Sunday, June 7, 2026 · Edition #16

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 101 of the war. India’s Manufacturing PMI hit 55 in May and the headline is doing heavy lifting for a number built on precautionary stockpiling and government infrastructure, not export orders. FIIs sold a record Rs 21,105 crore in a single session on May 29, taking 2026 YTD outflows to $26.4 billion, already more than any full year on record. India slipped to seventh in global market cap rankings as South Korea crossed $5 trillion on AI chip demand. Tata Motors licensed Chery’s EV platform for Avinya after JLR shelved its architecture, making visible what was already true: India cannot build competitive EVs without Chinese technology. The US proposed a 12.5 percent Section 301 tariff on India for forced labour during the same week India-US trade talks were held in New Delhi. Venezuela’s interim president flew to New Delhi; India is now the second-largest buyer of Venezuelan crude at 427,000 barrels per day, with all oil revenues flowing through the US Treasury.

1. PMI 55: READ THE FOOTNOTES

India’s HSBC Manufacturing PMI rose to 55.0 in May from 54.7 in April, above the flash estimate of 54.3. New orders grew at their fastest pace since February. Factory output rose at its quickest pace in three months. Capital goods and intermediate goods led. Business confidence remained positive. The headline number is good.

The composition is less so. Pranjul Bhandari, Chief India Economist at HSBC, said the reading “points to another month of possible precautionary stockpiling as the Middle East conflict remains unresolved.” Export orders rose at a softer pace. Input cost inflation was the second-strongest since April 2022, with energy, fuel, and the war explicitly cited. Output price inflation slowed more sharply than input costs, suggesting a potential squeeze on manufacturers’ margins.

MY TAKE: A PMI of 55 built on government civil engineering and precautionary stock-building is not the same as a PMI of 55 built on export orders and private investment. Companies are buying more inputs than current production requires to buffer against supply disruption. That precautionary purchasing is inflating the headline. Strip it out and the underlying demand picture is softer. Business confidence fell to a four-month low while the output number looked strong. Watch which of those two signals the next quarter confirms.

2. THE RECORD SELL-OFF: $26.4 BILLION AND COUNTING

FIIs sold a record Rs 21,105.86 crore on May 29 in the cash segment, the highest single-day outflow in at least two years, triggered by MSCI Global Standard Index rebalancing that took effect that day. Passive global funds and ETFs adjusted portfolios, driving estimated outflows of $800 million to $1 billion. DIIs bought Rs 16,764 crore, their highest single-day purchase in nearly two months, partially cushioning the blow.

Total FPI selling in 2026 now stands at Rs 1,87,439 crore, already surpassing the full-year 2025 record of Rs 1,66,283 crore with seven months still remaining. In the three weeks after the April 8 ceasefire rally, FIIs sold over $5 billion from India while allocating $4 billion to Korea and $5.5 billion to Taiwan.

MY TAKE: The MSCI rebalancing was the trigger on May 29. The underlying reason is structural. India’s weight in the MSCI EM index has fallen to 12.3 percent from a peak of 21 percent in September 2024. FIIs are not leaving India because of a bad quarter. They are rotating toward markets with AI and semiconductor exposure. Every dollar that goes to Taiwan and Korea instead of India is a vote on where the next decade’s growth is. India’s answer to that vote is a licensing deal with Chery and an MoU with ASML signed last month for a fab that does not yet exist.

3. SEVENTH PLACE: THE MARKET CAP THAT TELLS YOU EVERYTHING

India’s equity market slipped to seventh in global market capitalisation rankings this week. South Korea’s combined exchanges hit $5.01 trillion against India’s $4.85 trillion, overtaking India for the first time. Eighteen months ago India’s market cap was roughly 3.5 times South Korea’s and more than twice Taiwan’s, according to Bernstein analysts Venugopal Garre and Nikhil Arela.

Samsung and SK Hynix drove KOSPI up 107 percent. Taiwan’s TAIEX advanced 59 percent on AI demand. India’s benchmark indices are down 12 to 13 percent from their September 2024 peak. Abhay Laijawala of Lighthouse Canton framed it precisely: “AI is the defining theme and semiconductors are at its centre. Within emerging markets, that story belongs to Taiwan and Korea, not India.”

MY TAKE: The market cap number is the symptom. The disease is the absence from the AI supply chain. India offers what Laijawala called a picks-and-shovels opportunity: data centres, cooling systems, electricity infrastructure. That is a real thesis. It is also a decade behind the semiconductor story that is driving capital flows right now. The Tata-ASML agreement and the BPCL Brazil investment are both pointed in the right direction. The question is pace, not direction.

4. TATA AND CHERY: THE DEPENDENCY INDIA WILL NOT NAME

Tata Motors will use Chery’s EV platform to locally build cars under its Avinya brand after JLR shelved its EMA platform for India. JSW MG, which already runs SAIC’s MG brand, has a similar platform arrangement with Chery. India has effectively banned Chinese equity investment in the auto sector since 2020. Chinese EV technology is in India’s two largest electric vehicle programmes anyway.

The pattern is not unique to India. Ford licensed CATL’s battery chemistry for a Michigan plant while the US imposed tariffs on Chinese EVs. German carmakers have CATL gigafactories in Europe. The EU imposed 17 to 38 percent tariffs on Chinese EVs in 2024 while simultaneously building CATL’s Hungary plant. Political restrictions slow equity. They do not stop IP.

MY TAKE: China has embedded itself in the world’s EV supply chain at the component and IP level where political restrictions rarely reach. Every country is running the same playbook: ban Chinese equity, license Chinese technology, avoid the political optics, get the product to market. India is not uniquely hypocritical here. The more important question is whether India builds its own EV architecture before the Chery arrangement becomes permanent. Tata calls it a stopgap. Stopgaps tend to last.

5. FORCED LABOUR, SECTION 301, AND THE DEAL INSIDE THE PRESSURE

The USTR launched Section 301 investigations on March 11 and 12, 2026 covering 60 economies. On June 2 it proposed a 12.5 percent additional tariff on imports from 54 economies including India for failing to ban goods made with forced labour. The proposal entered a consultation phase: hearing requests by June 22, written comments by July 6, public hearings July 7. A final decision is expected before the 10 percent Section 122 tariffs expire on July 24, 2026.

The tariff proposal arrived on the second day of three-day trade talks in New Delhi between India’s negotiator Darpan Jain and the US team led by Brendan Lynch. The timing was not coincidence. Commerce Minister Piyush Goyal said on June 2 that 99 percent of the first tranche of the bilateral trade agreement is settled. The remaining 1 percent is agriculture and dairy access.

That 1 percent has blocked every India-US trade attempt for two decades. Indian farmers and dairy cooperatives have never been opened to foreign competition in any trade agreement. US Ambassador Sergio Gor confirmed 99 percent is done. The G7 summit in France on June 15 to 17, where Modi and Trump meet, is the next inflection point where this either closes or collapses.

MY TAKE: The pattern from August 2025 to today is consistent: pressure, Indian concession, brief relief, new pressure. India stopped buying Russian oil under the 25 percent tariff threat. The tariff was removed. A framework was announced. The Supreme Court intervened. Section 301 was immediately activated. Now a 12.5 percent tariff is proposed during the same week a deal is described as 99 percent done. The pressure and the negotiation are the same instrument. If India signs this deal with dairy concessions, that opening outlasts this war, this administration, and this rupee crisis by decades. The 10 percent Section 122 tariff expires July 24. The G7 is June 15. India arrives at both with a closed Strait, a record-low rupee, and $26 billion in FII outflows behind it. The terms will reflect that.

6. VENEZUELA: THE OIL WASHINGTON SENDS AND INDIA BUYS

Venezuela’s interim president Delcy Rodriguez visited New Delhi on June 5 to 7 with a delegation of ministers. India and Venezuela are deepening energy cooperation in upstream and downstream projects. India is the second-largest buyer of Venezuelan crude in May at 427,000 barrels per day, second only to the US. Venezuela is on course to become India’s fourth-largest oil supplier. Reliance Industries is one of the three largest buyers globally.

The mechanism is specific. Under the February 2026 US-Venezuela oil pact, all Venezuelan crude sale proceeds flow through US Treasury-administered accounts. Commercial terms follow US guidance. India resumed purchases in February when sanctions were eased. It stopped buying Venezuelan oil last year when Trump threatened 25 percent tariffs on countries that did not comply.

MY TAKE: Venezuela is a friendly nation now because the US made it one. The proceeds from every barrel India buys go through a Washington account. India stopped buying when Washington said stop. India started buying when Washington said start. Rodriguez visited Delhi to deepen ties in an arrangement designed in the US Treasury. Strategic autonomy is what you call it in speeches. The oil flows tell a different story. Until India builds its own reserves, its own renewable capacity, and its own energy security architecture, every barrel it imports comes with someone else’s terms attached.

WHAT TO WATCH

1. Watch July 24, 2026. The 10 percent Section 122 tariff on India expires that day. Whatever replaces it, whether the Section 301, 12.5 percent rate, a negotiated BTA rate, or a new executive order, defines India’s trade cost structure for the year. July 7 hearings and July 6 comment deadline are the last moments to shape the outcome. India’s negotiating position enters this final stretch with a closed Strait, a record-low rupee, and $26 billion in FII outflows behind it.

2. Watch India’s MSCI EM weight trajectory through Q3. It has already fallen sharply from its late-2024 peak. If it continues declining, passive fund rebalancings will keep generating forced selling regardless of India’s fundamentals. The May 29 record single-day outflow was a structural event not a sentiment one. More MSCI rebalancings are scheduled in August and November.

3. Watch India’s weekly forex reserve data through July. Reserves have fallen from $728 billion in February to approximately $696 billion today, a $32 billion drawdown in 99 days. At that pace reserves reach $680 billion by the time the G7 meets. The RBI’s declared comfort level is 11 months of import cover. Below $670 billion that cover begins to compress. The reserve number is the most honest real-time indicator of how much runway India has before the currency defence becomes unsustainable.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #16 | June 7, 2026

Friday, May 30, 2026 · Edition #15

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 91 of the war. Trump sat in the Situation Room and walked out without signing. A 60-day ceasefire extension and Hormuz reopening framework is on the table. The sticking point is the same one it has always been: Iran’s enriched uranium. Petrol in Delhi crossed Rs 100 for the first time in this hike cycle, hitting Rs 102.12 after the fourth fuel price increase in 10 days, a cumulative Rs 7.38 per litre rise since May 15. Air India is cutting 22 percent of domestic flights and IndiGo is cutting 17 percent of international capacity between June and August. The Quad signed its first joint infrastructure project, a port in Fiji, alongside critical minerals and energy security pacts. The RBI meets June 5 with 44 of 56 economists expecting a hold, but a growing majority now expects a rate hike before year-end. The rupee is oscillating between 95 and 96 on deal rumours and deal denials simultaneously. The war is in its 91st day. The consumer is paying for every single one of them.

1. TRUMP WALKED OUT WITHOUT SIGNING. THE PATTERN HOLDS.

A draft 60-day memorandum of understanding was on the table this week proposing to extend the ceasefire, reopen Hormuz to unrestricted traffic, remove all mines within 30 days, and launch nuclear negotiations. Trump concluded a Situation Room meeting without signing. He posted on Truth Social that the Strait “can now head home” as the blockade “will now be lifted” while simultaneously demanding Iran agree it will never obtain a nuclear weapon. The Iranian foreign ministry confirmed no agreement has been finalised.

Iran currently holds 440.9 kilograms of uranium enriched to 60 percent purity, one technical step from weapons-grade. That stockpile is the wall every negotiation hits. Iran has not agreed to relinquish it. The US has not agreed to proceed without that commitment. The 60-day framework defers rather than resolves the question.

MY TAKE: Every headline since April 7 has announced a deal is close. The gap between the announcement and the signature has been consistent: the nuclear question. Iran will not surrender its enriched uranium. The US will not accept a deal that leaves it intact. The 60-day framework is not a solution. It is a countdown to the same argument. For India, which has been adjusting its monetary policy, fuel pricing, and foreign exchange strategy to the hope of a Hormuz reopening, the risk is not that talks fail. It is that they succeed in a way that leaves the underlying tension unresolved and the next crisis closer than anyone admits.

2. RS 102.12. FOUR HIKES. TEN DAYS. AND MORE TO COME.

Four fuel price hikes in 10 days have added Rs 7.38 per litre to petrol and Rs 7.53 to diesel since May 15. Petrol in Delhi now costs Rs 102.12 and diesel Rs 95.20. In Mumbai petrol is Rs 111.21. In Kolkata Rs 113.51. State-owned oil companies IOC, BPCL, and HPCL, which control 90 percent of India’s fuel retail market, have been making the revisions as they attempt to recover losses from a crude oil import basket that has jumped from $69 per barrel in February to $113 to $114 per barrel currently.

The cumulative correction is still insufficient. OMCs were losing Rs 7.5 billion daily before the hike cycle began. Three hikes of under one rupee followed the initial Rs 3 move. The fourth at Rs 2.61 brought petrol past Rs 100 for the first time in this cycle. Refiners say more hikes are needed.

MY TAKE: The hike pattern is being managed in instalments to avoid a single politically visible number. Four hikes of varying sizes over 10 days is less visible than one hike of Rs 7.38. The consumer pays the same either way. State-owned OMCs crossed the Rs 100 threshold quietly on a Monday. The question is not whether further hikes are coming. At $113 per barrel and a rupee at 95, the required correction is Rs 25 to 28 per litre according to Kotak Institutional Equities. Rs 7.38 has been recovered. The remaining correction will arrive in instalments timed around the political calendar, just as these four did.

3. INDIA’S SKIES ARE SHRINKING. FOREIGN AIRLINES ARE FILLING THE GAP.

Air India is cutting up to 22 percent of domestic flights between June and August 2026. IndiGo is reducing domestic capacity by 5 to 7 percent and international capacity by 17 percent. Both cited the sustained impact of high aviation turbine fuel prices driven by the West Asia crisis. This follows earlier cuts: Air India’s US routes collapsed 77 percent, Delhi-Chicago was suspended, and foreign carriers captured 58.4 percent of India’s outbound international market. The government cut airport landing and parking charges by 25 percent in April and separately Delhi and Mumbai cut VAT on jet fuel, but neither measure was sufficient against ATF prices up more than 50 percent since February 28.

MY TAKE: India wanted to be an aviation powerhouse. The Hormuz crisis is redistributing that ambition to European and Gulf carriers with stronger balance sheets, lower fuel taxes, and currency hedging strategies that Indian carriers do not have. Air India cutting 22 percent of domestic flights during summer is not a temporary adjustment. It is a market share transfer happening in real time. IndiGo’s 17 percent international cut opens routes to competitors who will not give them back easily when fuel normalises. The aviation ambition survives the war. The market position it held before the war does not.

4. THE QUAD’S FIRST INFRASTRUCTURE PROJECT: FIJI AND THE CRITICAL MINERALS QUESTION

The foreign ministers of Australia, India, Japan, and the United States signed agreements this week to jointly build a port in Fiji and signed separate pacts covering critical minerals and energy security. This is the Quad’s first jointly executed infrastructure project after years of declarations and frameworks. The timing is deliberate. The Iran war has accelerated every supply chain diversification discussion that was already happening. Critical minerals for semiconductors and EVs, shipping route diversification, and energy security infrastructure all converge in one set of agreements signed in one week.

MY TAKE: The Quad has a credibility problem. Every summit produces statements. This week produced a construction contract. That difference matters. A port in Fiji is a small project by any measure but it establishes the Quad as an entity capable of executing, not just declaring. The critical minerals pact is more immediately relevant to India’s semiconductor ambitions than the port. If it provides preferential access to Australian and Canadian lithium, cobalt, and nickel, it is a structural input to India’s PLI programme that no single bilateral deal could deliver. The test is always implementation. Watch this one before celebrating.

5. RBI JUNE 5: HOLD NOW. HIKE LATER. THE WINDOW IS CLOSING.

A Reuters poll of 56 economists found 44 expect the RBI to hold the repo rate at 5.25 percent on June 5. However a growing majority now expects at least one 25 basis point rate hike before year-end. Mizuho’s Vishnu Varathan called it “a matter of when not if” and argued “moving sooner rather than later at the August meeting makes sense and mitigates unnecessary pain.”

The pressure is structural. Brent is 50 percent above pre-war levels. The rupee is down 6 percent year to date. Wholesale inflation accelerated sharply in April. Bank Indonesia raised 50 basis points in a surprise move last week. The Philippines raised 25 basis points in April. India has not moved. India, Indonesia, and the Philippines are the three Asian economies most exposed: higher oil import costs coinciding with capital outflows. The other two have acted.

MY TAKE: The RBI is defending a growth number while the inputs to that number deteriorate in real time. Manufacturing PMI at its lowest since June 2022. IIP at a five-month low. FII outflows of Rs 2.47 lakh crore. The argument for holding is that rate hikes do not fix oil prices. The argument for hiking is that the longer India waits, the more the rupee depreciates, the more imported inflation builds, and the harder the eventual correction becomes. Mizuho’s framing is precise: this is a matter of when, not if. Every month of delay adds to the adjustment India will eventually need to make. The question the RBI is not answering publicly is what growth rate it is actually protecting. If that number is overstated, the defence becomes harder to justify with each passing week.

WHAT TO WATCH

1. Watch the RBI June 5 meeting. A hold is the base case but the language matters as much as the decision. Any shift toward a hawkish signal or withdrawal of accommodation framing would be the first official acknowledgement that a hike is coming. That language alone would move bond markets before the rate does.

2. Watch the Iran deal timeline. Trump has not signed. The 60-day framework defers the nuclear question. If no signature arrives before end of June, the Hormuz closure enters its fifth month and the inventory depletion risk becomes physical shortage rather than forecast. Every week of delay narrows the window between expensive oil and unavailable oil.

3. Watch Air India and IndiGo’s July load factor data, released in early August. If load factors hold despite capacity cuts, the airlines have managed the crisis. If load factors fall alongside capacity, demand destruction from high fares is compounding the supply shock. That combination signals a structural contraction in Indian aviation, not a temporary adjustment.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #15 | May 30, 2026

Sunday, May 24, 2026

Edition #14

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 85 of the war. Petrol in Delhi crossed Rs 99.51 after the third fuel price hike in two weeks, with OMCs still losing Rs 7.5 billion daily even after the increases. The rupee touched 96.13 before recovering slightly, remaining Asia’s worst-performing currency in 2026. US Secretary of State Rubio visited New Delhi to push Indian oil purchases from the US and Venezuela, announcing Venezuela’s acting president Rodriguez’s visit to India before either New Delhi or Caracas had done so. The US Department of Justice dropped all charges against Gautam Adani with prejudice, weeks after he pledged $10 billion in US investment. Nine million Indian workers in the Gulf face job losses as Gulf GDP growth collapses from 4.4 percent to 1.3 percent. India’s Trade Minister heads to Canada with 150 industry leaders next week. The war is no longer disrupting India’s economy at the edges. It is restructuring it from the centre.

1. THREE HIKES IN TWO WEEKS. AND STILL NOT ENOUGH.

India’s state fuel retailers raised petrol prices by approximately 0.9 rupees per litre on Tuesday and 0.87 rupees on Saturday May 23, the third increase since May 15. Petrol in Delhi now costs Rs 99.51 per litre and diesel Rs 92.49. The cumulative hike since May 15 is approximately Rs 4.77 on petrol. Sujata Sharma, Joint Secretary in the oil ministry, confirmed on Monday that state fuel retailers are losing Rs 7.5 billion daily. The government has no plans to provide financial support to OMCs. Refiners say more hikes are needed.

The arithmetic is unambiguous. At Rs 7.5 billion in daily losses, OMCs lose approximately Rs 225 billion per month. Three hikes in two weeks have recovered a fraction of that. The Strait of Hormuz has been closed for 85 days. Every day without a deal adds to the cumulative under-recovery that will eventually require either government support or further retail price increases.

MY TAKE: The hike pattern this week tells you what the government already knows: Rs 3 was never the answer. It was the opener. The move to smaller, more frequent increments rather than one large correction suggests the government is managing public perception as much as it is managing OMC finances. Petrol at Rs 99.51 is already psychologically significant. Rs 100 per litre in Delhi is not a number any government wants associated with its name before a state election. Watch whether the fourth hike crosses that threshold or stops just short of it.

