On Episode 834 of The Core Report, financial journalist Govindraj Ethiraj talks to Amit Pabari, Managing Director at CR Forex Pvt. Ltd as well as Karan Marwah, Partner & Leader, CFO Advisory & IPO Advisory Services at Grant Thornton Bharat.

SHOW NOTES

(00:00) Stories of the Day

(06:26) Brace for another tough week as US troops land in West Asia.

(10:02) Gas supply being stepped up to industries and commercial establishments says Government

(11:24) Will the RBI’s latest move to prop up the rupee help?

(18:44) The Companies Act, 2013 is set to see several amendments for ease of doing business and governance, what will work?

NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

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Good morning, it's Monday, the 30th of March, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital,

The Take: India's Energy Reckoning in the Age Of AI

When open AI abruptly pulled the plug on its highly touted video generation platform, Sora, last week, the tech world was jolted.

But the reason for its demise was a lesson in hard economics, the app was bleeding cash. Sora's daily inference costs, the raw computing power required to run the engine, were estimated at a staggering $15 million, driven overwhelmingly by energy consumption, as is usually the case. Its lifetime revenue, a meagre $2.1 million.

Open AI may have shuttered Sora to pivot towards robotics or because it recognised that chasing ever more complex models yields diminishing returns. The underlying truth is this, even as models become more efficient, the relentless demand for faster, more intense computing will invariably drive energy consumption higher. This reality check arrives precisely as India is throwing its weight behind the artificial intelligence arms race.

India has boldly outlined a $200 billion pipeline for data centre investments. This is on top of multi-billion dollar pledges from tech titans like Google, Microsoft, and Amazon, alongside domestic giants like Adani and Reliance who are erecting sprawling new facilities across the Western and Eastern parts of India. But beneath this techno-optimism lies a glaring vulnerability.

The math of data centres is measured not in square footage, but in power consumption. A 10 megawatt facility means it draws about 10 megawatts of electricity. As of early 2026, India's operational data centre capacity had crossed 1.5 gigawatts, that's 1,500 megawatts.

Here is where the strain becomes evident. Over half of that 1.5 gigawatt capacity is clustered in and around Mumbai, which is of course good news in the manner of speaking, but that equates to about 750 megawatts of data centre infrastructure situated in a metropolis, that's Mumbai, whose total power consumption hovers around four gigawatts at peak. While the actual power draw for these or by these data centres may be closer to 500 megawatts, the projections are ambitious.

Reports suggest Mumbai could seize data centre capacity, explode to 3.2 gigawatts in the coming years. So remember, 3.2 gigawatts of total capacity in a few years and current consumption levels of four gigawatts for the entire city. Now, powering these massive server farms, whether through the Maharashtra straight grid or new dedicated power plants will require a mix of thermal gas and renewable energy, including solar and wind, and perhaps supplemented by nuclear power.

India's installed power capacity sits at about 524 gigawatts, but the demands of a rapidly growing economy are insatiable, as we've said. Incidentally, India has a total non-fossil fuel capacity of about 262 gigawatts of which about 132 gigawatts is solar, a little over 15 gigawatt is wind. All of these figures are about four or five months old.

But as we know, solar power serves daytime needs and the technology to store that electricity at scale for nighttime release is elusive. Mumbai's own generation, including Tata Power's Trombe unit, is heavily reliant on coal, much of it imported. Now comes the point.

If the geopolitical chaos of the last month has taught us anything, it is that energy flows cannot be taken for granted. India is currently facing a massive gas shortage affecting both the liquefied petroleum gas, or LPG, produced by refineries and the liquefied natural gas extracted from oil wells. With Qatar's LNG production completely offline, it may be years before global supplies fully recover.

Incidentally, Qatar used to feed about 20% or close to 20% of the world and 80% of Asia's LNG requirements. India had deliberately steered its economy towards gas, achieving a 6% in its energy mix with ambitious targets of 15% by 2030. Now that goal seems unlikely.

Energy is fungible. If the economy cannot run on gas, it must pivot back to oil, coal, or renewables. Over the past month, possibly hundreds of thousands of Indian households and commercial eateries have switched to electric induction heaters or revived the use of kerosene, a fuel the government had spent years successfully phasing out.

Even if Middle Eastern or West Asian energy supplies were to miraculously come back online in the short term, countries like India must fundamentally prioritise their energy needs differently. Remember, we import 90% of our crude oil requirements, 60% of our LPG needs, of which 90% comes to the state of Hormuz, and 50% of our LNG requirements, of which 40% came from just Qatar and thus the state. As the current crisis took hold, the Indian government made the necessary albeit painful choices.

