Governance Group, to evaluate sector-specific legal gaps.

In terms of data governance, Microsoft announced plans to offer in-country data processing for its Microsoft 365 Copilot interactions in India by the end of 2025 to strengthen data sovereignty and regulatory compliance. Separately, cybersecurity experts warned that new AI-powered browsers, such as Perplexity’s Comet and Fellou, are susceptible to prompt injection vulnerabilities that can trick the AI into leaking data or performing unintended actions.

Key Business and Economic Developments AI is driving major shifts across the economy:

• Public Capex and Efficiency: The government is shifting focus from expanding public capital expenditure (capex) scale to improving its quality by deploying AI-driven tools and data analytics for project appraisal, monitoring, and performance tracking, aiming to minimize cost overruns and enhance transparency. There is a recommendation for an indigenous, government-owned AI server to address privacy concerns.
• IT Sector Consolidation: AI mirrors uncertain demand and has a deflationary impact on the IT services sector. This uncertainty is causing large clients to consolidate their IT vendors to cut costs and award larger, more valuable contracts to existing, major providers, helping these large Indian IT firms stay afloat amid AI uncertainties. Global tech companies, including IBM, are pivoting towards AI-led efficiency and automation, leading to workforce restructuring and layoffs globally, with hundreds of staff potentially affected in India.
• Investment and Innovation: Nvidia joined the India Deep Tech Alliance with an $850 million pledge to support deep-tech startups, providing guidance on adopting its AI and computing tools. Customer engagement platform MoEngage raised $100 million to expand its AI products, including the Merlin AI suite, which helps B2C brands scale conversions. Furthermore, Renalyx launched India’s first indigenous, AI and cloud-enabled smart Hemodialysis machine (Renalyx–RxT 21).
• Supply Chain Disruptions: The high demand for higher-margin AI data centers is causing chip manufacturers to shift production focus, resulting in a surge (over 50% increase in three months) in flash memory prices. This shortage is impacting the manufacturing of consumer electronic devices, like LED televisions, with disruptions expected to last six months to a year.
• AI as a Growth Engine: Leading LLM players are providing free access to their paid AI tiers exclusively in India, recognizing the country as a massive user base and a potential "biggest, safest bet" for AI usage. AI is viewed optimistically by officials as a mechanism to help India break out of its low-skill, low-productivity trap, potentially tripling the productivity of informal workers.

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Corporate earnings for the Second Quarter of Financial Year 2026 (Q2 FY26), covering the period of July through September 2025, showed a highly mixed picture, characterized by strong domestic consumption and cost management offsetting sharp negative impacts from currency volatility, transitional regulatory issues, and external supply chain headwinds.

Q2 FY26 Earnings Highlights and Key Context

The earnings season was defined by specific sector-level resilience and vulnerability:

1. Aviation and Forex Volatility: Interglobe Aviation Ltd (IndiGo) reported a net loss of ₹2,582 crore. While its Q2 FY26 revenue grew 9% year-on-year (y-o-y), its earnings before interest, taxes, depreciation, amortization, and rent (Ebitdar) fell 64% to ₹860 crore. This steep decline was primarily dragged down by forex losses of ₹2,892 crore caused by the rupee's depreciation against the dollar, directly impacting dollar-denominated aircraft lease payments. This highlights the ongoing challenge of volatile currency fluctuations in the economy.

2. IT Services and Sectoral Consolidation: Although specific Q2 FY26 overall revenue figures for all large IT firms were not detailed, available data underscored a shift favoring major players due to AI uncertainties and demand ambiguity. Revenue growth from the top 10 clients outperformed overall revenue growth for major IT firms, showing a "big get bigger" trend. For instance, revenue from the top 10 accounts grew 6.92% for Infosys Ltd and 1.58% for Tech Mahindra Ltd, reflecting large clients consolidating their vendors to cut costs and prepare for AI investments. Separately, TeamLease Services reported a 12% rise in net profit to ₹27.52 crore, driven partly by robust demand from Global Capability Centres (GCCs) in its specialized staffing division (up 34.3%).