2. THE RUPEE: TAPE ON A BROKEN PIPE

The rupee has recovered marginally from its 96.17 intraday low but the structural picture has not changed. Gold duties were tripled. Silver imports were restricted. Fuel prices were raised three times. The rupee fell through all of it and recovered only on thin hope of a Hormuz deal. FIIs have pulled Rs 2.47 lakh crore from Indian assets in 2026. The RBI has spent $32 billion in reserves. The April trade deficit hit $28.38 billion, a six-month high.

Three forces are driving this and none respond to domestic policy tools. Brent above $100 means continuous dollar outflows for crude purchases. A firm dollar index creates headwinds for every emerging market currency. And FII outflows reflect falling confidence in India’s near-term growth trajectory relative to other Asian economies offering better returns with less geopolitical exposure.

MY TAKE: Every policy measure this week addressed approximately 11 percent of India’s import bill, the gold and silver share. The crude share is 32 percent and remains untouched by any of these tools. The current rupee recovery is not structural stabilisation. It is a brief pause driven by deal optimism that will reverse the moment talks collapse again. The pipe is still broken. The tape is holding for now. The structural fix requires either the Strait reopening or a decade of manufacturing-led export growth that India has not yet delivered. Neither arrives this week.

3. THE ADANI CHARGES: A $10 BILLION QUESTION

The US Department of Justice dropped all criminal fraud and conspiracy charges against Gautam Adani and Sagar Adani on May 18, dismissing the case with prejudice, meaning the charges cannot be refiled. The dismissal came after Adani pledged $10 billion in US investment. The original indictment accused Adani executives of concealing a $265 million bribery scheme tied to Indian solar contracts. The Adani Group consistently denied all allegations. Prosecutors said they would not devote further resources to the case.

The sequence is precise. Charges filed in 2024. $10 billion US investment pledged in 2026. Charges dropped with prejudice in May 2026. The DOJ’s own filing states this was a matter of “prosecutorial discretion” and resource allocation.

MY TAKE: Call this what it is. A $10 billion investment pledge preceded a “with prejudice” dismissal of charges that had wiped $55 billion from Adani Group’s market capitalisation in 2024. Whether the investment triggered the dismissal or the dismissal rewarded the investment, the outcome is the same: the US legal system’s treatment of a major Indian corporate appears to have been calibrated to American economic interests. This is not unique to India or to Adani. It is how power actually operates in the global economy. The more relevant question for India Inc is what this episode reveals about the cost of being dependent on US capital markets for fundraising. If your access to global capital can be disrupted by a US indictment and restored by a US investment pledge, your financial autonomy is as conditional as your energy autonomy.

4. THE INDIAN WORKER: SQUEEZED INSIDE AND OUTSIDE

Nine million Indians work in the Gulf. The World Bank estimates Gulf GDP growth will slow to 1.3 percent in 2026 from 4.4 percent in 2025, directly threatening those jobs. Returning migrant workers are finding no equivalent employment at home. Urban unemployment stands at 6.6 percent. Economists warn of weak hiring, slow wage growth, and worsening job quality for the 6 to 7 million young Indians entering the workforce each year. The leather sector, the glass industry, and manufactured export businesses are cautious on hiring even as they try to avoid layoffs. Kerala’s economy, structurally dependent on Gulf remittances, is absorbing a remittance shock in real time.

The war has simultaneously reduced manufactured export demand from the Gulf and from European markets diverted by the energy shock, while returning migrant workers to an economy that lacks the manufacturing base to absorb them. India’s economy is growing at nearly 7 percent. The growth is not producing enough jobs of the right quality at the right wage.

MY TAKE: Sixty-eight million workers returned to farming between 2018 and 2024 because manufacturing did not hold them. The Gulf war is now adding another wave of returnees to an economy that was already failing to absorb its own workforce. Urban unemployment at 6.6 percent is the formal number. The informal number is higher and climbing. The protests in north India last month were a preview. An economy that grows at 7 percent while its workers earn stagnant wages and face shrinking job quality is not building social stability. It is deferring a reckoning. The war has shortened that timeline considerably.

5. RUBIO, RODRIGUEZ, AND INDIA’S OIL SOVEREIGNTY

US Secretary of State Marco Rubio visited New Delhi between May 23 and May 26 for talks on trade, energy, and the Quad. Before arriving, he announced that Venezuela’s acting president Delcy Rodriguez would visit India next week to discuss oil sales, a visit that neither New Delhi nor Caracas had officially confirmed at the time. Congress leaders noted this was the second time Rubio had announced a major India-related development before India’s own government did, the first being his announcement of the Operation Sindoor ceasefire in May 2025. Rubio said Washington wants to sell India “as much energy as they are willing to buy” and flagged Venezuelan crude as an additional opportunity. India imported 343,000 barrels per day of Venezuelan crude in March 2026, making it the largest buyer of Venezuelan oil, surpassing China and the United States.

Venezuela holds the world’s largest proven oil reserves at approximately 303 billion barrels. Since Washington removed Maduro in January 2026, Venezuelan oil industry operations and export revenues are controlled by the US Treasury under American licensing arrangements.

MY TAKE: Washington is telling India where to buy its oil before New Delhi has announced it. That sentence captures the state of India’s strategic autonomy more precisely than any diplomatic speech. Venezuelan crude is heavier than Middle Eastern grades and more expensive to refine in Indian facilities designed for lighter crude. Russian oil was discounted, easier to refine, and came without American conditions attached. Venezuela’s oil comes with Washington’s fingerprints on the revenue stream. India is buying it because the Strait is closed and the US is the only country offering accessible alternatives. That is not diversification. That is dependency with a new label. The question India’s energy planners should be asking is not how much Venezuelan crude to buy. It is how long before Washington turns this tap off too.

6. CANADA: PRESSURE CREATES OPPORTUNITY

Trade Minister Piyush Goyal leads a 150-member industry delegation to Ottawa and Toronto from May 25 to May 27, the largest trade mission India has sent to Canada in recent years. Discussions will cover critical minerals, clean energy, natural resources, and investment. Canada holds significant reserves of lithium, cobalt, nickel, and uranium, all critical to India’s semiconductor and EV manufacturing ambitions. India-Canada trade is currently approximately $9 billion annually, well below its potential given the size of both economies.

The visit follows years of strained relations after the Hardeep Singh Nijjar killing in 2023. The diplomatic thaw, accelerated by shared concerns about US unpredictability under Trump, is opening a trade corridor that both countries had left underutilised.

MY TAKE: America’s pressure on India to accept its energy and trade terms is producing an unintended consequence: India is accelerating its relationships with every credible alternative. Canada for critical minerals. South Korea for semiconductors and shipbuilding. Brazil for equity oil. The Goyal visit is not primarily about trade diversification. It is about building the architecture of genuine strategic autonomy that India has been claiming rhetorically for decades. The irony is that Washington’s own behaviour is the most effective driver of that diversification. The question is whether India builds it fast enough to have leverage before the next crisis.

WHAT TO WATCH

1. Watch the RBI’s June 4 meeting. Three fuel price hikes in two weeks add approximately 0.3 to 0.4 percentage points to CPI over the next two months. If April CPI printed above 4 percent and May follows, the June meeting becomes a hold-or-hike debate rather than a hold-or-cut debate. A rate hike at this point would be the worst possible outcome for India’s growth trajectory.

2. Watch Delcy Rodriguez’s India visit next week. If India signs a long-term Venezuelan crude supply agreement, it signals Washington has successfully redirected India’s oil sourcing away from Russia and toward US-controlled supply chains permanently. That has profound implications for India’s trade balance, refinery margins, and strategic positioning.

3. Watch the Adani Group’s capital markets activity in the next 90 days. With charges dropped with prejudice, the group can return to US capital markets for the first time since November 2024. Whether and how quickly it does will signal confidence in the permanence of the dismissal and the group’s assessment of its relationship with Washington going forward.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #14 | May 24, 2026

Day 77 of the war. Trump rejected Iran’s peace proposal calling it “totally unacceptable and garbage” sending oil back above $105 and confirming what markets have suspected for weeks: there is no end in sight. The rupee hit a fresh record low of 95.97 on May 16, Asia’s worst-performing currency in 2026 at minus 6.2 percent year-to-date. India’s April trade deficit widened to $28.38 billion as imports surged to a six-month high of $71.94 billion. Air India slashed international flights by 17.5 percent as foreign carriers captured 58.4 percent of India’s outbound international market. The government raised gold import duty from 6 to 15 percent. Petrol and diesel prices were hiked by Rs 3 per litre on May 15, the first hike in 49 months, coming exactly 16 days after four state elections concluded, with ICRA warning OMCs are still losing Rs 500 crore daily even after the hike BRICS foreign ministers met in New Delhi and failed to produce a joint statement. Global oil stockpiles are depleting at 11 to 12 million barrels per day, the fastest drawdown on record. The war is no longer an external shock being managed from a distance. It is restructuring India’s economy from the inside. India restricted silver imports placing 90 percent of import volumes under the restricted category as the government extended its import defence line beyond gold. Tata Electronics and ASML signed an agreement to build India’s first front-end semiconductor fabrication plant in Gujarat.

1. NO DEAL. NO END. THE WAR BECOMES A PERMANENT CONDITION.

Trump’s rejection of Iran’s peace proposal on Monday was swift and categorical. Oil surged above $105 immediately. The rejection was not surprising. Iran’s counter-proposal included demands for sovereignty over the Strait of Hormuz and full sanctions lifting before any agreement. Washington will accept neither. What is new is Trump’s framing: he said explicitly this week that the economic pain of elevated gasoline prices, now 50 percent higher in the United States than pre-war, is “worth it.” US school budgets are being strained. Consumer spending is softening. And yet the administration is holding.

The gap between the two positions has not narrowed since Islamabad. It has widened. Iran wants permanence. The US wants unconditional compliance. Neither is negotiable for the other side. The next diplomatic catalyst is the Trump-Xi summit outcome and whether Beijing can create a framework that gives both sides a face-saving exit.

MY TAKE: When the country causing the disruption says the economic pain is worth it, the disruption is no longer a crisis to be resolved quickly. It is a policy. India is not managing a temporary shock. It is adapting to a new baseline where $100-plus oil, a closed Strait, and a structurally weakened rupee are the operating conditions. Every corporate planning assumption built on pre-February 2026 oil prices needs to be revisited. The question is not when normal returns. It is what the new normal looks like.

2. THE RUPEE AT 95.97: STRUCTURAL NOT SITUATIONAL

The rupee hit 95.97 on May 16, Asia’s worst-performing major currency in 2026 at minus 6.2 percent year-to-date. Malaysia’s ringgit is up 3.3 percent. China’s yuan is up 2.8 percent. The divergence is not accidental. India’s Hormuz dependence is structurally higher than most of its Asian peers. India’s April trade deficit widened to $28.38 billion as imports surged to $71.94 billion, a six-month high driven primarily by crude oil. The RBI has spent approximately $38 billion in reserves defending the currency since February. Gold import duty was raised from 6 to 15 percent this week as part of a multi-tool rupee defence strategy. A fuel price hike on petrol and diesel is now widely expected, with OMCs absorbing approximately Rs 30,000 crore in monthly losses since the war began.

Three forces are driving the rupee simultaneously and none of them responds to policy announcements. Brent above $100 means dollar demand for oil imports rises continuously. A firm US dollar index means all emerging market currencies face headwinds. And FII outflows of Rs 2.5 lakh crore in 2026 remove the capital flow support that sustained the rupee in previous years.

MY TAKE: The gold duty hike and the conservation appeal are the government’s visible tools. They are real but insufficient. India’s April gold imports were already at a 30-year low before the duty hike due to the IGST enforcement issue on banks. The duty addresses a problem the market had already partially solved. The rupee’s real problem is a $28.38 billion monthly trade deficit driven by oil that no duty notification touches. Every day the Strait stays closed, that deficit widens. The rupee does not read press releases. It reads the current account. And the current account is deteriorating structurally.

3. AIR INDIA’S AMERICAN DREAM: GROUNDED BY A WAR IT DID NOT START

Air India cut 17.5 percent of its international flights between March and May 2026. Its US routes collapsed 77.4 percent. Delhi-Chicago is suspended. Delhi-Washington was already gone. Bengaluru and Mumbai to San Francisco stopped last year. The airline is staring at a record FY26 loss of approximately Rs 22,000 crore. Three forces converged simultaneously: Iran war-driven jet fuel prices up approximately 40 percent since February, Pakistan’s airspace ban on Indian carriers since April 2025 adding nearly five hours to some US routes, and no fuel hedging strategy to absorb the shock.

The beneficiaries are moving fast. Swiss, owned by Lufthansa, grew India flights 39 percent. KLM grew 19.5 percent. Cathay Pacific expanded. Foreign airlines now hold 58.4 percent of India’s outbound international scheduled market, up from 51.2 percent a year earlier. Lufthansa lit up Mumbai’s Sea Link bridge with its name in March. It understood what was happening before Air India’s management communicated it publicly.

MY TAKE: This is not a temporary setback for Air India. It is a structural market share transfer happening in real time during the peak of India’s international aviation growth cycle. India’s outbound travel demand is at record highs. Foreign carriers are capturing that demand with better-hedged fuel costs, stronger currencies, and more flexible network structures. Air India’s competitive disadvantage is not operational. It is financial: no hedging, currency mismatch, and a balance sheet absorbing a war-driven shock with no buffer. The aviation market Air India returns to when the war ends will look different from the one it left. Foreign carriers do not give market share back easily.

4. TRADE DEFICIT AT $28.38 BILLION: THE STRUCTURAL ACCOUNT

India’s April merchandise trade deficit widened to $28.38 billion, up from $20.67 billion in March, as imports surged to $71.94 billion, a six-month high. Exports grew 9 percent year-on-year to $38.49 billion but could not offset the import surge. The deficit expansion was driven primarily by crude oil and gold. Services exports provided partial support at $37.24 billion against services imports of $16.66 billion, generating a services surplus of $20.58 billion that partially offsets the merchandise deficit.

The April number reflects the first full month of the US naval blockade, which began April 13. May’s number will capture the full force of both the blockade and Project Freedom’s failure. The trajectory is worsening not stabilising.

MY TAKE: Read April’s trade data alongside the rupee chart and the picture becomes precise. Higher imports mean more dollars leaving India. More dollars leaving India means rupee pressure. Rupee pressure means every subsequent import costs more in rupee terms. That cycle is self-reinforcing until either the oil price falls or the import volume falls. Neither is happening. Goldman Sachs sees Brent elevated through June even if a deal is reached, because rebuilding depleted global inventories takes months after supply resumes. The trade deficit will widen further before it narrows. The rupee pressure is not at its peak yet.

5. THE INVENTORY CRUNCH: THE REOPENING WILL NOT BE FREE

Global oil stockpiles are depleting at 11 to 12 million barrels per day in April, the fastest drawdown on record according to the IEA. Goldman Sachs expects Brent to remain elevated through June even after a deal because rebuilding depleted inventories takes months. Shell’s CEO summarised it last week: “We’ve drilled a hole, a billion barrels worth of a hole, and we’re going deeper and deeper.”

India’s strategic petroleum reserve covers 9.5 days. When the Strait eventually reopens, India faces a simultaneous three-cost event: replenishing strategic reserves, paying insurance premiums on delayed cargoes, and absorbing backlog freight costs. The reopening of the Strait is not a return to pre-war economics. It is the start of a restocking cycle that will keep prices elevated for months.

MY TAKE: India’s 9.5-day strategic reserve is the single most important number in this entire crisis and it receives the least attention. The IEA recommends 90 days minimum. Japan holds 145 days. South Korea holds 97 days. The $38 billion India has spent defending the rupee in 2026 would have funded the entire strategic reserve expansion to 90 days. India spent that money maintaining a status quo that the next crisis will disrupt again. The strategic reserve is not an oil story. It is a national security story that gets filed under energy policy and forgotten until the next war.

6. BRICS IN NEW DELHI: THE GLOBAL SOUTH’S FRAGMENTED MOMENT

The 2026 BRICS Foreign Ministers’ Meeting concluded in New Delhi on May 15 without a joint statement, the first time the grouping has failed to reach consensus at a ministerial level. The divide was over the West Asia conflict: some members wanted explicit condemnation of US military action, others refused. India, as chair, issued a Chair’s Statement instead. Jaishankar used the occasion to call for UN Security Council reform, arguing that Asia, Africa, and Latin America need permanent representation in structures that “reflect an earlier era.”

The optics are significant. BRICS was supposed to be the institutional architecture of a post-Western multipolar world. At its most important geopolitical moment in years, it could not agree on a statement about an active war.

MY TAKE: Look at what is fragmenting simultaneously: NATO divided over the Iran war, OPEC fractured by UAE’s exit, and now BRICS unable to issue a joint statement. Every multilateral institution built over the past 50 years is cracking under the same pressure: the gap between stated solidarity and actual national interest. The Global South’s dependence on the Global North is not just economic. It is institutional. Countries that earn their surpluses from trade with the US and Europe cannot afford to sign documents that antagonise Washington. That constraint explains the BRICS impasse more precisely than any ideological disagreement. Jaishankar’s call for UN reform is correct in principle. The BRICS meeting just demonstrated why it will not happen anytime soon.

7. RS 3 PER LITRE: INDIA’S FUEL HIKE IS ONE-TENTH OF WHAT IS ACTUALLY NEEDED

On May 15, IOC, BPCL, and HPCL raised petrol and diesel prices by Rs 3 per litre each, the first hike in 49 months. Delhi petrol now costs Rs 97.77. The increase of 3.2 to 3.4 percent ends a freeze that survived two general elections, multiple state elections, and 77 days of a war that has pushed crude above $105 per barrel. The hike came exactly 16 days after assembly elections concluded in four states.

The relief to OMCs is minimal. ICRA estimates they are still losing approximately Rs 500 crore per day on auto fuels and domestic LPG even after the hike, at current crude prices. The Rs 3 hike is approximately one-tenth of the correction needed to fully reflect the crude price surge since February 28. The second hike is a matter of when, not if.

MY TAKE: The political choreography is textbook. Conservation appeal first. Gold duty hike next. Fuel hike last, exactly 16 days after elections ended.

But the 49-month freeze deserves an honest reading. For most of those months OMCs were earning record profits on discounted Russian crude, posting a combined Rs 81,000 crore in FY24 alone. The freeze was not consumer protection. It was electoral management. The genuine loss absorption began only on February 28, 2026.

Eleven weeks later prices rose by Rs 3 against a required correction of Rs 25 to 28 per litre. At Rs 500 crore in daily losses even after the hike, the next instalment is not a question of if. Watch for a COVID-scale correction before this war ends.

1. SILVER RESTRICTED: INDIA EXTENDS THE IMPORT DEFENCE LINE

India placed silver bars with 99.9 percent purity and all semi-manufactured silver forms under the restricted import category with immediate effect, the government notified this week. The two restricted categories accounted for more than 90 percent of India’s silver imports in FY26. The move follows the gold and silver import duty hike from 6 to 15 percent announced earlier this week. Chirag Thakkar, CEO of Amrapali Group Gujarat, one of India’s largest silver importers, said the restriction will tighten domestic supplies and push silver from trading at a discount to trading at a premium within weeks.

Silver imports have surged in recent years as investors shifted from gold to silver to avoid higher gold duties. India imported approximately $8 billion worth of silver in FY26, up sharply from $5.1 billion in FY25.

MY TAKE: The government has now moved through gold, silver, and fuel in rapid succession, deploying every available import restriction tool to defend the rupee. Each measure addresses a symptom. None addresses the cause, which is a $28 billion monthly trade deficit driven overwhelmingly by crude oil. Gold and silver together account for approximately 11 percent of India’s import bill. Crude accounts for 32 percent. The government is tightening the smaller valves while the main pipe stays open. The rupee at 95.97 is the market’s verdict on that arithmetic.

1. TATA-ASML: INDIA’S FIRST FRONT-END SEMICONDUCTOR FAB IS REAL

Tata Electronics and ASML signed an agreement on Saturday to build India’s first front-end semiconductor fabrication plant in Gujarat. ASML’s lithography technology will support Tata’s planned 300-millimetre fab, the companies confirmed in a joint statement. ASML is the world’s only manufacturer of extreme ultraviolet lithography machines, the equipment without which advanced chips cannot be made. No fab anywhere in the world operates without ASML. This agreement means India has secured access to the most critical piece of semiconductor manufacturing infrastructure in existence.

The Gujarat fab was announced under India’s PLI semiconductor scheme. This agreement moves it from announcement to engineering reality.