It prioritised domestic consumers relying on piped LNG, abruptly cutting supplies to industries like ceramics manufacturing that had fully transitioned to gas-only operations. Refineries were directed to alter their output, maximising the production of butane and propane, which go into LPG while restricting commercial LPG supplies. In a stressed environment, the basic needs of citizens, who also happen to be voters, will always be served first.

All of this has worked, but up to an extent. There will still be painful readjustments in the near to medium term, but the economy will cope. But it's also a good time to start thinking, should India abandon its ambitions to build data centres or relook at some of its energy-intensive growth ambitions? Not necessarily.

But this presents a critical moment for introspection regarding the nation's energy planning for the next decade. Policymakers must ask hard questions. How do we engineer a system of incentives and disincentives that prioritises our most critical applications for both consumer survival and industrial growth? Now, these are not simple equations and they will require rigorous, unsentimental scenario mapping.

Failure to do so risks a dystopian outcome. India cannot afford to funnel scarce electricity into, for example, hyperscale AI platforms, while significant swathes of the country are forced to return to burning firewood just to cook their daily meals.

And that brings us to the top stories and themes…

Brace for another tough week as US troops land in West Asia.

Gas supply is being stepped up to industries and commercial establishments, says the government.

Will the Reserve Bank's latest move to prop up the rupee help?

And the Companies Act 2013 is set to see several amendments for ease of doing business and governance. What could work?

Markets

As expected, the calls for ceasefire by the United States following their attack of Iran along with Israel were diversions. The two countries are now pounding civilian infrastructure in Iran along with universities and centres of learning and, of course, killing civilians too. The calls for ceasefire were quite likely driven by two objectives.

First, to temporarily calm the markets and second, buy time for the ground forces to assemble and set up their staging points. The first batches have clearly arrived. The Pentagon is preparing for weeks of ground operations in Iran, The Washington Post is reporting, as thousands of American soldiers and Marines arrive in the Middle East for what could become a dangerous new phase of the war should President Donald Trump choose to escalate.

Any potential ground operation would fall short of a full-scale invasion and could instead involve raids by a mixture of special operations forces and conventional infantry troops, said the officials to The Washington Post. So, oil prices are now spiking and will continue to do so as markets open today. This is a holiday-shortened week with two holidays on Tuesday in India and on Friday in India as well and in many parts of the world, including the Western world, being Good Friday.

Closed markets are good news, but they're also bad news because delayed price recovery can have greater ramification on asset prices. Meanwhile, the government has adjusted taxes on petrol and diesel to keep pump prices stable and more on that in a moment, but in the United States, they're rising as they're more market-linked. The U.S. has no problem of oil or gas and is thus brazening it out with a war whose objectives are baffling most of us.

But prices are rising there too. Diesel prices are up 50% in the last month, delaying a long-awaited trucking industry turnaround and squeezing cash flows and profits for independent big-rig drivers, according to Reuters. Now, all of this may have little or no bearing on U.S. plans to, to quote some Wall Street greats, neutralise Iran, but there will be some pain.

Brent crude is currently at $112 a barrel and is all set to rise. It's possible on Monday morning, Washington time, you might hear some other market-calming moves, but you know, of course, by now what they mean and how long they will last. Back home on Friday, the Sensex and Nifty 50 snapped their two-day gaining streak.

The Sensex was down 1,690 points to 73,583, and the Nifty 50 was down 486 points to 23,000. On Wall Street, heightened uncertainty and headline-driven swings are pushing investors to cut risk, hedge more, and tighten liquidity. Analysts spoke to Bloomberg saying that markets were reacting more to positioning and volatility than fundamentals.

Their point is, for the U.S. that is, the macro and earnings backdrop is still supportive and expectations have reset, but without clear resolutions on the conflict and stabilisation in energy markets, it's hard to see a sustained move higher. Bloomberg also quoted Goldman Sachs trading desk warning investors not to turn bearish on U.S. stocks, saying current positioning leaves the market vulnerable to a short squeeze if geopolitical tensions rise. While all of Wall Street does not think or speak alike, the largest asset manager, BlackRock CEO Larry Fink, is on record saying Iran should be neutralised.

Gold prices, meanwhile, are fluctuating. Spot gold was up 3.1% on Friday to about $4,513 an ounce. Meanwhile, in a fairly candid view, the chief economic advisor to the government of India said on Saturday that the combined impact of West Asia's conflict on India across growth, inflation, fiscal balance, and external balances were likely to be significant.

