The Weak Link In India's Grid

India's Next Power Crisis Lies In The Last Mile

By Amritha Pillay

What?

While India has spent the past few years worrying about whether it could generate enough electricity and build enough transmission lines to move it across the country, this summer exposed the problem of getting that power from the grid to homes and businesses.

As the country touched a record peak electricity demand of 270 gigawatts three times this year, ageing transformers, overloaded substations and stretched local distribution networks buckled under the strain in parts of the country. 

From Mumbai to Kerala, consumers complained of repeated power cuts, highlighting a weakness that could define the next phase of India's power-sector investments.

The frustration spilt onto the streets.  

These incidents may appear local, but together they point to a niggling problem in India's electricity story. 

For years, policymakers have focused on expanding generation capacity, integrating renewable energy and strengthening interstate transmission networks. 

This summer, industry analysts said, exposed the country's next power constraint, which is the last mile, or the neighbourhood distribution grid.

They said ageing distribution infrastructure, weak financial health of many distribution companies and hence their ability to invest in grid modernisation and network expansion, as reasons for the last-mile hitch. 

What Now? 

The power ministry told Parliament in July that peak electricity demand during April-June rose around 12% from a year earlier and could remain elevated because of El Niño conditions. 

In Mumbai, Adani Electricity said demand during the April-June quarter increased about 10% from last year.

That surge has intensified pressure on infrastructure that often receives less attention than generation plants or transmission corridors. 

Distribution assets — including substations, transformers, feeders and low-voltage lines — are the final link between the grid and consumers. When they fail, electricity generated hundreds of kilometres away never reaches homes.

The problem has surfaced across multiple states this summer.  

"With heatwaves becoming more frequent and India's peak electricity demand already touching record levels, strengthening the distribution network has become an urgent priority,” said Vibhuti Garg, director for South Asia. 

What Next? 

Now, India will need to decide where the power sector will make its next investments. 

So far, investments in the power sector have been focused on transmission capacity to evacuate renewable energy and adding thermal generation to maintain grid stability. 

Now states are pointing out that overload or maintenance of their distribution assets has caused power failures. Last-mile distribution infrastructure includes assets such as sub-stations, feeders and transformers, and is now emerging as the next major investment requirement.

The central government has already begun pushing utilities in that direction. 

For electrical equipment manufacturers, that lag represents a pipeline of future orders.

"Both state-owned and private discoms are expected to continue investing in distribution infrastructure through network strengthening, grid modernisation, loss-reduction initiatives and new consumer connectivity," said Arun Kailasan, Research Analyst at Geojit Investments. 

Whether those investments materialise, however, depends on the financial health of India's distribution companies.

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$2.1 billion

That's the value of foreign portfolio investment (FPI) that flowed into Indian equities in July, marking a sharp reversal after four straight months of selling, according to NSDL data analysed by PL Capital.

Foreign investors bought Indian shares as improving corporate earnings, attractive large-cap valuations and easing global uncertainty brought overseas money back into the market.

Breakdown: Consumer Services attracted the highest inflows at about $770 million, followed by Metals & Mining with $630 million, Healthcare with $430 million, Services with $250 million, Consumer Durables with $250 million, and Realty with $220 million. 

Financial Services also extended its buying streak with inflows of about $210 million.

How We Got Here: Foreign investors continued to trim exposure to automobiles, capital goods, telecom, power and FMCG.

Earlier geopolitical tensions, including the Iran-Israel conflict, had pushed investors towards safer assets. Even as sentiment improved in July, they remained selective and continued to reduce exposure to sectors with weaker earnings prospects and richer valuations.

Pivot: Investors rotated back into sectors tied to domestic consumption, healthcare and commodities as geopolitical risks eased. They also increased allocations to India after concerns over AI-driven spending and technology valuations prompted a reassessment of exposure to parts of Southeast Asia and other Asian markets.

RBI Holds Rates Steady

India’s central bank, the Reserve Bank of India, kept its benchmark repo rate unchanged at 5.25% on Wednesday, with all six members of the Monetary Policy Committee voting to retain both the rate and the "neutral" policy stance.

Governor Sanjay Malhotra said the RBI would wait for greater clarity on whether higher oil prices are fuelling broader inflation, while reaffirming its commitment to the inflation target. The decision was widely expected.