MY TAKE: Three forces converged to make this happen and none of them is purely Indian policy ambition. The US-China tech rivalry has made Washington actively push allies to build semiconductor capacity outside China. Trump’s tariff pressures and geopolitical unpredictability have made European technology companies like ASML actively seek partnerships in stable, large-market democracies outside the US-China axis. And India’s own PLI incentives provided the financial structure. The result is that India benefits from a fracturing world order without having to choose a side explicitly. The Iran war has accelerated every diversification decision that was already in motion. This one will outlast the ceasefire by decades. The question is not whether India can build chips. ASML just confirmed it can. The question is whether it builds them fast enough to matter before the next crisis.

WHAT TO WATCH

1. Watch India’s May CPI data due June 12. April was the first full month of elevated crude pass-through. May will be the second. If CPI prints above 5 percent in May, the June RBI meeting becomes a hold-or-hike decision rather than a hold-or-cut decision. That scenario changes the entire monetary policy outlook for FY27.

2. Watch Air India’s June-August schedule finalisation. The airline has announced 29 route suspensions or reductions. If it announces further cuts beyond those already disclosed, foreign carriers will accelerate capacity addition and the market share transfer becomes structurally permanent rather than cyclical. IndiGo’s international ambitions are the collateral beneficiary to watch.

3. Watch petrol and diesel prices over the next few weeks. The May 15 hike of Rs 3 per litre was only a fraction of the actual correction required at current crude prices. ICRA estimates OMCs are still losing approximately Rs 500 crore per day even after the hike. If Brent stays above $100 and the rupee remains near record lows, another fuel price increase becomes increasingly likely. A second hike would not just affect transport costs. It would feed directly into inflation, household spending, logistics, and the RBI’s entire policy outlook for FY27.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #13 | May 16, 2026

Sunday, May 10, 2026

Edition #12

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 71 of the war. Project Freedom, the US military escort mission through the Strait of Hormuz, launched on Monday, provoked Iranian attacks on the UAE, produced no surge in commercial shipping, and was paused within 48 hours as Trump cited “great progress” toward a deal. Iran struck the UAE in retaliation, sporadic clashes between US and Iranian naval forces continued through the week, and Israel killed 31 people in southern Lebanon on Friday. Trump insists the ceasefire still holds. The rupee hit a fresh record low of 95.40. India’s cabinet approved ECLGS 5.0, a Rs 181 billion emergency credit guarantee scheme, the largest external-shock response since Covid-19. SBI reported its treasury income collapsed 86 percent year on year as bond yields rose and the RBI clamped down on forex arbitrage. India’s gold imports fell to a near 30-year low of 15 metric tons in April. Q4 earnings told two stories: sectors insulated from imported inputs held up, sectors exposed to crude and shipping took the hit. SBI’s chairman warned a prolonged war could dampen loan demand across the economy. The war’s damage to India’s balance sheets is no longer a forecast. It is appearing in the numbers.

1. PROJECT FREEDOM: LAUNCHED, BACKFIRED, PAUSED. THE WAR PLAYS TRUMP AGAIN.

On Monday Trump launched Project Freedom, a US Navy operation to escort stranded merchant vessels through the Strait of Hormuz using guided-missile destroyers, over 100 aircraft, unmanned platforms, and 15,000 service members. Within hours Iran attacked the UAE. Iranian drones and missiles struck Gulf infrastructure for the first time since the ceasefire. Two US destroyers fended off Iranian fast boats, drones, and missiles. The UAE intercepted more than a dozen Iranian missiles. At least 10 civilian sailors died. The US Navy destroyed seven Iranian fast boats. Two vessels were successfully escorted through before Trump paused the entire operation on Tuesday night, citing Pakistan’s mediation and “great progress” toward a deal.

Major shipping companies said they were likely to wait for an agreed end to hostilities before attempting to cross the Strait regardless of US military escorts. Iran’s state television confirmed military officials authorised attacks on the UAE in response to what it called US military adventurism. The rupee weakened to 95.40, eclipsing its previous record of 95.33 set the week before.

Sources: Daily transit figures from UKMTO Advisory Notes

MY TAKE: Project Freedom was a pressure tactic dressed as a humanitarian mission. It backfired within 24 hours. Iran demonstrated it retains both the will and the capability to escalate against US Gulf partners, and the shipping industry’s response made the point that military escorts cannot replace a negotiated settlement. Two ships escorted. Ten sailors dead. One operation paused. The war has now cost the US more credibility in the Strait than it has recovered. The pause is genuinely the best news India has had this week. But a pause is not a deal. And every day the Strait stays at 5 percent of pre-war traffic costs India approximately $1.2 to 1.5 billion in additional import costs.

2. ECLGS 5.0: INDIA DECLARES A FINANCIAL EMERGENCY WITHOUT CALLING IT ONE

The Union Cabinet on May 5 approved Emergency Credit Line Guarantee Scheme 5.0, with a sovereign guarantee outlay of Rs 181 billion ($1.9 billion), designed to unlock an additional credit flow of Rs 2.55 lakh crore for businesses facing liquidity stress from the West Asia crisis. MSMEs receive 100 percent guarantee coverage. Non-MSMEs and airlines receive 90 percent. Airlines can access up to 100 percent of outstanding credit facilities, capped at Rs 1,500 crore per borrower. The scheme runs until March 31, 2027. SBI chairman CS Setty said SBI alone estimates it can channel Rs 70,000 to 80,000 crore in credit through the scheme.

This is the fifth iteration of ECLGS and the first since the Covid-19 pandemic to be triggered by an external shock. The original ECLGS launched in 2020 became one of India’s most effective economic stabilisation tools, disbursing over Rs 3.6 lakh crore to stressed businesses during the pandemic. ECLGS 5.0 follows the same architecture: government guarantee reduces lender risk, encouraging banks to extend credit to businesses that would otherwise be rationed out of the formal credit system.

MY TAKE: When a government labels a credit scheme “Emergency” and structures it identically to its pandemic response tool, it is telling you something about the severity of the situation that the GDP forecast is not. India has now deployed the Bharat Maritime Insurance Pool, raised windfall taxes twice, extended LPG booking windows, hiked commercial cylinder prices by Rs 1,337 cumulatively, and launched ECLGS 5.0. Each of these is a crisis management tool. Together they form a picture of an economy running a multi-front containment operation. The formal economy says 6.9 percent growth. The policy response says something more urgent.

3. Q4 FY26: THE WAR’S DAMAGE IS IN THE NUMBERS NOW

India’s Q4 FY26 earnings produced a split verdict. Sectors insulated from imported inputs held up: banking and NBFCs reported healthy credit growth, FMCG delivered stable volumes on post-GST recovery, infrastructure benefited from government capex, IT and hospitality showed steady traction, and defence was a standout with Garden Reach Shipbuilders posting revenue up 29 percent year on year. But sectors exposed to crude, gas, and shipping absorbed the hit. Oil marketing companies IOC, BPCL, and HPCL are absorbing losses of approximately Rs 30,000 crore every month because the government has frozen retail fuel prices. Auto ancillaries saw margin compression from elevated aluminium and energy costs. City gas distributors faced costlier spot LNG. Pharma absorbed higher shipping and petrochemical-linked input costs. India’s fuel exports fell 18 percent in April from pre-war levels, the lowest since October 2022, with Europe receiving zero Indian cargo last month.

The split is explained by timing. Elevated crude was largely confined to March in Q4. The first two months of the quarter were relatively insulated. Q1 FY27 will carry a full quarter of $100-plus oil on every balance sheet simultaneously.

MY TAKE: The green bars in this earnings season are not immune. They are early. FMCG’s rural demand recovery, banking’s credit growth, infrastructure’s capex tailwind: all of these are real. None of them is insulated from a demand shock that the RBI and IMF have both warned is coming if the war persists. The supply shock becoming demand destruction chain runs from an oil barrel in the Gulf to a two-wheeler purchase delayed in Pune. Q4 told us where India stood at the start of the war. Q1 FY27 will tell us whether the economy absorbed the shock or broke under it.

4. SBI: INDIA’S LARGEST BANK SHOWS YOU THE WAR’S REAL COST

SBI reported Q4 net profit of Rs 19,684 crore on May 8, up 5.6 percent year on year, beating a headline that looks solid. Underneath it, treasury income collapsed to Rs 12.59 billion from Rs 89.91 billion a year earlier, an 86 percent decline in a single quarter. Rising bond yields reduced the value of SBI’s government securities portfolio. The RBI’s decision to bar banks from offering rupee non-deliverable forward contracts, taken to stabilise the rupee, eliminated another income stream. SBI stock fell 5 percent on results day despite the profit increase. Chairman CS Setty warned that a prolonged conflict lasting five to six months could dampen consumption demand and economic activity, particularly if inflation crosses the RBI’s 4 percent target. SBI is separately planning a $2 billion bond issuance with its executive committee meeting on May 12 to finalise the structure.

MY TAKE: SBI’s treasury income collapse is the war’s most precise financial footprint in India’s corporate results so far. The bank made 86 percent less from its investment portfolio in one quarter because a war in the Gulf pushed up Indian bond yields and forced the RBI to restrict currency trading to defend the rupee. The causal chain from an Iranian drone strike to SBI’s income statement runs through oil prices, inflation expectations, bond yields, and currency market restrictions. It is not theoretical. It is in the audited numbers. When India’s largest bank warns about loan demand slowdown, it is worth listening. SBI has Rs 40 lakh crore in loans outstanding. If demand softens across even a fraction of that book, the growth story changes.

5. GOLD AT A 30-YEAR LOW: TWO SHOCKS MEETING AT ONCE

India’s April gold imports fell to approximately 15 metric tons, a near 30-year low and down 57 percent from 35 tons in April 2025. The monthly average for FY26 was approximately 60 tons. The primary cause is a domestic regulatory disruption: customs authorities began enforcing a 3 percent IGST on bank gold imports for the first time since 2017, when banks were exempted from the levy. Banks halted shipments entirely. Eight tons of gold ordered for Akshaya Tritiya sat in vaults unsold as the festival passed. India spent approximately $1.3 billion on gold imports in April against a monthly average of $6 billion in FY26.

The demand side is also weak but for different reasons. Gold prices in India are trading around Rs 1,52,600 per 10 grams, up 57 percent in a year. Dealers quoted discounts of up to $15 an ounce this week, compared to premiums of $9 last week. A Hyderabad-based jeweller told Reuters: “Retail demand is not picking up even though the wedding season is underway. Higher prices are severely affecting purchases.”

MY TAKE: The 30-year low import figure is being read as a demand shock story. It is more precisely a two-shock story. The regulatory disruption on bank imports is the primary cause of the import collapse. The demand weakness from elevated prices and geopolitical wait-and-watch is real but secondary. Both are worth tracking separately because they resolve differently. The tax enforcement issue can be fixed with a government circular. The demand weakness resolves only when prices fall or consumers capitulate. China’s central bank loaded up on gold for an 18th straight month in April. India’s consumers are waiting for a ceasefire. The divergence tells you something about risk appetite across two of the world’s largest gold markets right now.

WHAT TO WATCH

1. Watch Iran’s formal response to the US peace proposal, expected this week. If Tehran accepts the framework of settling Hormuz first and nuclear issues later, a deal structure becomes possible before the Trump-Xi summit on May 14. That single development would send Brent below $95, give the RBI its first clear window for a June rate cut, and reverse the rupee’s record-low trajectory.

2. Watch the Trump-Xi summit on May 14 and 15 in Beijing. If Xi commits to pressing Tehran on Hormuz reopening as part of broader US-China trade normalisation, India benefits without having applied any pressure. The combination of an Iran deal signal and a Beijing summit outcome in the same week would be the most significant positive catalyst for Indian markets since the April 8 ceasefire rally.

3. Watch SBI’s $2 billion bond issuance decision on May 12. If SBI proceeds with the raise it signals the bank is building capital buffer for a prolonged war scenario. If it delays, it signals management expects a deal-driven improvement in conditions within weeks. The decision is a real-time read on India’s largest banker’s view of how long this crisis lasts.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #12 | May 10, 2026

THE INDIA STRATEGIST by Divya Rai

Sunday, May 3, 2026 · Edition #11

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 64 of the war. Shipping through the Strait of Hormuz has collapsed to fewer than 10 vessels per day, down from 130 before the conflict, with 850 ships and 20,000 seafarers stranded in the Gulf. The UAE quit OPEC, Brent crossed $110, and oil is now 83 percent above where it started the year. The commercial LPG cylinder in Delhi crossed Rs 3,071 on May 1 after a single-month hike of Rs 993, the sharpest in recent history. The rupee hit a new record low of 95.33. Foreign investors have pulled over $20 billion from Indian stocks and bonds in March and April alone. India’s industrial output slowed to a five-month low of 4.1 percent. The government proposed E85 and E100 ethanol fuel rules. Karnataka approved 140 acres for Applied Materials near Bengaluru airport. And India’s GDP growth of 6.9 percent continues to be reported with a straight face while the informal economy absorbs shocks that no survey will capture in time. This is the week the gap between the official story and the lived reality became impossible to ignore.

1. THE NUMBER BEHIND THE NUMBER: INDIA’S GDP PROBLEM

A Reuters poll of economists this week found India’s growth outlook “broadly unchanged” despite 64 days of war. The headline number holds at 6.9 percent. But the economists who compiled that poll were careful to add a caveat that deserves more attention than the headline: the data will not capture an already notable hit to the informal sector.

Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, was direct: “The informal segment is the worst hit and its ability to absorb shocks is very low. We will see a ripple effect on jobs and demand if this problem persists beyond the near term.” Indranil Pan, Chief Economist at Yes Bank, was equally candid: “The disruption to the informal sector would not be captured very significantly by the country’s GDP reading. That is also the reason why we have not really changed our GDP much.”

MY TAKE: Read those two quotes again carefully. India’s chief economists are not saying the economy is fine. They are saying the measurement tool cannot see the damage. The informal sector, which accounts for 85 percent of India’s workforce and roughly 45 percent of GDP, is estimated through surveys, extrapolations, and proxies, not real-time reporting. When 456 million workers absorb a cost shock with no buffer, that does not show up in quarterly IIP data or GDP prints. It shows up six months later in rural consumption numbers, in FMCG volume declines, in two-wheeler sales data. By the time the formal data catches up with what is happening in India’s dhabas, construction sites, and vegetable markets, the damage is already done. The 6.9 percent figure is not wrong. It is just measuring the wrong thing.

2. OPEC FRACTURES. OIL HITS $110. INDIA PAYS.

The UAE’s decision to quit OPEC is the most significant energy governance event of the year, and it did not happen by accident. Brent crossed $110 this week, up from $73 on February 28 and $60 at the start of the year: an 83 percent increase in four months. The World Bank forecast energy prices would surge 24 percent in 2026 to their highest level since Russia’s full-scale invasion of Ukraine, even assuming the most acute disruptions end in May. Between 125 and 140 ships crossed the Strait of Hormuz daily before the war. Kpler and SynMax data shows only seven did so in the past day, none carrying oil for the global market.

The UAE’s departure is not simply an institutional exit. Abu Dhabi has long chafed under Saudi-driven quota decisions that capped its production below capacity. The Iran war gave it the cover to act. With OPEC already fractured by the conflict and Gulf unity at its lowest point in decades, the UAE chose this moment to take full control of its output decisions.

MY TAKE: For India this has two dimensions pulling in opposite directions. Every $10 rise in Brent costs India approximately $12 to $15 billion extra annually in import bills. At $110, India is paying roughly $60 to $75 billion more per year than at the start of 2026. That is the bad news. The less obvious news: the UAE, freed from OPEC quota constraints, can now produce more oil. India already has a Comprehensive Economic Partnership Agreement with Abu Dhabi. A non-cartel UAE with surplus production capacity and an existing trade relationship with India is a more flexible energy partner than one bound by Riyadh’s quota decisions. Short-term pain, medium-term opportunity. Watch whether India moves quickly to deepen its CEPA energy provisions while the UAE recalibrates its position.

3. RS 993 IN ONE MONTH: THE INFORMAL ECONOMY’S REAL INFLATION

Effective May 1, the price of a 19kg commercial LPG cylinder rose by Rs 993 across India. In Delhi it now costs Rs 3,071.50, up from Rs 2,078.50. This is the third hike since the war began on February 28: Rs 144 in March, approximately Rs 200 in April, and Rs 993 in May. The cumulative increase since the war began is Rs 1,337 per cylinder in 65 days. Domestic household LPG prices remain unchanged.

The government’s decision to shield households while passing the full cost to commercial users is a political calculation, not an economic one. The commercial users who bear this cost are restaurants, dhabas, caterers, and small food businesses, which sit almost entirely within the informal economy.

MY TAKE: A dhaba owner in Lucknow or a small caterer in Coimbatore does not have a treasury desk, a hedging strategy, or a line of credit to absorb a 48 percent single-month price increase on their primary fuel input. They have three options: raise prices, reduce portions, or shut. Most will do all three in sequence. This is not a commercial LPG story. It is an informal employment story. Every small food business that reduces capacity or closes is a cluster of informal jobs that disappears from the economy without registering in any dataset that informs the GDP reading we just discussed. The government has shielded the household consumer. It has left the informal employer with nowhere to go.

4. INDUSTRIAL OUTPUT, RUPEE, CAPITAL FLIGHT: THE TRIPLE SQUEEZE

India’s industrial output grew 4.1 percent in March, its slowest pace in five months, against a Reuters forecast of 3.7 percent and a revised February reading of 5.1 percent. The core sector contracted 0.4 percent, its lowest in 19 months. The rupee hit a new record low of 95.33 against the dollar on Thursday before recovering slightly to close at 94.91. Foreign investors have offloaded over $20 billion of Indian stocks and bonds in March and April combined, nearly double the $11.8 billion of outflows for all of 2025.

Vivek Rajpal, Asia macro strategist at JB Drax Honore, warned that persistent rupee weakness could prompt the RBI to curtail oil-related dollar demand from the spot currency market, restrict gold imports, and tighten monetary policy. Each of those measures would add further pressure to an economy already under strain.

MY TAKE: This is a textbook supply shock becoming demand destruction. Higher crude raises input costs. Higher input costs raise prices. Higher prices mean consumers buy less. Less demand means factories produce less. Fewer orders mean lower wages. Lower wages mean even less spending. The RBI flagged this exact risk in April, calling it “possible second-round effects with the supply shock transforming itself into a demand shock.” The data is confirming it in real time. The triple squeeze of slowing output, a weakening rupee, and accelerating capital flight creates a feedback loop that is difficult to break without either a resolution in the Gulf or a significant domestic policy intervention. Neither is imminent. The RBI’s June meeting is now the most consequential domestic policy event on the calendar.

5. APPLIED MATERIALS IN BENGALURU: CHIPS WHEN IT MATTERS

The Karnataka cabinet on April 30 approved the allocation of 140 acres of land at the Bengaluru Signature Business Park to Applied Materials Inc, one of the world’s largest semiconductor equipment manufacturers. The land is valued at Rs 780 crore, priced at Rs 1,288 per square foot, and allotted on a lease-cum-sale basis near Kempegowda International Airport. The allocation is subject to statutory clearances and final pricing confirmation before it is finalised.

Applied Materials already operates a significant presence in India, including the country’s only facility capable of processing 300mm wafers and an AI Centre of Excellence in Chennai. The Bengaluru expansion builds on more than 20 years of operations in India.

MY TAKE: The timing matters as much as the investment. India’s PLI schemes for semiconductors were always framed as long-term industrial policy. The West Asia crisis has reframed them as energy security and supply chain resilience strategy simultaneously. Applied Materials is not just a semiconductor equipment company. It is a critical node in the global chip manufacturing supply chain that Washington is actively trying to move away from China. India landing Applied Materials’ manufacturing expansion is a direct consequence of that derisking strategy and a direct benefit of its positioning as Washington’s preferred technology partner in Asia. The Iran war has accelerated every diversification decision that was already in motion. This one will outlast the ceasefire by decades.

6. E85 AND E100: THE RIGHT DIRECTION, THE WRONG TIMELINE

India’s Ministry of Road Transport and Highways issued a draft notification proposing amendments to the Central Motor Vehicles Rules to formally incorporate E85 and E100 ethanol-blended fuels. E85 is an 85 percent ethanol and 15 percent petrol blend. E100 would allow vehicles to run on nearly pure ethanol. India achieved its E20 target in 2025 and is now pushing further to reduce petroleum import dependence. A nationwide E85 rollout is expected within two to three years, requiring dedicated dispensing units and separate storage infrastructure at petrol pumps.

The technical challenge is significant. Ethanol has roughly 30 percent less energy than petrol, meaning E85 vehicles would see a 27 to 30 percent drop in mileage. Flex-fuel prototypes have been showcased by Maruti Suzuki, Toyota, and Tata Motors, but commercial models are not yet available at scale.