3. Consumption and Manufacturing Resilience:

   • Grasim Industries reported a strong performance with net profit increasing 52% to ₹1,498 crore, largely due to better margins in cement and chemical businesses. Revenue was up 17% at ₹39,900 crore.
   • Biscuit-maker Britannia Ltd recorded a 23% jump in net profit to ₹655 crore (on 3.7% y-o-y revenue growth). This was achieved despite transitional challenges related to GST changes and expected struggles due to weather-led demand slowdown.
   • Titan Co. Ltd's jewellery division, the key growth driver (over 85% of revenue), saw segment revenue rise 21% y-o-y to ₹14,092 crore, with profit surging 55% to ₹1,506 crore. This demonstrates resilient demand for premium goods continuing into the wedding season despite high gold prices.
   • Redington achieved its highest-ever quarterly revenue of ₹29,118 crore (up 17% y-o-y), with net profit up 32%. This was led by its mobility solution business (up 18%) and software solutions business (cloud, cybersecurity).

4. Regulatory and Market Impact:

   • Fintech major Paytm saw its reported net profit weighed down by a one-time ₹190 crore impairment on a loan to its gaming joint venture, following a government crackdown on real-money gaming. However, the company's underlying profitability remained intact, driven by 24% y-o-y revenue growth to ₹2,061 crore, focusing on merchant subscriptions and loan distribution.
   • RBL Bank’s net profit dropped 20% to ₹179 crore due to lower Net Interest Income (NII). This comes as the bank is involved in a major acquisition by Emirates NBD.

5. Capital Expenditure and Growth Phase:

   • Electronics manufacturer Kaynes Technology reported robust growth (revenue up 35% sequentially to ₹906 crore; net profit up 61% to ₹121 crore). However, the company faced a negative cash flow of ₹218 crore, attributed to its aggressive expansion phase, acquisitions, and working capital demands. Kaynes postponed its net cash positive target to the end of the fiscal year. Similarly, Evonith Steel announced plans for a future Initial Public Offering (IPO) within 18-24 months to fund a massive capacity expansion plan of ₹5,500–6,000 crore.

6. Sector-Specific Headwinds (Weather/Input Costs): The heavy monsoon season affected profitability in specific sectors. Berger Paints saw a 23.53% decline in net profit (revenue up 1.9%). The strong volume growth (8.8%) was negated by weak value growth (1.1%) due to the continuous heavy rainfall impacting sales of high-value exterior products and forcing down-trading to the economy segment. Ramco Cements’ capacity utilization fell, and its costs rose due to new environmental taxes.

7. Financial Sector Performance:

• Bharti Airtel demonstrated superior performance in the telecom sector, achieving a sequential gain of 2.4% in average revenue per user (Arpu) to ₹256. This growth was driven by its strategy of shifting 2G users to higher-priced 4G/5G plans and maintaining a large post-paid user base. The wireless segment’s Ebitda margin improved to 60.3%.
• RBL Bank reported a 20% decline in Q2 FY26 net profit.

Regulatory and policy updates in India during November 2025 focused heavily on laying down adaptive governance frameworks for emerging technology, streamlining corporate oversight, and resolving regulatory conflicts affecting business revival and investment.

Artificial Intelligence (AI) and Digital Governance The Ministry of Electronics and Information Technology (MeitY) unveiled the AI Governance Guidelines under the IndiaAI Mission, founded on the principle of "Do no harm". This framework emphasizes innovation over restraint and adopts an adaptive governance model rather than rushing into rigid new legislation, contrasting with the EU's binding AI Act.

