India's Defence Industry Emerges as a Resilient Growth Driver

Indian Power Sector Benefits from Domestic Fuel Sourcing

The Indian power sector is well-insulated from the current Iran war-led price shock and supply disruption, with most of its fuel (largely coal) sourced domestically. In contrast, Asia Pacific peers such as South Korea, Vietnam, Thailand, and China rely heavily on imported fuels, exposing them to cost and earnings pressures.

Fitch Ratings notes that utilities and generators in India, Indonesia, and Australia are less affected by supply risk due to domestic fuel sourcing. However, the rising price of coal used in power generation may have a positive impact on local producers such as Coal India, which supplies a significant portion of its output to power utilities.

Coal India shares have risen 4 percent so far this week, driven by the potential for higher auction rates and realisations due to rising international coal prices. The government's efforts to replace imported coal with locally produced coal may also benefit the company. India is planning to add 30,000 megawatts of coal-based power generation capacities in FY26-FY30, which will increase incremental coal demand.

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However, the impact of the current market situation on Coal India's sales volumes will be seen in the coming weeks and next couple of months, depending on electricity demand. Coal offtake is expected to pick up as utilities build up inventories for summer, and early forecasts warn about the onset of El Nino weather conditions in 2026.