MY TAKE: India currently has no flex-fuel vehicle fleet and no E85 pump infrastructure. Announcing E85 rules while the vehicles and pumps that can use them do not yet exist at scale is either premature or aspirational, depending on how generously you read government signalling. The charitable interpretation is that this is regulatory infrastructure being laid ahead of commercial rollout, giving manufacturers the policy certainty to invest in flex-fuel models now. The less charitable interpretation is that it is a crisis-driven announcement that will take five years to materialise into anything a consumer can actually use. The direction is right. The gap between the notification and the reality on the ground is where the real story will be. Watch whether the vehicle manufacturers commit to commercial launch timelines in the next 90 days.

7. HORMUZ AT 5 PERCENT: 20,000 SAILORS. 850 SHIPS. NO END DATE.

The UK Maritime Trade Operations team confirmed this week that Hormuz traffic has fallen to fewer than 10 vessels per day from approximately 130 before the conflict: a decline of more than 90 percent. Between March 1 and April 27, UKMTO recorded 41 incidents including 26 attacks where ships or crew were damaged or harmed. Between 850 and 870 large merchant vessels are stranded inside the Gulf. Around 20,000 seafarers are on ships going nowhere, with crew changes not happening and supplies becoming strained. UKMTO also warned of a potential resurgence of piracy off Somalia as global naval attention concentrates in the Gulf.

CNN and Kpler data show overall Hormuz traffic over the past two months has run at approximately 5 percent of the pre-war average. Most vessels that have transited recently have taken the IRGC-designated alternative route through Iranian territorial waters, subject to inspection by Iranian naval authorities.

MY TAKE: Ninety percent closure for 64 days is not a disruption. It is a structural severance of the world’s most important energy corridor. Asia absorbs 84 percent of Gulf oil exports. India is the world’s third largest oil importer. Every additional day of 5 percent throughput compounds the damage in ways that neither the RBI’s forecasts nor India’s GDP prints can fully capture in real time. The piracy warning from UKMTO is the detail that is being under-reported. A second maritime crisis opening in the Indian Ocean while India’s naval attention and insurance infrastructure is focused on the Gulf would be a compounding shock of a different order. India’s newly approved Bharat Maritime Insurance Pool will matter more than anyone anticipated when it was announced.

WHAT TO WATCH

1. Watch the RBI’s June meeting. The rupee at 95.33, FII outflows of $20 billion, and Brent above $100 make a rate cut increasingly difficult. If Brent falls below $90 before June 4, a cut becomes possible and would be the single largest domestic demand stimulus available right now. If oil stays above $100, the RBI holds and the growth downgrade becomes more likely.

2. Watch commercial LPG pricing in June. The cumulative hike since February 28 is now Rs 1,337 per cylinder. If a fourth hike lands in June, the informal food and hospitality sector faces an existential cost pressure. That sector employs tens of millions of workers whose distress will not appear in GDP data until late 2026 at the earliest.

3. Watch Karnataka’s Applied Materials clearance timeline. The land allocation requires statutory approvals before it is finalised. If clearances come through within 60 days, it signals India’s semiconductor regulatory machinery is operating at the speed the moment requires. If it drags into Q3, it signals the opposite.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #11 | May 3, 2026

Sunday, April 25, 2026 · Edition #10

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 56 of the war. The ceasefire expired Wednesday with no replacement framework. Iran initially rejected a second round of talks, calling US demands “unrealistic.” But by the end of the week, both US and Iranian officials confirmed they will return to Islamabad for a fresh round of negotiations. The US seized an Iranian cargo ship in the Gulf of Oman. BPCL committed $2.8 billion to a deepwater oil project in Brazil, its largest overseas upstream bet in years. South Korean President Lee Jae Myung visited New Delhi and both countries agreed to nearly double bilateral trade to $50 billion by 2030. Trump reposted content calling India a hellhole while trade talks with New Delhi were described as “constructive.” Russia’s oil sales to India remain near record highs under a new US sanctions waiver. The RBI warned inflation risks have increased. The IMF cut its global growth forecast and warned of possible recession. This is the week India stopped waiting for the war to end and started building around it.

1. BPCL’S BRAZIL BET: INDIA STARTS OWNING ITS OIL

On April 13, Petrobras approved the Final Investment Decision for the SEAP-I project in the BM-SEAL-11 block off Brazil’s coast. BPCL’s subsidiary Bharat PetroResources holds a 65.4 percent equity stake in IBV Brasil, which holds a 40 percent participating interest in the block. Total projected investment: $2.8 billion. Planned production capacity: 120,000 barrels of oil per day. Production is expected to begin in 2026-27.

This is not a new relationship. India has been in Brazil’s oil sector since 2008. ONGC Videsh and Bharat PetroResources had together invested around $3.5 billion in Brazilian hydrocarbons before this announcement. This new $2.8 billion commitment from BPCL alone changes the scale considerably.

MY TAKE: There is a critical difference between buying oil and owning oil. When India buys oil on the market at $100 per barrel during a Hormuz crisis, it pays the war premium, the shipping insurance premium, and the currency risk on top. When India owns equity oil at the source, it gets the crude at production cost, which is a fraction of market price, regardless of what Trump posts on Truth Social or what the IRGC does in the Gulf. Projects like SEAP-I give India what economists call equity oil. It is oil India effectively owns before it reaches the market. The West Asia crisis has exposed exactly why this matters. Brazil is not in any ceasefire negotiation. It has no chokepoints. It has no IRGC. The journey from Brazil to India takes 25 to 35 days compared to 7 to 10 days from the Persian Gulf. But a longer safe journey is worth far more than a shorter one that might not arrive at all. India should have been doing this at scale a decade ago. Better now than never.

2. CAFE3: THE WAR IS ACCELERATING INDIA’S ENERGY TRANSITION

India’s CAFE3 norms, which set stricter fleet-wide fuel efficiency targets requiring automakers to accelerate the shift toward hybrids and EVs, have reached their final draft after industry and government agreed on the framework. The norms were already in development for climate targets, but the West Asia crisis has turned them into a strategic priority.

MY TAKE: The Iran war has done something years of policy nudging could not. It has made energy self-reliance feel urgent rather than aspirational. India has 85 percent dependence on imported oil. That number has not moved enough despite Make in India, Atmanirbhar Bharat, and PLI schemes that were supposed to build domestic manufacturing capability. What is moving it now is a war that has nothing to do with us. CAFE3 means Indian carmakers must build more fuel-efficient vehicles, more hybrids, more EVs. We already covered last week that car sales are slowing because fuel is expensive and uncertain. The industry that is losing sales today is now being asked to build the products that will reduce India’s exposure to the next crisis. The crisis is doing what policy could not. The question is whether the momentum survives after the war ends and the urgency fades.

3. INDIA AND SOUTH KOREA: CHIPS TO SHIPS

South Korean President Lee Jae Myung visited New Delhi on April 20, the first South Korean presidential state visit to India in eight years. Modi and Lee announced 25 outcomes under a Joint Strategic Vision for 2026 to 2030. The headline number: both countries agreed to nearly double bilateral trade from $26.89 billion today to $50 billion by 2030. Focus areas include semiconductors, shipbuilding, AI, critical minerals, nuclear energy, and defence manufacturing. Both sides agreed to upgrade the 2010 CEPA trade agreement. Lee will travel to Vietnam after India.

One important context: this $50 billion trade target was first announced in 2018. Trade grew at only 3 percent annually from 2018 to 2025, reaching $26.89 billion. The ambition is consistent. The execution has historically been slow.

MY TAKE: Modi put it simply: “From chips to ships, talent to technology, entertainment to energy.” That is a good line and it captures the logic. South Korea has what India needs: advanced semiconductor capability, world-class shipbuilding, and battery technology. India has what South Korea needs: a large and fast-growing consumer market and a manufacturing base that is increasingly attractive as supply chains diversify away from China. The Iran war adds a third dimension. Both countries are feeling the energy squeeze. Both are looking for trusted partners outside the US-China axis. This is diversification in practice, Asian economies finding each other in the middle of a crisis caused by powers neither of them controls. The track record on the $50 billion target is not encouraging. But the geopolitical logic for making it work has never been stronger.​​​​​​​​​​​​​​​​

4. RUSSIAN OIL: STILL FLOWING. FOR NOW.

Russian oil sales to India remain near record highs in April and May following a new US sanctions waiver. Traders confirmed that Indian refiners have already secured much of their supply needs through non-sanctioned entities and vessels. Russia currently supplies approximately 35 to 40 percent of India’s crude basket.

MY TAKE: This is the pattern again. US sanctions Russian oil. India reduces purchases under pressure. War breaks out. US issues a waiver. India buys Russian oil again. This cycle has repeated three times since 2022. The waiver is temporary.

But zoom out. The US is more focused on controlling global oil than at any point in recent history. It controls Venezuelan oil revenues. It is blockading Iranian ports. It issues and withdraws Russian oil waivers like a tap. And Reliance is now structurally embedded in the American energy system. In March 2026, Reliance signed a 20-year deal to purchase 1.2 billion barrels of American shale oil and fund America’s first new refinery in 50 years at Brownsville, Texas. A $300 billion commitment. This came weeks after Reliance signed a 10-year Rosneft deal for 500,000 barrels per day. Washington noticed. Brownsville was partly the answer.

On Russian and Iranian oil, India is making discounted hay while the sun shines. But the Brownsville commitment is not hay. That is a 20-year structural lock-in to American energy on American terms. Every discounted barrel bought under a US permission slip comes with conditions attached. India needs the strategic reserve depth and diversified sourcing to make energy decisions on its own terms. Right now it is not clear we are doing that.​​​​​​​​​​​​​​​​

5. RBI AND IMF: THE WARNINGS ARE GETTING LOUDER

The RBI’s monthly economic report this week said inflation risks have increased, driven by supply-side disruptions from the Iran war and weather-related uncertainties. The central bank flagged the risk of a “second-round effect” where the supply shock transforms into a demand shock, slowing consumption and investment simultaneously. India’s foreign exchange reserves provide cover for approximately 11 months of goods imports, which is a meaningful buffer.

Meanwhile the IMF cut its global growth forecast to 3.1 percent for 2026, down 0.2 percentage points from January. The IMF warned that a longer or broader conflict could significantly weaken growth and destabilise financial markets. Asia faces the sharpest impact as the region most dependent on Middle East crude.

The ceasefire expired Wednesday. Both sides continue to accuse each other of violations. Iran has said it will not reopen Hormuz until the US lifts the blockade. The US has maintained the blockade. Israeli strikes on Lebanon continue. There is no active negotiating framework.

MY TAKE: The RBI’s language this week is careful but the direction is clear. Supply shock becoming demand shock is economist language for: people are spending less because things cost more and they are worried about income. That chain runs from a barrel of crude in the Gulf to a two-wheeler purchase delayed in Pune or a restaurant meal skipped in Surat. The IMF’s recession warning is not hypothetical. India is the world’s third largest oil importer. Every additional month of Hormuz disruption adds to what the IEA has called the worst energy shock in recorded history. An economy with 1.4 billion people, many of them already at the margin, cannot absorb that indefinitely. The RBI has reserves. It has tools. What it does not have is a way to replace 20 percent of the world’s oil supply that is not moving.

6. TRUMP REPOSTED A “HELLHOLE” COMMENT ABOUT INDIA. INDIA CALLED IT “UNINFORMED.”

Trump reposted without comment a transcript from conservative radio host Michael Savage’s show on Truth Social, in which Savage referred to India and China as “hellhole” countries while arguing against US birthright citizenship. India’s Foreign Ministry spokesperson Randhir Jaiswal called the remarks “obviously uninformed, inappropriate and in poor taste,” adding that they “certainly do not reflect the reality of the India-US relationship.” The opposition Congress party called it “extremely insulting” and demanded Modi register a personal objection with Trump. India and the US are simultaneously in trade talks described by New Delhi as “constructive.”

MY TAKE: To be precise, Trump did not personally say the words. He shared someone else’s words without comment. Whether that distinction matters is a question of how seriously you take the act of a president amplifying content on his official platform. The content called 1.4 billion Indians a hellhole while trade negotiators from those same 1.4 billion people were sitting across the table in Washington calling the talks constructive. India’s official response was measured: uninformed, inappropriate, in poor taste. Not a protest. Not a demand. Not a consequence. This is the same week Modi called Trump a great friend. The same week Indian tankers were fired upon in the Strait. The same week the US blockade was cutting into India’s oil supply. And our trade negotiators were in Washington calling it constructive. I do not doubt the professionalism or the intent of those negotiators. But the pattern is worth naming: India absorbs, India adjusts, India continues. Will there ever be a line? I wonder what that line looks like.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #10 | April 25, 2026

THE INDIA STRATEGIST by Divya Rai

Sunday, April 19, 2026 · Edition #9

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 50 of the war. The Islamabad talks failed after 21 hours of negotiations. Trump declared a naval blockade of Iranian ports. Iran tightened its grip on the Strait. Two Indian-flagged tankers were fired upon by Iranian gunboats despite Iran’s ambassador assuring India just one week ago that Indian ships would be safe. Sensex opened 1,600 points lower on Monday. Oil crossed $100 again. India raised its windfall tax on diesel exports by 158 percent overnight. Indian refiners quietly paid for Iranian oil in Chinese yuan through ICICI Bank’s Shanghai branch. India approved a Rs 12,980 crore sovereign-backed maritime insurance pool called Bharat Maritime Insurance Pool. Modi called Trump a great friend. India’s trade deficit narrowed to a nine-month low. The auto sector is warning of demand slowdown. This is the week the war stopped being a headline and became a structural problem for India’s economy.

1. THE BLOCKADE BEGINS. THE STRAIT CLOSES AGAIN.

After 21 hours of talks in Islamabad, JD Vance returned to the US without a deal. Trump declared a naval blockade of all maritime traffic entering and exiting Iranian ports, effective 10am ET Monday April 13. Iran responded by tightening control over the Strait, warning mariners it was again closed and reporting at least two vessels came under fire attempting to transit. Iran’s Supreme Leader Mojtaba Khamenei said Iran’s navy was ready to inflict “new bitter defeats” on its enemies.

The blockade is technically narrower than Trump’s initial threat. CENTCOM clarified it applies to ships going to and from Iranian ports, not all Strait traffic. But in practice, ship traffic has halted again. Oil jumped 7 to 8 percent on Monday, with Brent crossing $102 and WTI at $104, more than 50 percent above pre-war levels. India’s Sensex opened 1,600 points lower, falling below the 76,000 mark. The rupee is under renewed pressure.

MY TAKE: A country that cannot reach an agreement decides to do more harm. That is what is happening. The US blockade is not a military necessity. It is a pressure tactic that is landing hardest not on Iran but on the Asian economies that depend on this waterway. India, China, Japan, South Korea, all are paying the price for a negotiating strategy between two parties neither of us elected. The question worth asking plainly: can we really call the US our ally when its actions are directly causing our fuel shortages, market crashes, and economic stress? And here is the broader geopolitical lesson this war keeps teaching us. There are no permanent friends, especially in a war with no clear end goal, no defined objective, no coherent strategy, and principles that are loosened by the day. Countries act in their interest. The US is acting in its interest. India needs to start doing the same.

2. INDIA RAISES WINDFALL TAX: AN EMERGENCY SIGNAL

On April 11, India’s Finance Ministry raised the windfall tax on diesel exports from Rs 21.5 to Rs 55.5 per litre, a 158 percent increase, and on aviation turbine fuel from Rs 29.5 to Rs 42 per litre, both with immediate effect. This was the second hike since the government first imposed these duties on March 26.

The reason is straightforward. Private refiners were exporting fuel at high international prices while rationing the domestic market. The government stepped in to stop that. Petrol exports remain exempt.

MY TAKE: Export tariffs are not normal policy tools. Countries use import tariffs routinely. Export tariffs are reserved for emergencies when a government fears its domestic supply is in danger. India has now raised them twice in three weeks on its two most critical fuels. Consider what is happening on the ground simultaneously. The domestic LPG cylinder was hiked by Rs 60 in March, the highest price since August 2023, taking it to Rs 913 per cylinder in Delhi. Commercial LPG cylinders used by restaurants rose by Rs 115 in the same revision, a cumulative increase of over Rs 300 since the start of the year. CPI inflation rose to 3.4 percent in March, with ICRA forecasting it will cross 4 percent in April as energy and food costs continue feeding through. The Finance Ministry’s emergency notifications are telling you the real story. Read those, not the GDP forecast.

3. INDIA PAYS FOR IRANIAN OIL IN CHINESE YUAN

Indian refiners IOC and Reliance Industries settled payments for Iranian crude through ICICI Bank’s Shanghai branch, routing funds in Chinese yuan into seller accounts. The 30-day US sanctions waiver expired on April 19 and the Trump administration confirmed it will not be renewed. IOC has confirmed it will not make further Iranian oil purchases after the waiver’s expiry. IOC bought 2 million barrels of Iranian crude in this window, worth approximately $200 million, its first such purchase in seven years.

IOC paid approximately 95 percent of the cargo’s value against the supplier’s notice of readiness, an unusual arrangement that one source described as reflecting the sensitivity of the transaction.

MY TAKE: Sit with this for a moment. India, in the middle of a US-sanctioned war, paid for oil from a US-sanctioned country in Chinese currency, through an Indian bank’s Chinese branch, to avoid the US-led dollar financial system, all while the US called it legal because it issued a 30-day permit. This is what de-dollarisation looks like in practice. Not a grand BRICS declaration. A quiet $200 million transaction routed through Shanghai. Is this the beginning of a yuan-based energy trade era? Probably not yet. But the infrastructure is being tested. The trust in the dollar system as a neutral financial highway is fraying. Once countries start finding workarounds, they tend to keep them.

4. BHARAT MARITIME INSURANCE POOL: INDIA BUILDS ITS OWN COVER

India approved the Bharat Maritime Insurance Pool this week, a sovereign-guaranteed insurance mechanism for Indian-flagged and controlled vessels, with a government guarantee of Rs 12,980 crore running for 10 years with a potential five-year extension. The Cabinet approved it at a meeting chaired by PM Modi.

The trigger is direct. Major international reinsurers have withdrawn cover or sharply raised premiums for vessels transiting conflict zones, leaving Indian shipping with limited options. India’s only state-backed reinsurer GIC Re had also pulled back. Without insurance cover, ships simply do not sail.

MY TAKE: This is one of the most consequential policy moves India has made during this war and it received almost no coverage. A country that imports 85 percent of its oil and gas, and whose trade depends entirely on maritime routes, discovered that when war breaks out, foreign insurers walk away. Ships without insurance cannot sail. Trade stops. Before this pool existed, Indian ships transiting conflict zones had no domestic backstop. The Bharat Maritime Insurance Pool is India saying: we will not let someone else’s geopolitical decisions determine whether our ships can move. It is a structural fix that should have existed ten years ago. Better late than never.

5. AUTO SECTOR WARNS. THE CHAIN REACTION SPREADS.

SIAM president Shailesh Chandra said this week the West Asia conflict poses short-term challenges for the auto industry. Crude price uncertainty, higher exchange rates, and shipping disruptions are weighing on export volumes. Buyer enquiries in the entry-level segment remain strong but conversion to sales is slowing.

India’s auto sector had been on a strong run. Car sales rose 7.9 percent to 4.6 million units in FY26. Two-wheeler sales rose 10.7 percent. That momentum is now at risk.

MY TAKE: The auto sector is a bellwether for India’s consumer economy. When people are enquiring about cars but not buying them, it is because they are uncertain about income, fuel costs, and the economic outlook. The numbers tell that story directly. Domestic LPG is at its highest price since August 2023. ATF prices for airlines rose over 100 percent on April 1 before being moderated. CPI inflation is heading above 4 percent. Each of these feeds into the consumer’s calculation about whether to make a large purchase today. The just-in-time supply chain lesson is being learned painfully. Diversified suppliers, buffer stocks, and alternate sourcing are not optional anymore. They are survival strategy.

6. INDIA’S TRADE DEFICIT NARROWS: THE ONE BRIGHT SPOT

India’s merchandise trade deficit narrowed to a nine-month low of $20.67 billion in March, with exports rising to $38.92 billion and imports falling to $59.59 billion. Exports to the US rose 17.4 percent month-on-month to $8.02 billion, supported by the tariff reduction to 10 percent following the US Supreme Court ruling that struck down Trump’s reciprocal tariff framework.

