Demand remains strong in India, but there are supply-side headwinds in areas like chips which is bothering the auto sector and coal shortages which threatens to put parts of the country into darkness, a Japanese brokerage said on Monday.
With power demand likely to rise amid the continued economic normalisation and upcoming festive sales, supply-side disruptions pose an important near-term downside risk to growth momentum, Nomura warned.
The country is reporting coal shortages and power sector companies face the prospect of importing coal at significant cost. “If power outages become more widespread, then industrial output could suffer in the near term, while higher energy costs may squeeze firms’ margins and add to consumer price inflation,” the brokerage said in the report.