The review also said the economy showed early signs of moderation in activity. It also said the data reflect the recent shocks are being transmitted through higher input costs, supply constraints, and pressures across sectors, with early indications of some moderation in economic activity.

India Gas Supplies

The government has cut excise duties on petrol and diesel by 10 rupees per litre and imposed export duties of 21 rupees 50 per litre on diesel and 29 rupees 50 paise per litre on aviation turbine fuel.

Now, this has no bearing on pump prices here for you and me. In the gas sector, supplies have been prioritised for households and transport with 100% allocation to pipe natural gas, which comes from LNG, and CNG, that's compressed natural gas, which typically goes into vehicles. While industrial and commercial users are receiving about 80% of average consumption, the government said over the weekend, fertiliser plants are at about 70 to 75%, with additional LNG cargoes being sourced.

Commercial LPG supply has been gradually restored to about 70% of pre-crisis levels, with priority given to hospitality, food services, and key industries, the government said. It also said, interestingly, that it's relaxing petroleum safety and licencing rules to allow faster distribution of kerosene to households. And it said that these measures will enable the ad hoc distribution of kerosene to households for cooking and lighting in 21 states and territories.

While there is, of course, little choice, a return to kerosene is quite retrogressive, given the efforts governments have taken to phase it out, and also a stark reminder on how the energy equations can change overnight.

Rupee

Here's the big development of the week. The Reserve Bank of India has put out new rules for foreign exchange transactions, effectively created to support the rupee.

It said, after markets closed on Friday, that lenders acting as authorised dealers in the rupee must ensure their open positions in the onshore currency market do not exceed $100 million at the end of each trading day. Previously, they were permitted to set so-called open position limits to within 25% of their capital. Now, the banks are already lobbying and seeking to delay an April 10th deadline for them to comply with the rules that would require a significant amount of positions to be closed.

Officials told Bloomberg that unwinding at such a scale would trigger large losses on their books, and also urged that the latest regulation apply only to new bets. The move comes as outstanding bets involving such positions amount to at least $30 billion, the people said. The Bloomberg report says these transactions involve banks purchasing dollars onshore and selling them overseas in the non-deliverable forwards market.

Local dollar buying, linked presumably to capital outflows, has exerted strain on the rupee, which fell to a new low on Friday, going past the 94-per-dollar mark for the first time. The rupee has already dropped more than 4% since the war in Iran began in late February and is Asia's worst performer this year according to Bloomberg data. I reached out to Amit Pabari of CRForex, and I began by asking him what could be the strategic thinking behind this move and how long could the impact of this move last in the market?

INTERVIEW TRANSCRIPT

Amit Pabari: You know, like a coin will have two sides, this circular also has two sides. Let me start with the positive side and then let me go to the negative side. On the positive side, I can say it is a Durandar kind of a move by RBI, where they are strongly saying, strong initiative move, that I am going to curb the volatility in the rupee and I want to stabilise the currency.

Directly, it will have a positive impact on rupee. Why? We are estimating that, you know, the banks might be having close to 10 billion to 18 billion dollars on the long side.

So, now if they have to go from a long to short, definitely 95 will be protected and probably we can see a move towards 93.5 or icing on the cake will be if the wall gets stopped. So, then we can move towards 92 also. But my guess is that at least one and a half rupees move on the positive side we can get.

This is on the positive side, impact on the positive side. Now, what is on the negative side? See, the rule came in 2020, where RBI allowed banks to trade in offshore.

When RBI allowed the bank to trade in offshore, arbitrage opportunities happened, forward premiums get reduced, lot of corporates were getting better pricing. Now, because of all of this, offshore market will be more dominating, like it was happening 2020 before. All due lows and highs will be made in offshore than in India.

So, offshore market will become more active. Second risk to the resolution is, in the long term, we will have a chance of gap up and gap down because of the circular in the medium to long term. Now, again the question here will be where the rupee will be heading.

So, in the short term, this is going to help rupee to allow some space. But in the long term, again the fundamental factors will take care of rupee. Say for example, if the fundamental factors like geopolitical tension continues, crude oil price continues to move higher, then FII are going to sell from Indian equity market and other Asian markets.

So, rupee is going to face pressure.

Govindraj Ethiraj: Right. So, if I can, I mean, a lot of listeners are obviously active in the stock markets. Is there an equivalent of a stock market action which people will understand, I mean, as to what's happening here?

Amit Pabari: Now, generally they say that if rupee is expected to become stronger, then FII will come to Indian equity market to invest. If rupee is going to get weaker, FII will generally prevail from investing in the Indian equity market. Now, with this circular, there is a possibility that FII might come.