MY TAKE: This is genuinely positive and should not be dismissed. But context matters. India’s overall trade surplus with the US has narrowed over the past year because India has been importing more from America under Trump’s pressure. The Supreme Court brought tariffs down to 10 percent but Trump is pursuing additional tariffs under Section 301 and India remains on that list. The India-US trade deal negotiations are paused. We are at a less-worse position, not a good position. After the war settles, watch how the US moves again. The pattern of pressure, concession, and further pressure has not changed.

7. MODI CALLS TRUMP. DIPLOMATICALLY NOTED. PRACTICALLY IRRELEVANT.

PM Modi and President Trump spoke on April 14, stressing the need for the Strait of Hormuz to remain open. Modi described Trump as a great friend.

MY TAKE: Trump has put the highest tariffs on India of any major economy. His war has created India’s worst energy shock in decades. His blockade is directly worsening our fuel supply. The domestic LPG cylinder now costs Rs 913, the highest since August 2023. Commercial cylinder prices are up over Rs 300 this year alone. Food inflation is rising. Migrant workers are returning to their villages because they cannot afford food in cities. Restaurants are shutting. And our response is a phone call describing him as a great friend. The question that needs to be asked is simple: will we never speak up, even when our people might stop getting food to eat because of this war? Will we keep calling him a friend on social media and phone calls while his decisions empty our shelves and crash our markets? Silence has a cost. At some point it stops being diplomacy and starts being surrender.

8. INDIAN TANKERS FIRED UPON IN THE STRAIT

Two Indian-flagged tankers were fired upon by Iranian gunboats in the Strait of Hormuz and turned back. No injuries were reported and neither vessel was damaged. One of the tankers, Sanmar Herald, sent a distress message that has since emerged as an audio recording shared by maritime intelligence firm Tanker Trackers. A crew member is heard saying: “Sepah Navy. Sepah Navy. This is motor tanker Sanmar Herald. You gave me clearance to go. My name is second on your list. You are firing now. Let me turn back.” NBC reported the vessel was in the Strait’s designated Green Area at the time.

One week before this incident, Iran’s Ambassador to India Mohammad Fathali told NDTV that the Strait would remain open for Indian ships. “We have good contact with the Indian government for allowing their ships to sail through the Strait of Hormuz,” he said, adding that India was not being charged toll fees.

MY TAKE: Since the war began, India’s quiet diplomacy with Iran appeared to be working. Tehran repeatedly said India was a friendly country, Indian ships would be allowed through, no tolls charged. That understanding held for weeks. This incident is the first crack in it. Was this a deliberate escalation against India? Almost certainly not. Was it a breakdown in coordination within Iran’s own naval command, where individual IRGC units are making decisions independently of the political leadership? Most likely yes. Wars create confusion, and confused soldiers fire first and ask questions later. The distress audio captures that confusion precisely. The crew member is not shouting about an attack. He is reminding the Iranian navy that he is on their own clearance list. That is the most unsettling part of this story. It was not a hostile act. It was a miscommunication in a war zone. And miscommunications in active conflict zones with loaded weapons are how accidents become incidents and incidents become crises. India should be on the phone with Tehran today, not to protest, but to ensure the coordination channel that has protected our ships for 50 days does not quietly collapse.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #9 | April 19, 2026

THE INDIA STRATEGIST by Divya Rai

Friday, April 12, 2026

Edition #8

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 43 of the war. A two-week ceasefire was announced hours before Trump’s deadline, with both sides claiming victory and nobody quite agreeing on what was agreed. The Islamabad talks, the first direct US-Iran meeting since 1979, ended without agreement. Both delegations have left Pakistan. India’s markets had their best day in five years on Wednesday and are now staring at the consequences of a collapsed negotiation. India’s informal economy is quietly showing stress sector by sector. Reliance bought Venezuelan oil whose revenues Washington controls. Indian Oil bought Iranian crude for the first time since 2019, under a US permit valid for 30 days. Bangladesh came to Delhi asking for fuel. Europe’s alcohol industry wrote to the Indian government warning it will run out of beer cans by May. This is the week India’s strategic autonomy was tested, and found to be more conditional than we like to admit

1. THE TALKS THAT WENT NOWHERE

The Islamabad talks ended without agreement. Both delegations have left Pakistan. The first direct US-Iran meeting since 1979, brokered by Pakistan at enormous diplomatic cost, produced nothing. The gap was always enormous. Iran wanted US troop withdrawal from the entire region, all sanctions lifted, Iranian sovereignty over Hormuz, and war reparations. The US wanted full Hormuz reopening and a halt to uranium enrichment. Nobody bridged that in a weekend. Nobody came close.

The ceasefire itself remains technically in place for two weeks, but without a negotiating framework it is now just a countdown clock. The IRGC has already said the Strait will never return to what it was before the war. Iran’s new Supreme Leader Mojtaba Khamenei has spoken of taking Hormuz management into a “new phase.” Israel continues striking Lebanon. The two weeks expire on April 22.

MY TAKE: This is straightforwardly bad news for India. Every day the talks remain collapsed is another day of Hormuz uncertainty. Oil prices will rise again on this news. Markets that rallied 2,946 points on Wednesday on the ceasefire announcement will now price in the breakdown. The rupee, which recovered to 92.59, faces renewed pressure. The RBI’s careful hold at 5.25% was premised on the hope that the war would de-escalate. That premise just weakened considerably. India had no seat at the table in Islamabad. We have no leverage over what happens next. And our strategic petroleum reserve covers 9.5 days.

2. INDIA’S INFORMAL ECONOMY UNDER STRAIN The government revised India’s FY27 GDP forecast to 6.9 percent this week. The framing was stable and reassuring, business as usual. Meanwhile, India’s services sector growth hit a 14-month low in March. Auto dealers are warning of supply disruptions. The Firozabad glass industry is running below capacity. The Bikaner namkeen industry, plastics manufacturers, the pharmaceutical packaging sector, even condom manufacturers, industries that seem completely unconnected to a Gulf war, are all reporting input shortages because their raw materials or packaging transit Hormuz.

Migrant workers who came to cities for better wages are quietly returning to their villages. LPG is short. Basic food prices are up. Wages have not moved. Restaurant losses from the LPG shortage are estimated at Rs 79,000 crore. A European industry lobby representing Pernod Ricard, Heineken, Anheuser-Busch, and Carlsberg wrote to the Indian government this week warning that India’s 65 billion dollar alcohol market could run out of glass bottles and aluminium cans by May, with costs already up 15 percent and alternative sourcing adding another 30 percent.

Image Source: Reuters

MY TAKE: We did not hear the word recession a few months ago when our GDP figures were quietly described as possibly overstated. We are not hearing it now either. The government continues to project confidence and stability. Yet on the ground an informal slowdown is spreading sector by sector, visible in empty restaurant chairs, in workers going home, and in factories running at 70 percent capacity. Confidence built on numbers that do not fully match lived experience tends to break suddenly rather than slowly.

3. STRATEGIC AUTONOMY: THE EVIDENCE THIS WEEK

Two oil stories this week, read together, say something important.

India bought its first Iranian crude since May 2019. The purchase was made by Indian Oil Corporation under a US Treasury general license, OFAC General License U, issued March 20, valid for 30 days only and covering Iranian oil already loaded before that date. India is not defying Washington. India is buying Iranian oil because Washington said it was allowed, temporarily.

Reliance Industries loaded a 2-million-barrel cargo of Venezuelan heavy crude directly from PDVSA. Venezuela’s oil exports to India surged from 35,000 barrels per day in February to 342,000 barrels per day in March. Oil revenues from those Venezuelan sales remain controlled by the United States through Treasury-administered bank accounts.

MY TAKE: Compare these two stories to the Russian crude story. India built real diversification with Russia, 35.8 percent of the crude basket at steep discounts, maintained despite consistent US pressure. That was genuine strategic autonomy. The Iranian and Venezuelan purchases this week are emergency measures, US-sanctioned, temporary, entirely reversible the moment Washington says so. We quietly reduced Russian purchases under US pressure, then had to resume them under a US waiver during a crisis the US created. We claim strategic autonomy in every diplomatic speech. The evidence this week suggests we exercise it selectively, and largely when the US permits it. It makes you wonder whether our silence on Trump’s threats, on the war, on the trade deal details, was diplomacy or compliance.

4. INDIA’S FIRST IRANIAN OIL IN SEVEN YEARS: WHAT IT ACTUALLY MEANS

India last bought Iranian oil in May 2019. Before US sanctions, Iran supplied roughly 10 percent of India’s crude. The resumption this week sounds like a win. It is more complicated. The US waiver window runs only until April 19. It covers only cargoes loaded before March 20, not new liftings from Iranian terminals. Companies that spent years unwinding Iranian contracts and rebuilding compliance frameworks are reluctant to re-engage for a 30-day window that disappears the moment Islamabad talks collapse.

The deeper question is what happens after this war. Will India sustain Iranian sourcing when the pressure returns? Will it build real buffer stocks now that it has seen what a six-week Hormuz closure does to its economy? India’s strategic petroleum reserve currently covers 9.5 days on its own. The IEA recommends 90 days minimum.

MY TAKE: The assumption that the US is a dependable energy security partner has been tested repeatedly during this war, and failed repeatedly. Iran oil was allowed, then banned, then permitted again on a 30-day permit. Venezuelan oil proceeds flow to Washington. Russian oil was sanctioned, then quietly waivered. The pattern is consistent. After feeling this jolt, the smart move for India is to stop waiting for permission slips and start building the energy security architecture that means we never need them. That means 90 days of strategic reserve. That means domestic LPG production at scale. That means being able to say no when it matters.

5. BANGLADESH COMES HOME Bangladesh’s foreign minister Khalilur Rahman visited New Delhi this week, the first ministerial visit from the new government. He came asking for higher volumes of fuel and fertiliser. India agreed to relax visa procedures for Bangladeshi medical and business travellers. Discussions covered energy supply, fertiliser procurement, and security cooperation.

Six months ago there were protests outside the Indian High Commission in Dhaka. The Greater Bangladesh idea. Chants against India. Demands to stop IPL matches in India. It was loud.

MY TAKE: Geography won. Bangladesh depends on India for water, energy, and trade access. The Iran war tightened the screws on their energy supply and made the dependence undeniable. Their water treaty with India is up for renewal. Their fuel imports are disrupted. The protests faded. This is what regional interdependence looks like in a crisis. The noise was always short-term. The dependence was always structural. India should remember this when the next round of anti-India sentiment emerges in Dhaka, as it will. The relationship is durable not because of goodwill but because of geography.

6. THE MARKET THAT ONE TWEET CAN MOVE

India’s Sensex jumped 2,946 points on April 8, its best single day in five years. Rs 16 lakh crore of market capitalisation added in one session. IndiGo up 8.22 percent. L&T up 7 percent. Auto, realty, banks all surging. The trigger was a Truth Social post from Donald Trump at midnight announcing a ceasefire.

MY TAKE: Just look at that sentence again. Our best market day in five years was caused by a midnight social media post. One man’s words, not a policy, not a treaty, not a verified agreement, added Rs 16 lakh crore to Indian wealth in a single session. And the same mechanism works in reverse. A breakdown in Islamabad this weekend, a fresh Israeli strike in Lebano, an IRGC announcement on Hormuz, any of these could erase those gains just as fast. This is not a criticism of markets. This is how markets work. But it is a reminder that when your economy is this exposed to events entirely outside your control, the volatility is not a glitch. It is a feature of under-diversification, both in energy and in geopolitical positioning.

The India Strategist is published weekly. It is free, independent, and written for students and professionals who want to understand the world through an Indian business lens.

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Divya Rai | Edition #8 | April 12, 2026

Sunday, April 5, 2026 · Edition #7

Global Politics. Business Impact. An Indian Lens.

Image Source: The Economic Times

THIS WEEK IN BRIEF

The Iran war entered its fifth week with no ceasefire in sight, a NATO fracture that is now formal, and a US ground buildup in the Gulf that contradicts every peace signal from Washington. India is absorbing the economic shock through a market rout, a rupee under pressure, and a fertilizer supply chain at risk ahead of the Kharif sowing season. On the brighter side, India deepened its Russia trade ties and moves closer to implementing its landmark UK free trade agreement. The April 6 Hormuz deadline expires tomorrow. Here is what it all means for India.

1. THE IRAN WAR: WEEK 5 | GROUND INVASION NEXT?

The war is not winding down. It is spreading. US strikes destroyed the B1 bridge between Tehran and Karaj, described as the highest bridge in the Middle East, killing eight people and wounding 95. Iran struck Gulf refineries and desalination plants in Kuwait. The UAE’s largest gas facility, Habshan, suffered significant damage. The death toll now stands at over 2,000 in Iran, 24 in Israel, and 13 US soldiers killed.

Iran escalated its threat posture this week, warning that US university campuses in Qatar and the UAE, including Georgetown, NYU, and Northwestern, could be considered legitimate targets.

The NATO fracture is now formal. Spain closed its airspace to all US military aircraft involved in the war, with Defence Minister Margarita Robles calling it a war “initiated unilaterally and against international law.” Spain had already denied the US use of its jointly operated Rota and Moron airbases. France and Italy have also blocked US aircraft from their airspace or bases. Secretary of State Rubio said the US will “reassess” its relationship with NATO after the war, calling the alliance a “one-way street.”

Meanwhile, the US is amassing a force of 3,500 Marines in the Gulf even as Trump says peace talks are progressing, sending a message that is simultaneously “we are leaving soon” and “we are building up.”

My take: Mixed messages are either a negotiating tactic or a sign that Washington has no clear endgame. With US and Iran still firing missiles (damaging civilian Infrastructure in most cases), the Houthis joining in, and 3,500 Marines landing in the Gulf, this does not look like a war winding down. The last time the US sent ground forces into the Middle East without a clear exit plan, it spent 20 years and trillions of dollars trying to leave. The question worth asking is whether we are watching an Iraq-like situation being set up all over again and what reputational cost that carries for the US in a world that is already questioning its global leadership.

2. THE INVISIBLE WAR: UKRAINE, FOOD, AND THE COMMON MAN

While Iran dominates headlines, the Ukraine war’s economic damage never stopped.

The Iran war’s fertilizer crisis is now layering on top of supply chain stress that began in 2022. One-third of globally traded fertilizer ships through the Strait of Hormuz. The World Food Programme warns that 45 million additional people could be pushed into acute hunger globally by mid-2026 due to the Iran war alone. East African nations that import massive amounts of fertilizer from the Gulf are especially vulnerable, with planting seasons now at risk.

Analysts increasingly describe this period as the end of the post-WWII “Long Peace,” replaced by simultaneous, compounding great-power conflicts whose economic damage reinforces each other.

My take: Leaders move on. They sign deals, give speeches, earn millions and billions of dollars, go on vacation. Markets do not move on. Trade does not. Inflation does not. Shortages do not. The common man pays the price for every war, every miscalculation, every ego-driven decision made in air-conditioned rooms. In India, that means petrol prices that spiked and never came back down, LPG shortages hitting the poorest households hardest, jet fuel doubling. We are paying for wars we have no part in. The geopolitical elite creates the fire. Ordinary people sit in it.

3. INDIA: ABSORBING THE ECONOMIC SHOCK

The numbers tell an unambiguous story.

FY26 delivered India’s steepest yearly market decline since COVID. Sensex fell 5.36% and Nifty lost 3.6% for the full financial year. The Iran-US war drove a 13-15% crash in Nifty in March alone. On April 2, Sensex tumbled 1,583 points following Trump’s escalation speech. Pharma, Realty, and PSU Banks led the losses.

The rupee breached the Rs.94-95 mark against the dollar, driven by FII outflows of over Rs.1.11 lakh crore in March 2026 alone, one of the largest single-month sell-offs in Indian market history. RBI intervention has provided partial stability, with the rupee recovering to around Rs.93.

Brent crude is hovering around $100-115 per barrel. India imports about 60% of its LPG, of which 90% transits through the Strait of Hormuz. LNG supplies to India’s fertilizer industry are at only 70% of requirement, raising serious concern about the Kharif sowing season if the conflict extends into May-June.

Major industrial units have been hit. IOCL’s propylene unit in Odisha and GAIL’s polyethylene unit in UP have reported shutdowns or reduced runs due to feedstock shortages. Shipping reroutings and war-risk insurance have spiked freight costs, squeezing export-oriented sectors including engineering goods, textiles, and gems and jewellery.

My take: We are experiencing a war we never joined, through the very mechanisms of globalisation we built our growth on. The rupee falling, FIIs pulling out, markets bleeding, none of this is India’s doing. But 85-90% energy import dependence means the consequences are entirely ours to absorb. The correction will come. But the holes in our energy security architecture are now impossible to ignore. Renewable energy, strategic reserves, domestic production: these are not policy aspirations anymore. They are economic necessities. The urgency of this moment needs to translate into the consistency of action that India’s long-term growth demands.

4. INDIA-RUSSIA: THE OLD FRIENDSHIP, RENEWED?

Russia’s First Deputy Chairman Denis Manturov arrived in New Delhi on April 2 for a two-day visit, co-chairing the India-Russia Intergovernmental Commission on Trade. He met EAM Jaishankar, NSA Ajit Doval, and Finance Minister Nirmala Sitharaman. Both countries are targeting $100 billion in bilateral trade by 2030. Russian crude now makes up 35.8% of India’s energy basket. Putin is confirmed to attend the BRICS summit in India in September 2026.

The Japan Times this week: “Trump’s Iran war pushes India to rekindle old friendship with Russia.”

My take: The geopolitical script of this era reads like a thriller. India was pressured into reducing discounted Russian oil purchases. A few months later, with the US Supreme Court striking down Trump’s tariffs and the Iran war exposing American overreach, India is back deepening trade with Russia faster than anyone expected. This tells you something important: countries act in their national interest. And right now, India’s national interest is diversified energy supply, not loyalty to any single power. This quiet repositioning is good for India’s citizens and a reminder that no coercive pressure, however powerful in the moment, holds leverage forever.

5. INDIA-UK FTA: GOING LIVE

Commerce Minister Piyush Goyal confirmed the India-UK Comprehensive Economic and Trade Agreement is expected to be implemented within 30-40 days. Under the deal, 99% of Indian exports will enter the UK duty-free. It is described as the UK’s most economically significant bilateral deal since Brexit, expected to increase bilateral trade by $34 billion a year by 2040.

My take: This is a genuine win at exactly the right time. What took India 20 years of trying with the EU happened in under three years with the UK, partly because post-Brexit Britain needed this deal. India gains immediate duty-free export access. UK tariff reductions on Indian goods phase in over 10 years. India got the better of this negotiation. For manufacturers in textiles, pharma, and IT services, this is a direct competitive upgrade. As geopolitical turbulence makes some markets less reliable, a locked-in deal with a major developed economy is exactly the structural anchor India needs.

6. THE HORMUZ DEADLINE: TOMORROW

As this edition goes live, Trump’s ultimatum to Iran- reopen the Strait or face destruction of power plants expires on April 6. That is tomorrow.

Will Pakistan’s mediation produce a breakthrough? Will the war enter a new, more destructive phase? India has 8.9 million citizens living across Kuwait, UAE, Bahrain, and Saudi Arabia, all now under regular Iranian missile and drone attack. The government has used quiet diplomacy to secure passage for Indian-flagged vessels and monitor the safety of Indian nationals.

India’s diplomatic balancing act has served it well so far. But there is a domestic political dimension here too. If the war drags on for months, and if Indian citizens in the Gulf face escalating danger with no visible response from New Delhi, the prolonged silence will become harder for the government to sustain without public pressure building at home.

7. GLOBAL AVIATION IN CRISIS

Jet fuel prices have more than doubled since the war began. Korean Air has entered emergency management mode. The Philippines has flagged grounding planes as a real possibility. China has banned jet fuel exports to protect its own supply but is routing its carriers through Russian airspace, gaining a direct competitive advantage over every other airline on Europe routes.

In India, the government and OMCs have partially absorbed the shock rather than passing the full increase to consumers. ATF in Mumbai currently stands at approximately Rs.98,247 per kilolitre for domestic operations. International operations in Delhi have crossed $1,690 per kilolitre, a more than 100% surge. IndiGo has updated its domestic fuel surcharge to Rs.275-Rs.950 per ticket depending on distance.

My take: The aviation story is a microcosm of the larger India story right now. The government is cushioning the immediate blow, but this cannot last indefinitely. If the war extends into summer, airlines will pass costs on, demand will fall, and rail and road travel will see a surge by default. We are vicariously living a war through our fuel bills, flight prices, and grocery costs.

The India Strategist covers global power shifts and their impact on India’s economy and business.

