XLPE cables have high dielectric strength and excellent ageing characteristics in dry environment. But a problem that appears, especially in case of underground cable, is the effect of water absorption on the insulation of the cable. Hence this papers firstly aims at presenting the results of variation of Capacitance, Dissipation Factor, Stability Factor and Relative Permittivity, with respect to water absorption. Partial discharge is an important parameter measured as a part of routine test for the power cables in all the cable manufacturing industries. Hence the paper secondly aims at creating the termination defects, purposely, on the newly manufactured cable and analyze the variation in the value of partial discharge by performing partial discharge test on this cable. The increase in the value of electric field stress at the defects is analyzed by simulation using FEMM Software.