But the question is, the fundamental factors have not changed. The war has not stopped. Crude oil prices have not started moving lower.

Till that fundamental factors are not aligning, rupee will face pressure. For rupee to change the direction, fundamental factors have to change. But giving a perspective, I will say, RBI has indirectly said, main hoon na, in good and bad times.

When times are difficult globally, I'm not allowing banks to take a speculative position. When things were good, normal, in 2021, I allowed banks to participate in all onshore and offshore activity.

Govindraj Ethiraj: So, theoretically, what could be the fallout? So, I mean, when there is speculation, there is price discovery now and in future. So, obviously, in this move, the Reserve Bank is limiting some of that price discovery.

So, what can happen?

Amit Pabari: You know, as a central bank, you have to think, what is the need of the hour? Today, the need of the hour is that rupee should not get more weaker. So, today, they are taking this step.

So, probably when things settle down, they can again go back to the same old rule. I think this is a very good move by RBI. At least, they are there to see and to curb the volatility.

They are not allowing it to freefall what happened in past 2013, 2008 and prior to that.

Govindraj Ethiraj: Okay. Last question. So, you talked about the fundamentals.

And of course, there are broad economic fundamentals. But what's driving the currency down is really outflows and geopolitical tension. Prices are high, outflows are there.

Right. And is there anything in that equation that can change or will it be purely determined by foreign portfolio outflows or foreign direct investment outflows?

Amit Pabari: As a country, we are a trade deficit country on the good side. So, if the war continues, our trade deficit is going to definitely increase because the oil prices are moving higher. So, till that time, the fundamentals do not change.

Globally, we will continue to have pressure on rupee. Apart from that, RBI is short on dollars, close to 67 billion, which is known to us and probably some 20-30 billion in the NDF market also. So, in net, market is estimating that 100 billion RBI is short.

So, even if the inflows come, RBI will start buying at the lower level and not allowing rupee to appreciate below 90. That is my assumption for next six to eight months.

Govindraj Ethiraj: Got it. Amit, thank you so much for joining me.

Companies Act 2013

We just finished with the new Income Tax Act, and next up is the Companies Act 2013, which is sought to be amended, among other reasons, for ease of doing business and better governance focus.

The proposed amendments are broadly aimed at, apart from ease of doing business and ease of living for corporates by decriminalising more provisions and amending provisions, also providing ease of compliance for one-person companies, small companies, startup and producer companies, and also a simplification of procedures relating to mergers and amalgamations, or M&A, through rationalisation of approval thresholds for fast-track mergers, relaxations in CSR, or corporate social responsibility requirements, among others. Now, there are several more pointers, but to get a sense of what's important or what's useful, I reached out to Karan Marwa, partner and leader, CFO Advisory and IPO Advisory Services at Grand Thornton Bharat, and I began by asking him what stood out for him in this bill.

INTERVIEW TRANSCRIPT

Karan Marwah: I think it obviously signifies or actually reinforces the government's intent on decriminalising a lot of offences, you know, under the previous act and the current act, in fact. And I think that's been a trend. I think they've been talking about it.

They've done a lot in that space earlier too. And I think this carries that forward. A lot of procedural areas where, you know, at least the implications are now being changed to penalties versus something that was more intrusive.

That's a good outcome, I think, for any progressive economy and for corporate laws.

Govindraj Ethiraj: And what's a good illustration of that, Karan?

Karan Marwah: I think a whole host of them. I think across the board, you know, things like filing your financial statements, not holding meetings on time. There were provisions around buybacks, which had, again, more severe consequences.

I think there are about 20 plus areas like that actually reduce and take away that, you know, consequence and replace it with a penalty. So I think that's a good outcome. I think my personal favourites, if you ask me, are, you know, changes to M&A.

I think allowing easier fast-track mergers for certain category of companies, reducing the approval thresholds to 75%. I think that's a positive. You know, allowing for certain mergers to go through, you know, not have to go to the NCLP.

I think that's, again, positive. I think it's just a step in the right direction, you know, allowing companies more flexibility in terms of what they choose to do as far as M&A is concerned.

Govindraj Ethiraj: And what was the approval threshold earlier? 90%. Of shareholders had to approve.

Yes. So you're saying 75% could potentially approve. And you're saying also in some cases, it may not need to go to NCLP.

Yes, it could just go to the registrar instead of going to the NCLP. Right. And what kind of mergers?

I mean, what could be the, let's say, the cutoff size, or is that the consideration?