Written by Divya Rai | Subscribe for weekly editions

In the event of sustained disruption during the 2026 Iran conflict, one reality becomes impossible to ignore: India remains heavily dependent on external energy flows.

Image Source: The Indian Express

India imports roughly 85–90% of its crude oil. Before this crisis, about 33% of that came through the Strait of Hormuz, down from 61% in 2020, thanks to years of quiet diversification including the shift to Russian crude. That foresight matters. A closure of this magnitude in 2020 would have threatened approximately 61% of India’s crude supply simultaneously. Today, the same crisis is painful but not catastrophic.

But painful it is. India imports about 60% of its LPG consumption, and 90% of those imports transit through the Strait of Hormuz. When these routes are threatened, it is not just supply that is at risk, but economic stability itself.  To plug the gap, the government directed refineries to maximise domestic LPG production. Output has seen a short-term ramp-up of roughly 25–40%, with daily production pushed toward 50,000 metric tons against a requirement of 80,000. It is a meaningful response. It is also a number that tells you how exposed we still are.

This is the question worth sitting with: if the Strait reopens next week, will India treat this as a crisis survived, or a crisis that revealed something structural?

The honest answer is that just-in-time energy supply becomes fragile in a world shaped by geopolitical shocks. The Hormuz disruption is not an anomaly. It is a preview. Every decade brings a war, a canal blockage, a sanctions regime, or a superpower using energy as leverage. We know this because it has already happened to us. Remember when the US pressured India to stop buying Russian oil? Energy is not just economics. It is geopolitics with a price tag attached.

The good news is that the foundations for a real response already exist. India’s solar capacity additions, the hydrogen mission, ethanol blending targets, E20 by 2026 is no longer aspirational, it is policy. The PLI schemes for renewables manufacturing are live. India is also actively pursuing coal-based power diversification and strategic fuel source expansion as immediate stabilisers. These are the right building blocks. What has been missing is the consistency of political will to push them through commodity price cycles, when oil is cheap, urgency tends to dissolve.

The diversification from 61% to 33% Hormuz dependence did not prevent this crisis from causing economic pain. But it prevented manageable pain from becoming unmanageable catastrophe. That distinction is worth precisely the five years of diversification work that produced it.

The next five years need to be more ambitious. Not a crash programme, not a political slogan but a structurally consistent reduction in import dependence, paced in a way that consumers and businesses can absorb. The goal is not energy autarky. It is resilience: enough domestic production and enough route diversity that no single chokepoint, no single superpower, and no single war can hold India’s economy hostage.

The 2026 Iran war did not create India’s energy vulnerability. It simply made it impossible to ignore. The question is whether we use the clarity it has provided.

Divya Rai writes on geopolitics and trade at The India Strategist.

The India Strategist | Special Post | 2 April 2026

At the WTO’s 14th Ministerial Conference in Yaoundé, Cameroon, India claimed victory. Commerce Minister Piyush Goyal said India’s position was “heard and reflected.”

What went unsaid: this was one of the most inconclusive ministerials in the WTO’s 30-year history.

The e-commerce moratorium lapsed for the first time since 1998. A key safeguard on public health under TRIPS expired. The Investment Facilitation for Development Agreement (IFDA), backed by 128 members, was blocked. Agriculture saw no progress. Fisheries talks were postponed again.

India called it a win. Much of the world saw a breakdown.

The Core Problem

India’s approach reflects a deeper tension. It defends policy space and fairness but often at the cost of influence.

Its positions are not wrong.

• On e-commerce, India is right to resist a permanent ban on customs duties for digital trade. Most benefits currently flow to large US tech firms, not developing economies.

• On investment rules (IFDA), India’s concern is valid: countries should not lose control over how they regulate foreign investment.

• On agriculture, India’s demand for updated subsidy rules is justified — current limits are based on outdated 1980s prices.

These are real issues.

But being right is not enough if you are standing alone.

From Resistance to Isolation

At Yaoundé, India was increasingly isolated.

• Only 38 countries opposed IFDA, yet that was enough to block it

• Even Turkey dropped its objection, leaving India and South Africa as key holdouts

• Meanwhile, 66 countries moved ahead with an e-commerce deal outside the WTO

This is the real shift.

When agreements cannot pass inside the WTO, countries simply move outside it through smaller group deals (called plurilateral agreements).

The result is simple:

• The rules still get written

• India is just not part of writing them

The Reputation Risk

India’s influence has grown as US leadership at the WTO has weakened. But its strategy carries a cost.

Think of it like a group project:

• If one person keeps rejecting every idea

• Eventually, the group moves ahead without them

That is what is happening.

Institutions like the Council on Foreign Relations, Lowy Institute, and Global Trade Research Initiative have all flagged a similar concern:

India is gaining a reputation as a blocker, not a builder

This matters because India wants to:

• Lead the Global South

• Shape global rules

• Play a larger geopolitical role

That is difficult if it is seen as saying “no” more than shaping outcomes.

What India Should Do Instead

The answer is not to give up its positions those are important.

The answer is to change how it negotiates.

1. Build Coalitions (Not Just Objections)

India has done this successfully before. At the 2003 Cancún WTO Ministerial Conference, India led a group of developing countries to push back against unfair agricultural subsidies.

2. Offer Alternatives, Not Just Resistance

Instead of blocking:

• Propose a new digital trade framework

• Suggest modifications to IFDA that protect regulatory freedom

Why this works:

People engage more with solutions than objections.

3. Turn Agriculture Into a Shared Agenda

India should actively build a bloc with:

• African nations

• Least Developed Countries (LDCs)

• Caribbean economies

The Bigger Picture

India is navigating a complex global system:

• The US is increasingly using tariffs as a tool

• China is expanding influence through investment frameworks

• The WTO itself is weakening

In this environment, protecting national interests is important.

But there are two ways to do it:

• Defensive strategy: Block what you don’t like

• Strategic leadership: Shape what replaces it

Right now, India is leaning too much toward the first.

Final Thought

The Yaoundé outcome was not a victory. It was a signal.

India has a choice:

1. Be inside the room shaping the rules

2. Or outside it, reacting to them

India can lead the Global South.

But leadership is not built by saying no. It is built by shaping what comes next.

Sunday, March 29, 2026 · Edition #6

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 29 of the war. Trump extended his power plant strike deadline twice, first by five days, then by ten, saying Iran asked for time. Iran said there were no talks. Pakistan became the officially confirmed US-Iran peace mediator. India finally spoke, but only to say the Strait should stay open, not to take any position on the war itself. Iran turning the Strait of Hormuz into a toll booth charging up to $2 million per vessel. Israel quietly took control of southern Lebanon all the way to the Litani River. And while the world watched the Gulf, China ran its most complex Taiwan blockade drill since 2022. This edition covers the war and the world beyond it.

THE WAR

1. TRUMP IS BACKING DOWN WITHOUT SAYING SO?

Trump issued a 48-hour ultimatum to strike Iranian power plants. The deadline passed. He extended it five days. That deadline passed. He extended it ten more days to April 6, saying Iran desperately wanted more time. Iran called his claims of peace talks “fake news” and a “big lie.” A CBS News report confirmed a senior Iranian foreign ministry official said Iran received a US proposal through mediators and is reviewing it. So talks are happening through intermediaries even as Iran publicly denies them. Someone is managing the optics on both sides.

MY TAKE: Trump’s strategy of threatening a nation and extracting concessions works in trade negotiations. It is not working in a military conflict. Military wars are not won like trade wars and the same model does not apply. Trump attacked Iran without a clear objective, without weighing consequences for Gulf allies, and now finds himself isolated without NATO support, with domestic disapproval above 50%, and with his own counterterrorism chief having resigned calling the war built on a lie. Extending a deadline you set publicly while claiming the other side begged for the extension is a classic way of backing down without admitting it. That is a significant moment. Every country in the world, including India, is reading it carefully.

2. ISRAEL IS THE QUIET WINNER

While the world watches the US-Iran war, Israel is systematically achieving what it could not do openly for decades. Israeli Defence Minister Katz confirmed the military is taking control of southern Lebanon all the way to the Litani River. All five bridges over the Litani used by Hezbollah have been blown up. Israel has struck Iran’s Arak heavy water reactor, two major steel factories, and systematically eliminated Iran’s naval command, intelligence chief, and paramilitary leadership.

MY TAKE: The US may not be fulfilling any clear objective in this war but Israel clearly is. Under the cover of a US-Iran war that dominates every headline, Israel has advanced its strategic depth in Lebanon, degraded Hezbollah’s infrastructure, and eliminated Iran’s entire top command structure. The news media frames this as a US-Iran war with Israel as a supporting actor. But look at the territorial and strategic gains and Israel is the one coming out ahead. This is not a coincidence. It raises a question worth asking: who is using whom in this alliance?

3. THE TEHRAN TOLL BOOTH: IRAN TURNS THE STRAIT INTO A CASH MACHINE

Before the war, approximately 110 ships transited the Strait of Hormuz daily. Today that number is fewer than 10. Iran has turned the world’s most critical maritime chokepoint into what shipping experts are calling the “Tehran toll booth.” At least two vessels have paid fees of up to $2 million per voyage to the IRGC Navy for safe passage. Iran’s parliament is drafting legislation to make these tolls permanent. Iran has also declared one of its five conditions for ending the war as international recognition of its sovereignty over the Strait of Hormuz.

The legal picture is genuinely contested. Under Article 38 of UNCLOS, all ships enjoy the right of transit passage through international straits. However Iran signed but never ratified UNCLOS, and contends it is therefore not bound by its provisions. The GCC called Iran’s fees an illegal violation of international maritime law. Legal scholars note that transit passage rights are considered customary international law binding on all nations regardless of ratification.

MY TAKE: The right and wrong here are in genuinely murky waters. A country being bombed by a military coalition is charging fees to ships transiting a strait it physically controls. A president who threatened to obliterate civilian power plants is calling those fees illegal. International law is being selectively invoked by every party to suit their position. For India specifically, our government has officially stated that international law guarantees freedom of navigation and no fees can be levied. India got four LPG vessels through the Strait this week. Whether India paid any fees unofficially is not confirmed. What is confirmed is that Iran is charging, some ships are paying, and the question of who controls this strait after the war ends will define global energy geopolitics for decades.

4. INDIA FINALLY SPEAKS. BUT ONLY HALF A WORD.

After 29 days of silence, India has finally said something about the war. PM Modi spoke to Trump about the conflict’s impact on the maritime corridor and posted publicly: “Ensuring that the Strait of Hormuz remains open, secure and accessible is essential for the whole world.” India got four LPG vessels through the Strait successfully this week. India officially stated that no transit fees can be levied under international law.

Meanwhile Pakistan is the officially confirmed US-Iran peace mediator. US envoy Steve Witkoff confirmed Pakistan’s role. Pakistan’s Foreign Minister Ishaq Dar confirmed facilitation of indirect talks with 15 US points under discussion. Iran agreed to allow 20 ships under the Pakistani flag to pass through the Strait. Turkey and Egypt are also active diplomatic participants.

MY TAKE: India spoke. But it spoke only on the one issue that was safe, uncontroversial, and in India’s immediate economic interest: keep the Strait open. India did not take any position on the war itself, on the US-Israel strikes, on civilian casualties, or on Iran’s conditions for ending the conflict. Compare this to Pakistan, a country India rightly criticises for hosting terrorist groups and sponsoring cross-border violence, which is now earning diplomatic credit as a peace broker between the US and Iran. India is the BRICS chair in 2026. Iran is a BRICS member. Cuba is a BRICS partner. Both are under active US pressure this year. India has said nothing about either situation in its capacity as BRICS chair. Wanting to lead the Global South, getting the chance to do so through the BRICS presidency, and then staying silent on the two most significant crises affecting BRICS members this year has spoken more loudly than any statement India could have issued. Pakistan will get the diplomatic credit. India will get its LPG. Both are rational choices. Only one of them builds lasting strategic influence.

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BEYOND THE WAR

1. CHINA IS WATCHING. AND TAKING NOTES.

While the world’s attention has been on the Strait of Hormuz, China has been quietly running its most significant Taiwan military exercises since 2022. In December 2025, the PLA conducted Justice Mission 2025, deploying at least 14 warships, 14 coast guard vessels, and 130 aircraft sorties to simulate a full blockade of Taiwan’s ports of Kaohsiung and Keelung. China has also shifted its official rhetoric from opposing Taiwan independence to “resolutely cracking down” on separatist activities. New military legislation and an Ethnic Unity Law have been passed alongside these exercises.

Taiwan’s semiconductor industry supplies approximately 90% of the world’s most advanced chips including those powering the AI boom. TSMC alone manufactures chips used in everything from iPhones to fighter jets to data centres running artificial intelligence models. Any disruption to Taiwan would collapse the global technology supply chain in ways that make the current oil shock look manageable by comparison.

MY TAKE: With the US setting the precedent that powerful countries can attack sovereign nations to remove regimes they dislike, China is watching and drawing its own conclusions. The argument that international norms prevent a Taiwan invasion becomes harder to make when the country that created those norms is simultaneously bombing Iranian cities, seizing Venezuela’s president, and blockading Cuba. China has no reason to feel constrained by a rules-based order whose primary enforcer has stopped following the rules. For India this has direct implications. We have unresolved border tensions with China. We depend on Taiwan for semiconductors. If China moves on Taiwan in the next two to three years, India faces a semiconductor crisis on top of an energy crisis simultaneously. Pax Silica, our semiconductor agreement with the US, is a step in the right direction. But a strong domestic semiconductor capacity building programme is now a national security imperative, not an industrial policy option. The US has proven itself an unreliable long-term partner. Domestic capability is the only truly reliable hedge.

2. IRAN WAR IS THREATENING THE AI BOOM

The connection nobody is making clearly: the Iran war is threatening artificial intelligence. East Asia’s memory and advanced chip producers depend on Middle Eastern energy and industrial inputs. The closure of the Strait of Hormuz is driving up pressure across oil, LNG, and chemical flows needed for semiconductor production. Data centres depend on abundant and affordable power. Chip fabrication depends on stable supply of specialty chemicals and gases. A prolonged energy shock hits chip costs, delays production timelines, and puts pressure on AI company valuations that are built on assumptions of cheap, abundant compute power.

MY TAKE: People say oil is the talk of the 20th century and technology is the future. This war is proving that the future still runs on oil. Without stable energy supply, there is no AI boom. Without stable semiconductor supply, there is no digital economy. These are not separate systems. They are the same system at different points in the supply chain. Trump cancelling renewable energy contracts and doubling down on fossil fuel production is actually making this dependency worse, not better. For India, which is building its digital infrastructure at scale and has ambitions in AI and semiconductors, energy security and technology security are now the same strategic question.

3. CUBA IS IN THE DARK AND NOBODY IS TALKING ABOUT IT

Cuba has been without reliable power since the US oil blockade took full effect in December 2025. Trump has said publicly he wants to “take Cuba,” that he can do “whatever he wants” with it. Secretary of State Rubio confirmed at the G7 that regime change is required for Cuba’s economy to improve. Russia is sending gas ships to Havana to partially ease the crisis.

Cuba is a BRICS partner country since January 2025. Cuba’s crisis is directly linked to the same US unilateralism that is driving the Iran war, the Venezuela operation, and the pressure on India’s trade frameworks.

MY TAKE: Trump labelled Cuba a national security threat, sanctioned its oil, froze its finances, and is now talking about taking it over, despite US intelligence showing no imminent threat. The independence of countries seems increasingly at the mercy of one man’s judgment about who is and is not a threat to American interests. The US that emerged from World War Two as a champion of sovereignty and self-determination is now openly discussing territorial takeovers of sovereign nations. Cuba is a partner of BRICS and India’s presidency of BRICS in 2026 has produced no collective response to any of these pressures on member and partner states. South-South solidarity remains an aspiration, not a reality. That gap between aspiration and action is something India as BRICS chair has the opportunity and the obligation to address.

The India Strategist is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

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Divya Rai | Edition #6 | March 29, 2026

That is a transaction. Not politics. A transaction.

Now look at what has happened since the Iran war began on February 28.

US oil producers are selling crude at prices not seen in years. US LNG exporters, who received the export permits Trump promised at that 2024 dinner, are now among the only major suppliers able to fill the gap left by the disruption to Qatar’s LNG production. Every country scrambling for energy is turning to the United States. The dollar has surged, benefiting American financial institutions. American defence contractors including Raytheon, Lockheed Martin, and Northrop Grumman have hit all-time stock highs as the Pentagon replenishes weapons stocks used in the war.

Then came the most explosive story of the war.

Just minutes before Trump posted on Truth Social that the US had been in “productive conversations” with Iran, unknown traders made roughly 6,200 futures contracts worth approximately $580 million in a single minute. The average volume for that same time slot over the previous five days was 700 contracts. The Dow surged more than 1,000 points and the S&P 500 gained over 1% following Trump’s post. The oil position alone could have generated enormous profits within minutes. Nobel Prize winning economist Paul Krugman called it treason on his Substack, writing that using confidential national security information for financial gain has a specific name and that name is treason. Senator Chris Murphy called it “mind-blowing corruption.” The White House denied any wrongdoing. The trades are under investigation. No individual has been identified or charged.

Two additional verified facts worth noting. Trump’s sons Eric and Donald Jr. have invested in drone companies currently competing for Pentagon contracts. Trump’s Iran envoy Jared Kushner is simultaneously seeking to raise billions for his private equity fund from Persian Gulf governments directly entangled in the war he is helping to end.

None of this is proven corruption. Each piece individually has an explanation. The dinner was a campaign fundraiser. The war has a stated strategic justification. The trades are unattributed. The investments are disclosed.

But ask yourself one question. When you look at every major Trump decision since he took office, who benefits? Not the 11.8 million Americans losing health insurance under cuts signed into law last year. Not the government workers unpaid during a five week shutdown. Not Indian, Qatari, or Lebanese families paying the price of a war they had no vote in starting.

The winners are always the same group. And the timing is always impeccable.

Trump promised to make America great again. He is making some Americans very, very rich. That is not the same thing.

— Divya Rai

The India Strategist is published every Sunday. This is a special post.

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The geopolitical thinker Robert Kaplan has long argued that geography is not a historical accident. It is a permanent condition. You can have the most powerful military in the world, the most sophisticated weapons, the most righteous cause. But if you ignore the physical reality of where you are fighting, the land itself will fight back. Permanent conditions do not care about presidential ultimatums.

The United States is learning this lesson again. In real time. At nearly $120 a barrel.

1. NOBODY IN WASHINGTON GAMED OUT A 33-MILE STRETCH OF WATER

When the US and Israel launched strikes on Iran on February 28, the mood in Washington was triumphant. Iran’s navy and air force were destroyed within days. Trump said they were “weeks ahead of schedule.” The military operation looked clean.

What nobody in that room appears to have fully gamed out was a stretch of water 21 miles wide at its narrowest point.

The Strait of Hormuz is not just a shipping lane. It is the single most consequential chokepoint in the global economy. Here are the numbers that should be on the front page of every newspaper:

Around 20 million barrels of oil per day, roughly 25% of all seaborne oil trade, pass through it. Qatar and UAE together supply almost 20% of global LNG exports through it. There is no alternative maritime route for any of it. Approximately 89% of oil passing through the Strait is destined for Asian markets: China, India, Japan, South Korea. The United States itself depends on the Strait for roughly 2% of its petroleum consumption.

Read that last line again. The US consumes 2% of its oil through the Strait. It went to war over Iran. And the country paying the steepest price is not America. It is Asia. It is us.

2. IRAN’S REAL WEAPON WAS NEVER ITS NUCLEAR PROGRAMME

Iran’s leverage was always geographic, not nuclear. Iran sits on the northern shore of the Strait of Hormuz. You cannot bomb that away. You cannot regime-change it out of existence. The geography is permanent.

Iran’s Revolutionary Guards began blocking Strait passage within hours of the first strikes. This was not a surprise. Iran had signalled it for years. Military analysts had war-gamed it repeatedly. The threat was on every map. And yet the decision to strike was taken without a credible plan to keep the Strait open.

Before the crisis, approximately 100 vessels transited the strait daily. Western naval architecture was simply not built for a sustained escort operation of this scale. The IEA called this the largest oil supply disruption in the history of the global market.

3. THE MAP ALWAYS PUSHES BACK

Kaplan’s thinking on the Iraq War is worth revisiting here. He described how idealists in Washington began to believe that American air power could resolve any political problem anywhere. Geography, terrain, civilisational history: all of it was considered secondary to American military will. Iraq proved them catastrophically wrong.