Catch Up Quick: The RBI lowered its FY27 inflation forecast to 5% from 5.1% and raised its growth projection to 6.7% from 6.6%, signalling confidence in resilient domestic demand despite global and geopolitical uncertainties.

According to Dharmakirti Joshi, Chief Economist at Crisil, inflation remains largely supply-driven, giving the central bank flexibility on future policy decisions.

Setting: Deepak Agrawal, CIO-Debt at Kotak Mahindra AMC, said the policy carried a mildly dovish tone, while Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the RBI remains in a data-driven wait-and-watch mode.

Auto Industry Body Retracts E20 Remarks

Amid growing scrutiny around India's E20 ethanol-blended programme, auto industry body Society of Indian Automobile Manufacturers (SIAM) has withdrawn its July 28 letter to the Petroleum Ministry that had flagged high chloride contamination and moisture in E20 fuel as possible causes of failures in components such as fuel injectors and fuel pumps.

Catch Up Quick: After the letter became public and the government defended the E20 rollout, SIAM said in a statement that the data cited required further validation and described the exchange as part of routine technical discussions.

The Core had earlier reported on rising consumer concerns over vehicle compatibility, fuel system corrosion and lower fuel efficiency following the nationwide rollout of E20 petrol, even as the government and the auto industry maintain the blend does not cause widespread engine damage.

Setup: The issue has also spilt into the political arena, with the Aam Aadmi Party seeking a choice between E20 and pure petrol, while the Punjab Assembly on Tuesday urged the Centre to suspend the mandatory rollout for vehicles not certified to run on the blend.

Hormuz Deal Gains Momentum

US President Donald Trump said an agreement to reopen the Strait of Hormuz could come "tomorrow or the next day," adding that negotiations with Iran were "moving along very nicely" and that "we'll know in 48 hours," according to Bloomberg.

Context: Bloomberg, citing Axios, reported that the US, Iran and Oman are preparing a proposed 60-day interim arrangement to restore shipping through the Strait of Hormuz. The plan would allow inbound vessels to use a northern shipping lane near Iran, while outbound traffic would transit through Omani waters in coordination with Tehran.

No tolls or fees would be charged during the temporary agreement, and Iran and Oman would work to clear mines from a central shipping lane. However, Iranian state television said reopening the waterway would still depend on a change in US policy.

According to Bloomberg, a growing number of Iranian oil tankers remain stranded off the country's coast as the renewed US naval blockade disrupts exports.

Forecast: Reuters reported that optimism around the negotiations initially pushed oil prices lower and lifted global equities.

Brent crude later recovered after Yemen's Houthis threatened to escalate attacks on shipping in the Red Sea, underscoring the continuing risks to regional energy trade.

SRK Tops Brand Rankings

Actor Shah Rukh Khan emerged as India's most valuable celebrity brand in 2025 with an estimated brand value of $177.9 million, according to Kroll India's Celebrity Brand Valuation 2025 report. Ranveer Singh retained the second spot at $162.9 million, while Virat Kohli ranked third with a brand value of $158.4 million.

By The Numbers: Kroll estimated the combined brand value of India's top 25 celebrity brands at $2 billion in 2025, down 3.7% from the previous year.

Sachin Tendulkar moved up to fourth place ($125.9 million), followed by Mahendra Singh Dhoni ($115.3 million), whose ranking improved on the back of increased brand endorsements.

Among actors, Alia Bhatt, Deepika Padukone and Hrithik Roshan featured in the top ten, while Ananya Panday, Samantha Ruth Prabhu, Janhvi Kapoor and Shraddha Kapoor recorded notable gains in the rankings.

Background: The report said digital endorsements now account for 60–75% of brand associations for several leading celebrities, reflecting the growing role of social media and digital-first campaigns.

Kroll added that celebrity brand value is increasingly driven by a combination of endorsement strength, digital engagement, entrepreneurial ventures and emerging AI-led opportunities.

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Indian Markets Stay Hesitant As Global Markets Hit Fresh Highs

On Episode 940 of The Core Report, financial journalist Govindraj Ethiraj talks to Aditi Nayar, Chief Economist at ICRA as well as Devender Singhal, Equity Fund Manager at Kotak Mahindra Mutual Fund.

• Indian Markets Stay Hesitant As Global Markets Hit Fresh Highs

• Why India Is Revising Its GDP Projections Upwards

• Indian Auto Industry Body Backtracks On Ethanol Fuel Study

• The Case For Multi-Asset Funds

• Air India Gets A New CEO