Karan Marwah: I think the ones they've called out are mergers between holding and subsidiary companies. I think those are going to be easier. And, you know, we'll have to wait for the detail to come out on some of the other stuff around that.

I think for me, I would also call out the changes to, you know, giving companies more flexibility on stock compensation. You know, instruments like stock appreciation rights, RSUs, which are prevalent around the world. You know, at least corporate India did not have that option earlier.

And now that will become a reality. Allowing more flexibility on buybacks, again, you know, capital structures. I mean, buybacks are so prevalent in the West.

I think there was obviously a limit on what you could do. I think that's been increased. Again, that allows a company more flexibility to be able to do more when, you know, if you've got cash sitting on the balance sheet, for example.

Govindraj Ethiraj: Right. And many companies do have cash sitting on the balance sheet right now, and there is a clamour for buyback. So tell us about what are the areas where you feel we need to be either careful with or could need some fine tuning, even as this passes through its draft to final stage?

Karan Marwah: I'll call out a couple, maybe, and I wouldn't necessarily say it's about fine tuning, but possibly more clarity. I think there's a requirement around a fit and proper test for appointment of directors. And what fit and proper means for you versus what it means for me could be different.

I think someone will have to wait and see how that gets defined. You know, I think that's an area where obviously more guidance would help. I think I would call out again, you know, more requirements or responsibilities on the board on areas like, you know, having to comment on audit observations, adverse audit observations or any areas where they've not agreed with all the committee recommendations.

Again, positive. I think it's not, I think it's called for, but again, how it gets practically implemented, we'll just have to wait and see.

Govindraj Ethiraj: Right. And one of the points that I noticed was holding annual general meetings, that you have to hold physical annual general meetings now, at least once.

Karan Marwah: It depends on what you're comparing it with, right? You always had to hold physical AGMs until COVID happened and the world changed, stayed several times after that. We just have to be conscious of that new reality that, and I think it's still allowed.

I think what they're saying is once in three years, you need to meet physically. This is not a bad thing. I think, you know, the connect with stakeholders, shareholders, you've got to see them hopefully more than once in three years, but I think it still allows that flexibility to companies to do this digitally.

Govindraj Ethiraj: Right. You do it for three years, then once in three years, you do it physically because you're saying that we're going back to what it was before COVID. Of course, before COVID, you had to do it mandatorily every year.

Yes. Okay. What is the passage of this bill from here on?

How long could it take and where is it right now?

Karan Marwah: What I understand is in the public domain, it's been referred to the joint parliamentary committee that needs to be constituted. I think that the government's aim is to do that in the monsoon session. I think they put a date to it, it slips my head, but I think that's the next step for the committee to get constituted and evaluate the, if any changes need to be made to this.

Govindraj Ethiraj: Right. And is there anything that you'd like to see or you felt should have been there?

Karan Marwah: That's a tough one. I think you always want more simplification. You always want things to be more easy.

We're all, I think, you know, lots of positive changes. We haven't spoken about, you know, small companies and what's been done there. We haven't spoken about CSR, you know, what's happened there.

I think easier the changes in the limits and more time to be able to spend that money in CSR. Yes. I think the small companies, they've doubled the threshold in terms of, you know, the capital and the size of revenues. I think it recognises the fact that we have, you know, so much vibrancy in the startup sector and those companies need to be focussing on their businesses in that gestational stage.

So you give them that runway of, you know, easier compliances for how long? That hasn't changed. So that's still under the, you know, that's still allowed in the current act.

I think until you cross those thresholds, that's what it means basically. Right. But the thresholds have been doubled.

So, you know, you have, if you're still, you know, that size, then you have that longer runway to get to that size threshold, which is what I'm saying. I think companies are growing faster, you know, some sectors, of course, that's always the case, but at least it's a conscious recognition of the fact that we have companies that are now larger and possibly need more time to redefine threshold to get to a certain size that those compliances need to be applicable to them.

Govindraj Ethiraj: Right. What would be the example of one compliance, which would, let's say you have the benefit of not doing and you will have to do once you reach that point?

Karan Marwah: So I think the requirement to, you know, do an audit, the requirement to sort of do board meetings and how often do you do them? You know, typically a small company has to do it at least once a year versus, you know, more often by companies that are not small companies. They've also, I think, announced reducing the penalties that are applicable to small companies.

And I think that's from what I understand half of what is applicable in the normal case.

Govindraj Ethiraj: Got it. Karan, thank you so much for joining me.

Karan Marwah: Pleasure's mine.