The same intellectual cycle has repeated with Iran.

Iran’s strikes have now hit US bases in Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia, Turkey, and the UAE. Iran’s centrality in West Asia means any war with it becomes a regional war by default. You cannot surgically remove Iran from its geography. Every country in the region is now either a target or a hostage to a war they did not start.

4. INDIA’S IMPOSSIBLE POSITION: CREATED BY GEOGRAPHY, NOT DIPLOMACY

India is in an extraordinarily difficult position and it is a position created entirely by geography.

India imports over 85% of its crude oil. A significant portion transits the Strait. India spent years building the Chabahar port as a strategic trade corridor to Central Asia through Iran. At the same time India has a growing defence partnership with Israel and deep trade ties with the US.

There is no geopolitically clean position available to India here. That is not a failure of Indian diplomacy. That is geography.

The country that will suffer most from this disruption is not the country that launched the war. India had no vote in starting it. India has no seat at the table ending it. And India is paying nearly $120 a barrel for it.

When this war ends, India must do what it has avoided for decades: build strategic energy reserves, diversify supply routes, and stop building an energy system that assumes ships will always arrive on schedule.

THE CLOSING THOUGHT

Trump’s response when asked about rising gas prices for Americans was: “If they rise, they rise.” That is not a geopolitical strategy. That is a man who did not read the map.

The most powerful air force in the world can destroy Iran’s conventional military. It cannot move the Strait of Hormuz.

Geography always gets the last word. And we are all paying for it.

— Divya Rai

The India Strategist is published every Sunday. This is a special post.

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Sunday, March 22, 2026 · Edition #5

Global Politics. Business Impact. An Indian Lens.

THIS WEEK IN BRIEF

Day 22 of the war. Trump issued a 48-hour ultimatum to Iran threatening to obliterate its power plants. Iran struck Israel’s Dimona nuclear facility and fired long-range missiles at Diego Garcia in the Indian Ocean, 4,000 kilometres from its own shores. Qatar’s Ras Laffan, India’s largest LNG supplier, is offline for months after Iranian retaliatory strikes. Malaysia pulled out of its US trade deal, potentially triggering a domino effect. Gold posted its biggest weekly loss since 1983. Cuba sits in the dark with no coverage. And India’s oil tankers are crossing the Strait of Hormuz while every major power waits to see what happens next. This is the week that proved the war has no objective, no direction, and no winners.

1. MALAYSIA EXITS. INDIA WATCHES. THE WORLD RETHINKS.

Malaysia became the first country to formally withdraw from a trade agreement negotiated under Washington’s reciprocal tariff strategy, after the US Supreme Court ruling removed the legal basis for that policy. Malaysia’s trade minister declared the deal void. Washington disputed that, urging Malaysia to uphold its commitments. The standoff is unresolved. Trade analysts say Malaysia’s move could encourage other US trading partners to reconsider similar arrangements, potentially triggering a broader rethinking of deals signed under the now-defunct tariff framework.

India has said nothing.

MY TAKE: India and Malaysia signed their trade frameworks under the same reciprocal tariff architecture that the Supreme Court has now invalidated. Malaysia acted the moment the legal ground shifted. India has stayed silent, not just on this but on the war, on the trade deal details, on the US official who said Washington would not allow India to compete with America, and on what was actually agreed in February’s negotiations. The Gulf states face the same dilemma India does. Joining the US-Israel campaign would expose them to Iranian reprisals while adding nothing to Washington’s military superiority. The result is what analysts call calculated restraint. India is doing the same. The question is whether calculated restraint is a strategy or whether it is simply the absence of one. At some point silence stops being diplomacy and starts being indecision. Malaysia has shown that acting on legal and strategic reality is possible. India is still deciding whether to acknowledge that reality exists.

2. TRUMP’S WAR IS FALLING APART. AND HE KNOWS IT.

Trump requested warships from NATO allies to secure the Strait of Hormuz. Every major ally either declined or did not respond. Germany said it is not their war. French President Macron said “We are not party to the conflict.” 22 countries including France, Germany, UK, Australia, and Japan issued a joint statement condemning Iran’s attacks but refused military participation. Nobody is sending warships. Nobody is joining.

This week Trump issued a 48-hour ultimatum on Truth Social: “If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS… the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!” In the same statement he signalled the US is “getting very close to meeting our objectives” and considering winding down military efforts. Two completely contradictory messages in one post.

Joe Kent, Trump’s own Director of the National Counterterrorism Center and a Gold Star widower with 11 combat deployments, resigned saying “Iran posed no imminent threat to our nation. This war was started due to pressure from Israel and its powerful American lobby.” He is the 16th US official across two administrations to resign over Israel policy. More than 50% of Americans now oppose the war. Sources confirmed the president was warned in advance that Iran would attack Gulf countries if struck. He appears to have been surprised when it did.

MY TAKE: Iran has achieved something significant without winning a single battle. It has politically destabilised Trump’s position both domestically and internationally. His own intelligence chief altered Senate testimony to support a war his counterterrorism chief called built on a lie. His allies refused to join. His approval on the war is below 50%. His 48-hour ultimatum to strike civilian power plants comes at the same moment his own intelligence community confirmed Iran had no active nuclear weapons programme. The US intelligence report said there was no imminent threat. Trump’s response to that finding is to threaten civilian infrastructure. That is not strategy. That is escalation driven by the need to appear decisive when the original justification has collapsed. For India, approximately 85,000 of our nationals remain in Iran. If Trump strikes Iranian power plants, hospitals lose power, water treatment stops, and tens of thousands of Indians are in the middle of a humanitarian catastrophe caused by a war they had nothing to do with. Will India finally speak?

3. INDIA’S OIL TANKERS ARE CROSSING. BUT FOR HOW LONG?

India’s oil tankers are crossing the Strait of Hormuz. External Affairs Minister Jaishankar confirmed his direct talks with Tehran yielded results for Indian-flagged vessels. Iran has officially stated the strait is closed only to US, Israeli, and Western allied ships. India’s refusal to formally join any side has kept it eligible for Iranian goodwill, even if that goodwill is unspoken and fragile.

This is quiet diplomacy working in real time. While the US begged seven countries for military help and got refused, India talked to Iran and got its tankers through. That is strategic autonomy in practice, not in speeches.

But the window is narrowing. The war is 22 days old with no end in sight. Trump’s 48-hour ultimatum could trigger the most devastating Iranian retaliation yet. Our strategic petroleum reserve covers only 9.5 days on its own. Total operational stocks give us 74 days but only if ships keep arriving. Qatar’s Ras Laffan, our largest LNG source, is offline for months. Our LPG strategic reserve covers less than two days of national consumption.

MY TAKE: India’s neutrality is buying us time but not solutions. When this war ends, and it will end, India must do what it has avoided doing for decades. Build strategic energy reserves worthy of a country of 1.5 billion people. The IEA recommends 90 days minimum. We have 74 days of operational stocks and 9.5 days of actual strategic reserve. The Ujjwala Yojana connected 10 crore poor households to clean cooking gas, a genuine achievement. But you cannot expand demand by 10 crore connections and then have less than two days of strategic LPG buffer when the supply chain breaks. Energy access and energy security are two completely different things. We built access. We must now build security. That is the only long-term lesson from this crisis that matters for India’s future.

4. QATAR’S CATASTROPHE IS INDIA’S ENERGY CRISIS

Israel struck Iran’s South Pars gas field on March 18 without informing Washington, according to Trump himself, who said the US “knew nothing.” Iran immediately retaliated by striking Qatar’s Ras Laffan Industrial City, the world’s largest LNG export facility. Qatar had nothing to do with this war. It hosted US-Iran nuclear talks in Geneva just weeks ago. It houses the largest US military base in the Middle East at Al Udeid Air Base. It tried to prevent the war through diplomacy. It got its most important facility destroyed anyway. Ras Laffan is expected to be offline for three to five years. QatarEnergy has declared force majeure on its LNG contracts.

The India numbers are stark. Qatar supplies 22 to 29% of India’s total LPG imports and 41% of India’s total LNG imports, nearly all from Ras Laffan. 92% of India’s LPG imports come from four Gulf countries: UAE, Qatar, Saudi Arabia, and Kuwait, all dependent on the Strait of Hormuz. India is hit simultaneously on two fronts: physical damage to its largest LNG supplier and a mined transit route for its cooking gas supply. The US has temporarily lifted sanctions on approximately 140 million barrels of Iranian oil at sea to ease global energy prices, which provides India some short-term relief.

MY TAKE: Qatar tried to be neutral. It housed US troops. It hosted peace talks. It still got its most important facility knocked offline for up to five years. Neutrality did not protect it. That is a direct lesson for India’s balancing act. The deeper story here is about who benefits from this crisis in the long run. The clear answer is the US and Russia. The US will supply oil to countries desperate for alternatives. Russia’s stranded crude, previously sanctioned, is now being purchased under US permission slips. India quietly reduced Russian oil purchases under US pressure, then had to resume buying it under a US waiver during a crisis the US created. First Washington sanctioned India for buying Russian oil. Then Washington created a war that made Russian oil the only realistic alternative and gave India permission to buy it again. If that is not a controlled energy market, it is a remarkable coincidence. India needs to recognise this pattern and take its energy decisions accordingly.

5. WHEN THE RULES DISAPPEAR: CUBA, CLUSTER BOMBS, AND THE ORDER WE GREW UP WITH

The rules-based international order that the world built after two world wars — beginning with Woodrow Wilson’s League of Nations after the First World War and crystallising into the United Nations after the Second, is not just under pressure this week. It is openly being ignored by the countries that created it.

The United States has supplied cluster bombs to Ukraine, which are prohibited under international humanitarian law. Iran is using cluster bombs in its retaliatory strikes. Both the supposed peacemaker and the designated rogue state are using the same illegal weapon. Meanwhile Cuba sits in complete darkness, its power grid collapsed, 10 million people without electricity, food, or medicine. Venezuela’s president was seized in a US military operation. Trump said publicly he wants to “take Cuba.” Russia is quietly sending gas ships to Havana. Nobody is covering it because everyone is watching the Strait of Hormuz.

MY TAKE: We grew up believing the world had moved past the era of no rules. International law, the UN, the ICC, diplomatic norms: these felt like permanent achievements. What this week has shown is that they were always dependent on the powerful choosing to follow them. The US created those rules when it was convenient. It is breaking them when they are not. Iran is labeled a rogue state for doing what the US itself is doing. The ICC has an active arrest warrant for Netanyahu. It is being ignored. Cuba is being strangled economically by a country that calls itself the leader of the free world. The order we grew up with was always fragile. We are watching it fracture in real time. The question for India, as the BRICS chair representing the Global South, is whether it will say anything while the fracturing happens or wait until it is over and then comment on the rubble.

6. GOLD IS FALLING IN THE MIDDLE OF A WAR: I COVERED THIS IN A SPECIAL POST THIS WEEK

Gold posted its biggest weekly loss since 1983, falling from $5,589 in January to $4,570 this week despite the worst geopolitical crisis in decades. The reason is a chain reaction most people are not explaining: war created an oil shock, oil pushed inflation higher, higher inflation means the Fed cannot cut rates, and high rates are gold’s ultimate killer because gold pays nothing while bonds pay 4 to 5%. A stronger dollar, margin call selling, and profit-taking from January’s record high made it worse.

The structural case for gold remains intact. Wall Street year-end targets range from $5,000 to $6,000. When the dust settles gold tends to recover. But the short-term dynamics are working against it for now.

I covered this in full in a special mid-week post this week including a chart showing all four forces: gold price, bond yields, the dollar, and the Fed rate, moving together in real time. If you missed it, find it on The India Strategist Substack.

The India Strategist is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

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Divya Rai | Edition #5 | March 22, 2026

Global Politics. Business Impact. An Indian Lens.

Week of: March 8 to March 15, 2026

THIS WEEK IN BRIEF

Oil crossed $100 per barrel for the first time since 2022 and the IEA confirmed this is the worst energy supply disruption in recorded history. India’s rupee hit a record low of 92.35. LPG rationing began across Indian cities. Russia was caught feeding Iran intelligence to target US military bases while quietly doing a nuclear deal with Washington. Trump announced that Reliance Industries is backing a new US oil refinery while India stayed silent for a 14th consecutive day on a war that is rationing its cooking gas. The question this week is not what is happening in the Middle East. The question is what India’s silence is actually telling the world.

INDIA AND ENERGY

1. THE WORST OIL CRISIS IN HISTORY: AND WE WERE NOT BUILT FOR THIS

Oil crossed $100 per barrel this week. Every $10 rise widens India’s current account deficit by approximately $12 to $15 billion annually. Brent went from $73 on February 27 to $107 on March 8, a 40% surge in ten days, before partially correcting to $89 after reports that the US is considering seizing military control of the Strait of Hormuz. The IEA confirmed on March 12 that this is the biggest oil supply disruption in the history of the global market. The 20% of global supply currently disrupted is roughly twice the record set during the Suez Crisis of 1956. Gulf countries have cut at least 10 million barrels per day of production, equal to 10% of global demand. There are 124 million barrels of Russia-origin oil stranded at sea across 30 locations globally, enough to cover five to six days of global supply. The US has issued India a 30-day waiver to purchase some of it.

MY TAKE: In 30 years of my life I have seen COVID-19 shut down the world. I have seen the 2008 financial crisis wipe out savings overnight. I have never seen the world genuinely not knowing whether oil ships will move through a strait four days from now. This is where arrogant, power-hungry leaders with zero interest in collaboration have brought us. The US created this crisis and is simultaneously issuing permission slips to India to buy Russian oil to stabilise the same market it destabilised. That is not contradiction. That is strategy. Globalisation works seamlessly when times are good. When times are bad every gap in your infrastructure becomes visible at once. India’s entire energy system was built around operational continuity, not resilience. We assumed ships would keep arriving on schedule. We were wrong.

2. TWO DAYS OF LPG FOR 1.5 BILLION PEOPLE

Iran’s new Supreme Leader Mojtaba Khamenei has formally declared the Strait of Hormuz permanently mined. More than 85% of India’s LPG imports pass through that strait. India’s dedicated strategic LPG reserve covers less than two days of national consumption, two underground caverns in Visakhapatnam and Mangaluru holding 1.4 lakh tonnes combined against a daily consumption of 80,000 tonnes. Total operational stocks including commercial inventories at ports and in transit add up to roughly 25 to 30 days. But those operational stocks only last as long as ships keep arriving. With the Strait mined and tanker movement severely disrupted, that 25 to 30 day clock is now ticking. LPG rationing has begun. Restaurants are limiting operations. Panic buying of cylinders has been reported across multiple cities. Induction cooktop sales in Delhi-NCR have jumped 300%.

MY TAKE: The Pradhan Mantri Ujjwala Yojana successfully gave clean cooking gas to 10 crore poor households. That is a genuine achievement. But the government expanded demand by 10 crore connections without building a single meaningful day of strategic reserve to back it up. India now has 33 crore domestic LPG connections and less than two days of buffer. Energy access and energy security are two completely different things. We built access. We ignored security. The IEA has flagged this weakness formally. No additional caverns are planned. A government that expands the demand side of a critical commodity without building supply resilience to match is not planning for India. It is planning for the next election. In an era of geopolitical uncertainty, operational efficiency is not a strategy. Resilience is.

AMERICAS

1. RUSSIA IS PLAYING BOTH SIDES AND NO ONE IS TALKING ABOUT IT

This is the most underreported story of the war. Russia has been feeding Iran targeting intelligence to help Tehran hit US military bases across the Gulf, according to AP sources. At the same time, US and Russian negotiators in Abu Dhabi have reached a draft handshake deal to observe the limits of the New START nuclear treaty. Russia is simultaneously helping Iran kill American soldiers and doing nuclear stability deals with Washington. Neither side is publicly acknowledging the contradiction.

MY TAKE: This is the most masterful geopolitical play of this entire war and almost nobody is covering it. Russia is feeding Iran intelligence to target American soldiers. Russia is simultaneously offering to mediate and end the war. Russia is doing a quiet nuclear deal with Washington. Three moves, one player, zero shots fired. Think about what Russia gains from every outcome here. If the war continues, the Strait of Hormuz stays closed, oil prices stay elevated, and Russia’s sanctioned crude sitting stranded at sea suddenly has buyers lining up with US permission slips. If Russia mediates successfully, it re-enters the world stage as an indispensable peacemaker after four years of being treated as a pariah over Ukraine. If the nuclear deal holds, it gets strategic stability with Washington regardless of what happens in the Middle East. Russia has no bad outcomes here. It is playing all sides simultaneously and profiting from each. The US imposed sanctions on India for buying Russian oil while doing nuclear deals with Russia while Russian intelligence helps target US troops. The rules-based international order applies to countries that cannot push back. For everyone else it is negotiable. Russia clearly got that memo long before India did.

INDIA AND GEOPOLITICS

1. IS INDIA INDEPENDENT OR A YES-MAN TO WASHINGTON?

This is the question that can no longer be avoided. The evidence from this week alone is striking. Trump personally announced on Truth Social that Reliance Industries is backing a new oil refinery in Brownsville, Texas, the first new American refinery in 50 years. Trump called it a $300 billion deal, though energy experts clarify that figure refers to the estimated value of oil processed over 20 years, not the construction cost. Reliance has neither confirmed nor denied its involvement. What is verified: Mukesh Ambani attended Trump’s second inauguration and is personally invested in Trump’s real estate firm. Reliance’s shares jumped 7% after the India-US trade deal in February in which India committed to phasing out Russian oil purchases and buying $500 billion of American energy products. The trade deal boosted Reliance directly. A potential refinery investment would lock Reliance further into the American energy system.

Meanwhile India significantly reduced Russian oil purchases from November 2025 under US sanctions pressure and formally committed to phase them out under the February 2026 trade deal with Washington, resuming only partially under a 30-day US waiver during a crisis the US itself created. India has issued no statement on the US-Israel strikes on Iran. PM Modi was photographed warmly with Netanyahu just days before the strikes began. The Indian government has not clarified publicly what was agreed in the India-US trade deal. An unnamed senior US official reportedly said Washington would not make the same mistake it made with China and would not allow India to reach a point where it can truly compete. The Indian government has not responded to that statement.

MY TAKE: Read those facts together and a picture forms. India reduced Russian oil imports under US pressure. India’s largest private company invested in a US refinery and its chairman attended Trump’s inauguration. India stayed silent for 14 days on a war that is rationing its cooking gas. The government of the fifth largest economy in the world has not told its own citizens what it agreed to in its most significant trade negotiation in years. At what point does strategic patience become strategic submission? India has always prided itself on independent decision making. But independence requires the willingness to speak even when it is inconvenient. Fourteen days of silence while your LPG runs out is not strategy. It might be a compromise?

2. INDIA-IRAN TALKS, CHINA’S MOVE, AND THE EMPTY PEACEMAKER’S CHAIR

PM Modi and Iran’s acting president have spoken this week. Modi asked for the security of Indian nationals in Iran and smooth transit of oil for India’s national security. Iran asked India to take a stand and called for multilateral cooperation from BRICS countries, which India currently chairs. India has not responded to that request publicly. China, meanwhile, announced emergency humanitarian aid to Iran following the strikes on a girls school.

In a parallel development, US development aid for 2026 stands at $28.5 billion, down from $63.3 billion in 2024, with estimates suggesting it could fall as low as $8.1 billion after further cuts. A recent study estimated that US and European aid cuts could cost an additional 22.6 million lives by 2030. The US is simultaneously spending $891 million per day on a war and cutting the foreign aid that keeps millions alive.

MY TAKE: China’s $200,000 humanitarian contribution to Iran is small in dollar terms and significant in symbolic terms. China is deliberately positioning itself as the humanitarian counterweight to the US-Israel operation. With the US explicitly retreating from its role as the world’s peacemaker and aid provider, a vacuum has opened. China is moving to fill it, not just in manufacturing and technology but now in the language of humanitarian concern and multilateral solidarity. Is China genuinely stepping into the peacemaker role or is this calculated positioning? I believe it is the latter. But positioning matters in geopolitics. Perception becomes reality. If China is the country sending aid to bombed Iranian hospitals while the US cuts foreign aid and wages war, the world will notice. India holds the BRICS chair in 2026 and has said nothing. China is acting. That contrast will define the next phase of the India-China rivalry more than any border dispute.

INDIA AND DAILY LIFE

1. YOUR FLIGHT TICKET COSTS MORE BECAUSE OF A WAR YOU ARE NOT IN

Major Indian airlines including Air India and IndiGo have significantly increased fares this week to cover rising aviation turbine fuel costs. Oil at $89 to $107 per barrel means every flight, every delivery, every logistics chain in India costs more. The rupee at 92.35 means every import is more expensive. The Strait of Hormuz mining means the disruption could last weeks or months.