Crucially, the guidelines mandate a comprehensive review of existing statutes to identify specific regulatory gaps concerning AI systems. Key legislative areas requiring clarification include:

• The Information Technology Act, 2000 (IT Act): There is a need for clarity on how the term "intermediary" applies to AI systems that autonomously generate or transform information, and whether they maintain limited liability protection under Section 79.
• The Digital Personal Data Protection Act, 2023 (DPDP Act): The framework raises questions regarding the use of personal data for training large-scale machine-learning models, compatibility with consent principles, and the extent of "research and legitimate use" exemptions.

To manage this, the guidelines propose establishing an AI Governance Group and an expert committee to evaluate sector-specific legal gaps. Separately, strengthening data sovereignty, Microsoft announced plans to offer in-country data processing for its Microsoft 365 Copilot interactions in India by the end of 2025 for customers in government and highly-regulated industries.

Corporate Oversight and Financial Regulation

1. IBC-PMLA Conflict Resolution: The Insolvency and Bankruptcy Board of India (IBBI) and the Directorate of Enforcement (ED) finalized a new standard operating procedure (SOP) to harmonize the Insolvency and Bankruptcy Code (IBC) and the Prevention of Money Laundering Act (PMLA). This is a major relief for creditors, including banks and homebuyers, allowing assets attached by the ED to be restored to rightful creditors. Resolution Professionals (RPs) must now approach special PMLA courts to seek the release of attached assets. This move is expected to enhance recovery prospects, expedite pending cases, and reduce litigation, reinforcing that PMLA enforcement and IBC value maximization are not conflicting objectives.
2. Corporate Regulatory Restructuring: The Ministry of Corporate Affairs (MCA) ordered a major administrative shake-up starting 1 January 2026, aimed at improving regulatory efficiency and the ease of doing business. This includes creating six new Registrars of Companies (RoCs) and expanding the Regional Director (RD) structure to 10 directorates to decentralize supervision and address bottlenecks in high-density corporate zones.
3. AGR Dues Relief: The Supreme Court permitted the Centre to take a decisive action regarding relief for Vodafone Idea (Vi) concerning its massive Adjusted Gross Revenue (AGR) dues (over ₹83,000 crore). This flexibility allows the Department of Telecommunications (DoT) to restructure dues, enabling Vi to attract new strategic investors and ensuring the continuation of a healthy, three-player telecom ecosystem.

Fiscal, Welfare, and Trade Policy

• Public Capex Policy Shift: The government is changing its focus regarding public capital expenditure (capex) from simply scaling up spending to improving execution quality and measurable outcomes. This involves deploying AI-driven tools and data analytics for project appraisal, monitoring, and performance tracking.
• GST Impact and Debate: The recent GST reforms replaced the 12% and 28% slabs with a two-slab system (5% and 18%). This GST reduction on select vehicles revived sentiment in the passenger vehicle and auto loan sectors. Conversely, a debate arose concerning health insurance, as the GST exemption explicitly applies only to individual policies, leaving group health policies subject to the 18% GST despite covering the majority (82%) of policyholders.
• Trade Policy Loophole: A loophole in the Asean-India Free Trade Agreement is being exploited by dealers importing platinum jewellery duty-free from Indonesia, melting it into bars, and effectively evading the 6.4% duty on platinum bars, costing the exchequer an estimated ₹14 crore daily.
• EPFO Rules: The EPFO extended timelines for full withdrawals (up to 12 months for EPF and 36 months for pensions) to discourage early exits and encourage long-term savings, though this move risks creating hardship for members needing funds for emergencies or international relocation.

Sector-specific news in November 2025 highlights a strong bifurcation in the Indian economy, characterized by resilient domestic consumption and robust AI-led technological investment, contrasting sharply with structural pressures like global supply chain shifts, currency volatility, and AI-driven efficiency mandates in older sectors.

Technology, IT, and Digital Economy In the IT sector, AI uncertainty is driving client consolidation, leading large clients to favor major Indian IT firms (Infosys, HCLTech, Wipro, Tech Mahindra) to cut costs and award larger contracts. This trend, often referred to as "the big get bigger," helps these major firms stay afloat amid muted demand. However, the shift toward AI-led efficiency and automation also triggered global workforce restructuring and layoffs at companies like IBM, impacting hundreds of staff in India.

