Good afternoon, readers. We are kicking off the week with the latest developments in India-linked energy markets, as domestic refiners secure oil and LPG supplies from Iran under a temporary US sanctions waiver. Meanwhile, New Delhi’s diplomatic push continues to bear fruit in the Strait of Hormuz, with more India-bound LPG tankers crossing the chokepoint to help ease domestic fuel shortages.

Plus: Emirates NBD is inching closer to sealing its acquisition of RBL Bank, and Lohum is building a cross-border battery recycling pipeline between Sharjah and India to secure critical minerals. Let’s dive right in.

Watch this space

ECONOMY — India’s manufacturing sector expanded at its slowest pace in nearly four years last month, as the war disrupted supply chains, dented demand, and pushed up input costs, according to the HSBC India Manufacturing Purchasing Managers’ Index (pdf), compiled by S&P Global. The index fell to 53.9 from 56.9 in February, broadly in line with estimates.

Demand weakens, exports hold: New orders and output grew at their weakest rate in close to four years, signaling softer domestic demand. “Disruptions linked to the conflict […] are weighing on Indian manufacturers,” HSBC Chief India Economist Pranjul Bhandari said. However, export orders rose to a six-month high, offering some support.

Costs rise, outlook steady: Despite the war driving input costs — steel, aluminum, and fuel — to their highest levels since 2022, Indian factories are not passing these costs onto buyers, with selling prices rising at their slowest pace in two years. Employment growth hit a seven-month high, while business optimism strengthened expectations of agricultural demand and capacity expansion.

POLICY — India has scrapped customs duties on 40 petrochemical products to keep supplies stable and contain input costs amid the Middle East conflict, according to a press release. The exemption (pdf), notified by the Finance Ministry and effective 2 April, reduces import duty on 40 products to zero until 30 June.

What’s covered: The list includes a mix of base chemicals and downstream polymers used across manufacturing chains, along with engineering plastics. The government also removed the Agriculture Infrastructure and Development Cess on ammonium nitrate imports over the same period.

Why it matters: India’s petrochemical supply chain is closely linked to the Gulf, which accounts for over 75% of methanol imports and a significant share of other feedstock. The region also supplies about 30% of India’s urea imports and roughly 50% of LNG used in fertilizer and chemical production. With the Middle East conflict pushing up input prices and logistics costs, the duty waiver helps offset cost pressures and support supply continuity.

AUTOMOTIVE — India’s largest carmaker Maruti Suzuki may raise vehicle prices as rising global commodity costs linked to the war push up production expenses, Reuters reports. The company said higher prices of fuel and industrial inputs are adding to production costs, which may need to be passed through to customers. A decision on price revisions is expected shortly, the company added without revealing a definite timeline. Maruti has not reported supply disruptions so far, but said risks could emerge if the conflict continues.

Industry body Federation of Automobile Dealers Associations also said the auto supply chain is showing signs of strain, with more than half of dealers reporting supply or dispatch disruptions linked to the conflict. Rising oil and gas prices are also pushing up fuel, logistics, and input costs.

Why it matters:The Middle East accounts for about 12.5% of Maruti’s export volumes, with shipment timelines to the region expected to face delays. Hyundai Motor India reported a 10% drop in overseas shipments last month, with roughly 40% of its exports linked to the Middle East.

PHARMA — Pharma exporters in India may lose up to USD 750 mn if the Iran war continues through April, up from earlier estimates of USD 150-200 mn, as higher freight, ins., and input costs affect shipments, Business Standard reports. Supply chains are likely to remain affected for an extended period, with longer transit times and higher logistics costs adding pressure on exporters, industry executives told the daily.

Why it matters:The MENA region accounted for USD 1.75 bn — or about 5.7% — of India’s USD 30.38 bn in pharma exports in FY 2024/25, with key markets including the UAE, Iraq, Egypt, and Saudi Arabia leaving exporters exposed to margin pressure as costs rise.

DIPLOMACY — India’s External Affairs Minister S. Jaishankar held calls with counterparts in Iran, Qatar, and the UAE to discuss the ongoing war, the minister said on X (here, here, and here), as tensions around the Strait of Hormuz sharpen concerns over energy flows and shipping routes.

Why it matters: Jaishankar discussed regional and global developments as well as bilateral ties with Iran’s Foreign Minister Abbas Araghchi. The discussions follow new US warnings to Iran regarding the Strait of Hormuz — there is significant concern that further disruptions to commercial shipping or energy infrastructure could occur, particularly as Washington considers strikes on Iranian power plants, which might provoke retaliatory attacks on Gulf energy facilities.

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Data point

INR 384.2 (USD 4.2 bn) — that was the value of India’s defense exports in FY 2025/26, marking a 62.6% y-o-y increase and an all-time high, the Defense Ministry said in a press release. Public-sector defense companies accounted for 54.84% of exports, while private firms contributed 45.16% of sales.

IN CONTEXT- India has ramped up its domestic defense manufacturing to reduce its dependence on external sources while also expanding exports. The UAE is among the 40 nations purchasing small arms, ammunition, and electronic warfare systems from India.

The big story abroad

Pakistan has proposed a two-tier ceasefire framework to reopen the Strait of Hormuz and de-escalate the war involving the US, Israel, and Iran, Reuters reports. The plan outlines an immediate 45-day ceasefire that would eventually pave the way for a comprehensive agreement to permanently end the war, a framework first reported by Axios on Sunday. Islamabad circulated the proposal to Washington and Tehran overnight and is awaiting a response from the warring parties.

REMEMBER- US President Donald Trump has once again threatened to destroy Iran’s power infrastructure. Should Tehran keep the Strait of Hormuz shut, Trump has vowed to target civilian infrastructure — power plants and bridges — in a post on TruthSocial, leading some critics to point out that this would constitute a war crime.

Oil jumped following the president’s ultimatum. Brent futures rose 1.6% to USD 110.74 a barrel earlier today, while US West Texas Intermediate futures gained 0.6% to trade at USD 112.25.

Market watch

Indian markets fell on Monday as crude prices hit USD 110 / bbl, marking the sixth straight week of losses as geopolitical turmoil outweighed strong corporate earnings, Reuters reports. The Nifty 50 declined 0.47%, while the Sensex dropped 0.59% with most sectoral indices in the red. Rising crude prices and renewed fears of escalation in the US-Israel-Iran war have tempered market sentiment.

MEANWHILE- The INR posted a sharp rebound, rising 0.3% to 92.8 / USD after a 1.8% surge last week — its biggest rally since 2013. This came after the Reserve Bank of India (RBI) aggressively capped banks’ net open positions at USD 100 mn to curb currency speculation. The INR had been under sustained pressure amid rising oil prices and foreign investor sell-off. The RBI intervention has depleted India’s reserves by USD 40 bn in recent weeks.

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