MY TAKE: With the US unable to materialise its claim of seizing control of the Strait of Hormuz, and Iran’s new leadership explicitly rejecting any ceasefire, this war does not appear to be ending soon. The people paying the price are not just the countries involved. They are the common citizens of countries that had nothing to do with this power struggle. Your cooking gas cylinder costs more. Your flight costs more. Your cooking oil, your fertiliser, your electricity bill, all connected to a strait you cannot find on a map. How can we say we are not party to this war while paying the price? With your cooking gas running low and your airline ticket unaffordable, you too are a party to this war. Just at the receiving end.

The India Strategist is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

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Divya Rai | Edition #4 | March 15, 2026

Global Politics. Business Impact. An Indian Lens.

Week of: March 1 to March 8, 2026

THIS WEEK IN BRIEF

A war is now eight days old and the world’s energy supply is fracturing. Iran closed the Strait of Hormuz. Ukraine knocked out 40% of Russia’s oil refining capacity. The dollar surged. The rupee weakened. And the US, having spent months pressuring India to stop buying Russian oil, turned around this week and gave India a 30-day permission slip to buy it again. Gold crossed $5,408 per ounce. Indian households are taking gold loans at a rate not seen in years. And quietly, with almost no coverage, the US is doing a nuclear deal with Russia while simultaneously waging war on Iran. This week had everything.

ENERGY AND OIL

1. THE STRAIT OF HORMUZ IS CLOSED: ARE WE ACTUALLY SAFE?

Iran closed the Strait of Hormuz this week, disrupting global oil and gas shipments. Energy Aspects calculates that approximately 15 million barrels of oil per day and 80 million tonnes of LNG passed through the strait last year. Ukraine simultaneously knocked out 40% of Russia’s oil refining capacity through targeted drone strikes on Russian oil infrastructure. Two major energy supply arteries are now damaged at the same time. Brent crude settled at $85.41 per barrel on Thursday, its biggest single day gain since May 2020, before easing slightly to $84.42 on Friday.

The Indian government moved quickly to reassure markets. According to PPAC, India holds over 250 million barrels of crude and petroleum products, providing a buffer of 7 to 8 weeks. The government added that only 40% of India’s crude imports pass through the Strait of Hormuz, with 60% arriving via alternative routes. No price hike at the pump is expected for now.

MY TAKE: The government’s reassurance is partially comforting but raises as many questions as it answers. India’s total buffer of 74 days sounds substantial, but the IEA recommends 90 days as the minimum safe threshold. More critically, India’s dedicated Strategic Petroleum Reserve covers only 9.5 days of consumption on its own. The remaining buffer sits in commercial refinery stocks and oil in transit, neither of which is truly strategic in a prolonged crisis. And critically, India has almost no strategic reserve for LPG, which is 80% sourced from the Gulf. That means cooking gas for millions of Indian households is the most vulnerable link in our energy chain. The government is right that we are not in crisis today. But the question worth asking is whether 74 days is genuinely safe or simply comfortable enough to avoid panic. In energy security, the difference between those two things matters enormously.

AMERICAS AND INDIA

1. THE 30-DAY PERMISSION SLIP: WHAT KIND OF COUNTRY ARE WE?

This is the most important story for India this week and it has received far less attention than it deserves. For months, the US pressured India to stop buying Russian oil, imposing 25% penalty tariffs on Indian goods as punishment. India complied. Indian refiners cut back significantly on Russian crude purchases and began looking for US oil as a substitute. Then the Iran war began, the Strait of Hormuz closed, and global oil prices surged.

Washington’s response? Issue India a 30-day waiver to buy Russian oil again. Treasury Secretary Bessent explained it publicly: “The Indians had been very good actors. We had asked them to stop buying sanctioned Russian oil this fall. They did. They were going to substitute it with US oil, but to ease the temporary gap of oil around the world, we have given them permission to accept the Russian oil.”

The waiver covers only Russian oil already stranded at sea before March 5, 2026, and expires on April 4. It is not a broad relaxation of sanctions. It is a one-time hall pass, issued when it served American interests to do so.

MY TAKE: Read that quote from Bessent again slowly. “We had asked them to stop. They did. We have now given them permission.” India, the world’s fifth largest economy, required permission from Washington to buy oil in a crisis that Washington itself created by going to war in the Middle East. This is not a partnership. It is a patron-client relationship dressed up in diplomatic language. The US bullied India into reducing Russian oil purchases, then when its own war caused a supply crisis it needed India to absorb Russian barrels to stabilise global prices. India was useful in both directions, once as a country that could be pressured, and now as a country that could be deployed as a price stabilisation tool. One senior American official who visited India recently reportedly said the US would not make the same mistake it made with China and would not allow India to reach a point where it can truly compete. The Indian government has not responded to or clarified that statement. It has also not clarified publicly what was actually agreed in the India-US trade deal framework. At what point does strategic patience become strategic submission?

2. THE QUIET NUCLEAR DEAL WITH RUSSIA: THE HYPOCRISY NO ONE IS TALKING ABOUT

While the world watches the US bomb Iran and kill its Supreme Leader in the name of nuclear non-proliferation and regional peace, a very different story is unfolding in Abu Dhabi with almost no media coverage. US and Russian negotiators have reached a draft handshake deal to observe the limits and verification rules of the New START nuclear treaty for at least six months after its formal expiration. US envoys Steve Witkoff and Jared Kushner led the talks.

Let that sink in. The same administration that killed Iran’s Supreme Leader to prevent nuclear proliferation is quietly doing a nuclear stability deal with Russia, a country that has been waging a brutal war against Ukraine for over four years, a war the US has officially condemned, imposed sanctions over, and spent billions supporting Ukraine to resist.

MY TAKE: The contrast could not be starker. Iran gets bombs. Russia gets a deal. The US imposed sanctions on India for buying Russian oil while simultaneously negotiating nuclear arrangements with Russia. These are not contradictions born of confusion. They are the deliberate choices of a country that uses international norms as tools when they serve its interests and sets them aside when they do not. The Iran story dominates the front pages because it has explosions and a dead Supreme Leader. The Russia nuclear deal gets no headlines precisely because it is inconvenient for the narrative of the US as a force for peace and non-proliferation. For India, the lesson is clear: the rules-based international order that powerful countries claim to defend is selectively enforced. The sooner Indian foreign policy internalises that reality rather than being surprised by it, the better positioned India will be to navigate it.

GOLD AND MARKETS

1. GOLD AT $5,408: WHEN HOUSEHOLDS BECOME THE SIGNAL

Gold opened this week at $5,408 per ounce after a volatile week that saw it briefly fall nearly 4% to $5,075 as safe-haven funds temporarily shifted to the dollar, before recovering to close at $5,172 on March 7. JPMorgan has raised its year-end 2026 target to $6,300 per ounce. Central banks globally are continuing to increase gold reserves specifically to reduce reliance on the US dollar.

The India story inside the gold story is remarkable. India’s gold loan sector has grown 91% year on year in the third quarter of fiscal 2026. Active gold loan accounts now stand at over 90 million, with gold loans accounting for 9.7% of the entire retail lending portfolio, up from 8.1% a year ago.

MY TAKE: Here is the chain of events that connects a war in the Middle East to an Indian household taking a gold loan in Indore or Surat. War creates uncertainty. Uncertainty drives gold prices up. Higher gold prices increase the value of gold held as collateral. Higher collateral value gives households access to more credit than before. Indian families are monetising their gold not because they planned to, but because geopolitics made their gold worth more overnight. This is a live example of how global conflict flows directly into household financial decisions across India. But there is a risk that deserves attention. If gold prices correct sharply once the Iran conflict stabilises, borrowers who took loans at peak valuations could face pressure. The 91% growth in gold loans is also a signal of underlying financial stress. Families do not pledge gold unless they need liquidity. The geopolitical risk premium in gold may be hiding a domestic demand crunch that deserves more scrutiny than it is currently receiving.

Weekly Geopolitics is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

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Divya Rai | Edition #3 | March 8, 2026

Sunday, March 1, 2026 · Edition #2

Global Politics. Business Impact. An Indian Lens.

Week of: February 23 to March 1, 2026

THIS WEEK IN BRIEF

This week a war began in the Middle East. The US and Israel struck Iran, killing Supreme Leader Khamenei. The US Supreme Court struck down Trump’s tariffs and India’s trade deal negotiations with Washington collapsed overnight. Gold surged past $5,292 per ounce as geopolitical risk drove investors to safe havens. The US military chief publicly warned Trump about ammunition shortages ahead of any Iran strike, raising the question of how much a president’s word really means when his own institutions push back. And Modi made history as the first Indian Prime Minister to address the Israeli Knesset, signing defence agreements worth up to $8.7 billion, but could not get the one thing India wanted most.

INDIA

1. INDIA-US TRADE DEAL POSTPONED: A LESSON IN BUILDING ON SAND

India’s trade delegation cancelled its Washington visit this week after the US Supreme Court struck down Trump’s emergency tariffs, invalidating the legal foundation of the deal India had been negotiating for months. The framework under discussion would have brought India’s tariff down from 50% to 18%, with India committing to purchase $500 billion of US goods over five years. Within 24 hours of the ruling, Trump reimposed tariffs under a different law at 15% and continued making tariff threats publicly as if the court ruling had never happened.

MY TAKE: It is hard not to notice the irony. Indian ministers had been celebrating getting a better deal at 18% compared to the earlier 50% tariff burden, presenting it as a diplomatic win. Then the Supreme Court pulled the rug from under the entire framework overnight. But the real lesson here is not about this specific deal. It is about what happens when you build your trade strategy around one man’s executive orders in a country where institutions can and do override those orders at any moment. India needs to negotiate trade agreements that are legislatively grounded and institutionally durable, not ones that depend on a president’s emergency powers surviving a court challenge. This week proved that is not a theoretical risk. It is the reality.

1. MODI IN JERUSALEM: THE DEAL INDIA WANTED AND COULD NOT GET

Modi became the first Indian Prime Minister to address the Israeli Knesset on February 25, declaring “India stands with Israel firmly, with full conviction.” The visit resulted in 17 bilateral agreements covering defence, AI, cybersecurity, and trade, and an announcement that both countries will pursue a free trade agreement. India’s Defence Acquisition Council approved a precision strike weapons package worth $8.7 billion including SPICE-1000 guidance kits and Rampage air-to-surface missiles.

But the headline that did not make the front pages tells the more interesting story. India wanted Iron Dome, Israel’s legendary short-range missile defence system. It did not get it. Israel cannot transfer Iron Dome technology without explicit US approval because American funding and components are embedded in the system. The country India is deepening its defence relationship with cannot sell India its most valuable technology without asking Washington’s permission first.

MY TAKE: India openly showing its relationship with Israel this week raises more questions than it answers. Israel purchases a significant portion of its defence technology from the US, and that dependency flows downstream to every country that buys Israeli systems. So when India signs defence deals with Israel, it is entering a supply chain where the US holds a veto at the top. The Iron Dome situation makes this concrete: India wanted a system, Israel wanted to sell it, and Washington’s fingerprints on the technology meant neither could complete the transaction without US approval. Does this mean India’s celebrated defence diversification is less independent than it appears? And with the US now in active military coalition with Israel having struck Iran and killed Khamenei, Washington’s hold over the entire Middle East security architecture has tightened dramatically. India is a major importer of oil and defence equipment from this region. The more Washington dominates the Middle East, the more India’s claimed independent position in international politics is tested. We are not as non-aligned as we like to believe.

AMERICAS

1. HOW MUCH DOES A PRESIDENT’S WORD REALLY MATTER?

The US Supreme Court struck down Trump’s emergency tariffs as illegal. The Chairman of the Joint Chiefs General Dan Caine publicly warned Trump about ammunition shortages and lack of allied support if force is used against Iran. The IMF told Washington directly that its tariffs have a negative supply effect, add to goods inflation, and distort resource allocation over the long term. Congressional Democrats formally warned that military action without authorisation is unconstitutional. Three institutions and an international body, one week, all saying the same thing: slow down.

Trump’s response was to reimpose tariffs under a different legal authority within 24 hours, publicly contradict General Caine on social media calling the reports “100 percent incorrect,” and continue issuing tariff threats to other countries as if the court ruling had never happened.

MY TAKE: What is remarkable about this week is not that institutions pushed back against Trump. That is how American democracy is designed to work. What is remarkable is how little it slowed him down. In recent American history it is quite unusual to see this kind of open friction between a president and his own institutions playing out so publicly and so rapidly. The US is struggling to present itself as one coherent unit to the world. For every country negotiating with Washington, and India is doing so on trade, technology, and defence simultaneously, this is the most important context to keep in mind. A president’s words move markets. But institutions decide outcomes. And right now those two things are moving in opposite directions almost daily. Truly turbulent times.

GOLD AND MARKETS

1. GOLD CROSSES $5,292: GEOPOLITICS IS THE DRIVER

Gold spot price reached $5,292.66 per ounce as of March 1, with silver at $92.02 per ounce, up 5.77% on February 27 alone. In India, 24 carat gold is now at Rs 1,61,710 per 10 grams in Delhi. JPMorgan has raised its year-end 2026 gold price target to $6,300 per ounce. Analysts at the World Gold Council describe gold as “strategically under-owned” relative to global equities, meaning institutional buying has barely begun.

MY TAKE: When gold surges this fast, it is the market telling you something that headlines have not yet fully processed. The combination of US tariff chaos, Iran tensions, and the outbreak of actual war between the US, Israel, and Iran this week has rebuilt what analysts call the geopolitical risk premium in commodity prices. With active conflict now in the Middle East and the Strait of Hormuz under threat, gold prices are likely to rise further in the coming weeks. For Indian households this means the gold they hold is worth more, but the oil they need is about to cost significantly more too. The net effect on Indian family budgets is negative. Watch Brent crude closely this week as markets open Monday.

The India Strategist is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

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Divya Rai | Edition #2 | March 1, 2026

Global Politics. Business Impact. An Indian Lens.

Week of: February 16 to February 22, 2026

EDITOR’S NOTE

Welcome to Edition #1 of Weekly Geopolitics. This newsletter is published every Sunday and covers the most important geopolitical developments of the week through one lens: what does it mean for Indian business and the world India operates in.

THIS WEEK IN BRIEF

The United States is days away from a potential military strike on Iran, with over 120 aircraft now deployed to the Middle East and no diplomatic breakthrough in sight. India signed the Pax Silica Declaration, formally joining a US-led coalition to build China-free technology supply chains, its boldest technology alignment with Washington yet. Russia launched nearly 400 drones at Ukraine the night before Geneva peace talks began, making clear that diplomacy and destruction are running in parallel. China opened its APEC chairmanship year projecting stability and openness, positioning itself as the responsible alternative to an increasingly unpredictable United States.

INDIA

1. INDIA SIGNS PAX SILICA: PICKING A SIDE IN THE TECH WAR

On February 20, India signed the Pax Silica Declaration at the India AI Impact Summit in New Delhi, becoming the tenth member of a US-backed coalition committed to building China-free semiconductor and AI supply chains. The declaration was signed by S. Krishnan, Secretary of the Ministry of Electronics and Information Technology, with IT Minister Ashwini Vaishnaw present at the ceremony. US Ambassador Sergio Gor and Under Secretary of State Jacob Helberg, who oversees US economic statecraft, witnessed the signing. This is India’s most explicit technology alignment with Washington in its history.

MY TAKE: Semiconductors are the oil fields of the 21st century. Pax Silica gives Indian IT firms preferential access to US contracts and accelerates chip manufacturing investment in India. But China is India’s largest trade partner. Expect Beijing to respond with quiet economic pressure. Watch India-China trade data and any Chinese diplomatic statements in the coming weeks. Also, this raises the question: is this going to give India the tech knowhow and capacity to build semiconductors domestically, or will it still keep us dependent on the US and China?

2. INDIA RECLASSIFIED AS “UNALIGNED”: THE BALANCING ACT TIGHTENS

In its 2026 update published this month, Capital Economics reclassified India from “leaning towards the US” to “unaligned” on its Global Fracturing map, reflecting a gradual cooling of the India-Trump relationship over the past year. India is simultaneously reaching out to Beijing and chairing BRICS 2026, a bloc explicitly designed as an alternative to US-led institutions.

MY TAKE: In these testing geopolitical times, being labelled unaligned does not mean India is free from pressure. Powerful countries, especially the US, are actively pushing India to align its supply chains with their preferences. India is already facing pressure to move away from Russian oil toward US-approved alternatives. The window for true supply chain independence is narrower than the unaligned label suggests. For Indian businesses, the time to plan for that choice is now, not when it is forced upon you.

AMERICAS

1. THE IRAN COUNTDOWN: TEN DAYS TO WAR OR DEAL

The US has deployed over 120 aircraft to the Middle East including B-2 stealth bombers and two carrier strike groups, a force that analysts describe as increasingly resembling one prepared for an extended air campaign rather than mere leverage. The White House was briefed that the military could be ready to strike by the weekend, though Trump had yet to make a final decision as of Sunday. Indirect US-Iran talks in Geneva lasted three and a half hours with no breakthrough. Iran is fortifying its Natanz nuclear facility with fresh concrete and has appointed a hardline IRGC commander to lead its defense council.

MY TAKE: India imports over 85% of its oil. Every $10 rise in crude prices widens India’s current account deficit by $15 billion and weakens the rupee. A strike on Iran also disrupts the $40 billion annual remittance pipeline from India’s 9 million Gulf workers. This is a perfect example of India’s structural vulnerability: two countries negotiate, one decides to go to war, and India pays the price without having any seat at the table. Until India meaningfully reduces its oil import dependence, these distant conflicts will continue to hit Indian families directly through fuel prices, inflation, and a weaker rupee.

EUROPE AND RUSSIA-UKRAINE

1. FOUR YEARS OF WAR: RUSSIA ATTACKS THE NIGHT BEFORE PEACE TALKS

February 24 marks four years since Russia’s full-scale invasion of Ukraine. Geneva talks on February 17 and 18 ended with no documents signed and no territorial progress. The night before talks began, Russia launched 396 drones and 29 missiles at Ukraine’s energy grid. Zelensky’s response was blunt: “This very clearly shows what Russia wants.” Every power plant in Ukraine has now been damaged. Russian total casualties have crossed 1.2 million according to CSIS estimates.

MY TAKE: Four years in, this war shows no sign of ending and Russia has made clear it will use military force even while sitting at the negotiating table. For India, the uncomfortable reality is that it remains deeply tied to this aggressor. India imports oil, weapons, and fertilizers from Russia, but Russia buys very little from India in return. This is not a partnership of equals, it is a dependency. But as BRICS Chair in 2026, India holds more cards than it realizes. BRICS+ represents roughly 40% of world GDP by purchasing power parity and includes the world’s largest oil suppliers. India should use this moment to negotiate price guarantees and supply continuity with Russia rather than remaining a passive buyer. This may be the best window India will ever have.

CHINA AND ASIA-PACIFIC

1. CHINA’S “CHINA YEAR”: POSITIONING AS THE STABLE ALTERNATIVE

China opened APEC 2026 in Guangzhou this week, framing itself as the champion of open trade and multilateralism while the US edges toward war and its own Supreme Court challenges its president’s tariffs. Japan responded by deploying weapons capable of striking adversaries on their soil for the first time since 1945, devoting a record nine trillion yen to defense. China’s trade surplus rose 20% to $1.2 trillion despite 52 economies launching new trade defenses against Chinese goods.

MY TAKE: China runs a $116 billion trade surplus with India and while the world fractures around it, China has emerged as the undisputed winner in global trade, growing its surplus to $1.2 trillion even as 52 economies raised defenses against it. Every Indian phone, solar panel, and electronics assembly still depends heavily on Chinese inputs. India is attempting to change this through both diversification and self-reliance. The Production Linked Incentive scheme has brought Foxconn and Tata Electronics to manufacture iPhones across Tamil Nadu and Karnataka, and Micron’s $2.75 billion chip packaging plant in Sanand, Gujarat is beginning commercial production by end of February 2026, India’s first. These are promising starts but they are years away from meaningfully reducing Chinese dependency.

Weekly Geopolitics is published every Sunday. It is free, independent, and written for students and professionals who want to understand the world through a business lens.

Subscribe on Substack. Share with a colleague. Write to Divya Rai.

- Divya Rai | Edition #1 | February 22, 2026