Deep-tech innovation received a major boost as Nvidia joined the India Deep Tech Alliance with a pledge exceeding $850 million to support startups in areas like semiconductors and AI. Customer engagement platform MoEngage raised $100 million to accelerate global expansion and expand its Merlin AI suite of products for B2C brands. In gaming, the Promotion and Regulation of Online Gaming Act (PROGA) 2025 was hailed as a huge positive, segregating video games from real-money gaming (RMG) and bolstering the sector's vision for $100 billion in value creation by 2035.

Manufacturing, Electronics, and Supply Chains A critical disruption was noted in the electronics supply chain: LED television prices are expected to rise due to a shortage and price surge (over 50% in three months) of flash memory sets. This shortage stems from chip manufacturers prioritizing production for higher-margin AI data centers, shifting capacity away from conventional consumer electronics. In heavy industry, Evonith Steel announced an aggressive expansion plan involving a ₹5,500–6,000 crore investment and a planned IPO within 18–24 months to fund doubling its steelmaking capacity. Meanwhile, Grasim Industries saw its Q2 FY26 net profit increase 52%, powered by strong performance in its cement and chemical businesses.

Mobility and Automotive The mobility sector experienced a strong rebound in October, attributed largely to the GST rate cuts on select vehicles and the festive season. Passenger car sales climbed 83% month-on-month (m-o-m) and auto loan demand surged. EV sales hit new records across categories, with e-3 wheelers surging 324% year-on-year. However, the massive ₹10,900-crore electric bus tender (PM E-Drive) was deferred for a third time, as companies sought extensions and expressed concerns over stringent contract terms.

Financial Services and Aviation In finance, Piramal Finance is seeking to raise $700 million–$1 billion from overseas debt markets in the second half of FY26 to finance its goal of doubling its Asset Under Management (AUM) to ₹1.5 trillion by FY28. RBL Bank reported a Q2 FY26 net profit drop of 20% due to lower Net Interest Income, concurrent with Mahindra & Mahindra selling its stake ahead of the Emirates NBD open offer. In aviation, IndiGo reported a substantial Q2 FY26 net loss, heavily influenced by ₹2,892 crore in forex losses. In response, the airline is executing a strategic transition away from its core sale-and-leaseback model to owning and financially leasing aircraft, aiming for 40% of its fleet by 2030, leveraging GIFT City for cost savings.

Consumer and Retail Titan Co. Ltd, the largest jewellery retailer, expects the momentum from the festive season to continue into the wedding season, sustaining strong sales despite high gold prices. Biscuit-maker Britannia achieved a 23% rise in net profit in Q2 FY26, managing cost pressures and transitional challenges from GST changes. E-commerce giant Flipkart is executing a major strategic pivot, betting on India’s volatile Gen Z consumers to revitalize its slipping market share in the online fashion segment ahead of its anticipated 2026 IPO.

The sources indicate that in November 2025, Trade & Global Supply Chains were defined by major disruptions due to shifting technological priorities, geopolitical and regulatory tensions (especially involving the US and China/Russia), and ongoing efforts by India to diversify exports and streamline logistics.

1. Disruptions from Shifting Global Technological Priorities

The intense global focus on Artificial Intelligence (AI) infrastructure is directly disrupting traditional manufacturing supply chains:

• Flash Memory Shortage: Prices of flash memory sets have surged by over 50% in the last three months due to chip manufacturers prioritizing production for higher-margin AI data centers. This shift has reduced the supply of DDR3 and DDR4 chipsets used in consumer electronics.
• Impact on LED TVs: This shortage is causing LED television prices to increase. Original equipment manufacturers (OEMs) believe the repercussions of this flash memory crunch could last for six months to a year.
• Raw Material Sourcing: Flash memory is mainly imported from China and is used in a wide range of electronic products, including televisions, mobiles, and laptops.

2. Geopolitical Tensions and Trade Warfare

The ongoing trade relationship between major global economies, particularly the US and China, continues to influence global and Indian trade dynamics:

• US-China Trade Truce: US President Donald Trump and Chinese leader Xi Jinping reached a one-year trade pact that temporarily stabilized their turbulent relationship. As part of this truce, China announced it would remove retaliatory tariffs on some US farm products (like soybeans, corn, and wheat) and halt export controls on array of US firms. However, a 13% Chinese import duty is still likely to remain on US soybeans, keeping them less competitive than South American supplies.
• Weaponizing Supply Chain Control (China): China demonstrated its ability to weaponize its control over global supply chains, extending beyond rare-earth minerals to crucial sectors like lithium-ion batteries, mature chips, and pharmaceutical ingredients. For instance, China blocked the export of mature chips made by a Dutch company (Nexperia), impacting global automakers like Honda who had to shut down factories within weeks.
• Russia Sanctions Impact on Oil: India’s crude oil import strategy is set to be reshaped by US sanctions, announced on October 22, against Russian oil giants Rosneft and Lukoil. These firms account for over 70% of India's crude imports. This shift is expected to trigger a sharp decline in Russian crude imports in December 2025, before a gradual recovery occurs as new trading intermediaries and alternative routes emerge. Indian refiners are expected to broaden their import baskets with higher inflows from Latin America, the US, West Africa, and the Middle East.

3. India’s Export Challenges and Diversification Efforts

Despite overall global headwinds, India demonstrated efforts in market diversification, although some sectors faced acute pressure:

• US Tariffs on Indian Goods: Merchandise exports faced pressure after the US imposed a punitive 50% tariff on Indian goods. For the six months ended September 2025, overall exports still grew to $220.1 billion (up from $213.7 billion previously), largely due to diversification of export destinations.
• US Market Decline: Exports to the US fell 12% in September, marking the fourth straight month of decline. Labour-intensive sectors like textiles, gems and jewellery, chemicals, and machinery were hit hard, falling by 33%. Exporters sought government support, including soft loans and relaxing NPA classification norms, noting that this crisis was beyond their control and threatened job losses.
• Soybean/Soymeal Exports Hit: India’s soymeal exports were threatened by the US selling $1 billion worth of soybeans to Bangladesh, traditionally one of India’s largest buyers. Indian soymeal shipments to Bangladesh dropped 46% during the 2024–25 oil year. Indian soymeal often remains less competitive globally because it is non-genetically modified (non-GM) and typically outpriced by about $100 per tonne compared to GM soymeal.
• Marine Product Success: Despite concerns over US tariffs, India's marine exports grew 17% in the first half of FY26 (reaching $3,974 million). This success was attributed to diversifying markets (Europe, South-East Asia, Middle East) and a shift in focus toward medium-sized shrimp preferred by non-US markets. Exports to China, Vietnam, and Thailand saw sharp growth, compensating for the 6% decline to the US.
• Free Trade Agreements (FTAs): India is actively negotiating FTAs. Discussions with the US are ongoing, acknowledging that sensitive and serious issues require time. India and the EU agreed to work toward concluding a fair and mutually beneficial FTA this year. With New Zealand, negotiations highlighted India’s caution regarding market access for dairy products due to economic and political sensitivities concerning Indian farmers and MSMEs.

4. Logistics and Regulatory Issues

• Trade Agreement Loophole: A loophole in the Asean-India Free Trade Agreement allows duty-free importation of platinum jewellery from Indonesia, which is then melted into bars, effectively avoiding the 6.4% duty on platinum bars. This evasion is estimated to cost the exchequer about ₹14 crore daily.
• Digitalizing Transit Cargo: India expanded the use of the Electronic Cargo Tracking System (ECTS) for Nepal-bound shipments through additional ports and rail routes. The GPS-enabled system replaces manual sealing and paper documentation, enhancing predictability, reducing delays, and ensuring secure cargo movement.

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