Gulf fertilizer crisis reveals a circular dependency

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WHAT WE’RE TRACKING TODAY

India concludes FTA with New Zealand

Good morning, lovely people, and happy FRIDAY. We are wrapping up the week with a close look at India's agrarian economy, where fertilizer has quickly joined crude oil as a critical geopolitical vulnerability amid the ongoing regional war and maritime chokepoints.

Meanwhile, the conflict is also cooling cross-border capital flows, with Gulf investors pumping the brakes on new commitments to Indian alternative investment funds until the economic fallout becomes clearer.

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What’s with the “+” in MENA+? We think one of the most powerful stories in the region is the *export* of ideas and capital not just to neighboring regions (Asia, the Stans) but to international financial centers. MENA countries are jockeying for position in the new global economy now taking shape, and we're going to shape that conversation.

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TRADE — India and New Zealand will ink a comprehensive freetrade agreement (FTA) this Monday, April 27, New Zealand’s Prime Minister Christopher Luxon said in a post on X. The pact is targeting bilateral trade of USD 5 bn within five years and plans to secure USD 20 bn in direct investment into India over the next 15 years.

A new market opens up: Negotiations, launched in March 2025, were concluded in under nine months. The agreement is expected to grant near-zero duty access for Indian exports, benefiting sectors such as textiles, pharmaceuticals and engineering goods. India will liberalize tariffs on around 70.3% of tariff lines, covering 95% of bilateral trade between the two countries.

What’s changed? The pact opens 118 services sectors and eases mobility, including visas for 5k Indian professionals annually and extended post-study work rights for students. In addition, Indian pharma exporters will benefit from faster market access as New Zealand accepts existing inspection approvals from the US, the UK and Europe’s pharma regulatory bodies, reducing approval timelines and lowering compliance friction for Indian firms.

Why it matters: Unlike conventional FTAs, this pact introduces a rebalancing clause that links market access to investment delivery. If New Zealand falls short of the USD 20 bn commitment, India can recalibrate or suspend specific trade concessions.

Market watch

HSBC has downgraded Indian equities to “underweight” from “neutral” in its second cut in under a month, flagging rising risks to earnings as energy prices surge, Reuters reports.

“India now looks less attractive than North East Asian peers in the current macro setting,” an HSBC analyst told the newswire. It sees pockets of value in private banks, base metals, and healthcare, but argues the broader investment case has weakened.

Earnings at risk: HSBC expects the current consensus earnings growth forecast of 16% y-o-y for 2026 to face downward revisions. It estimates that a 20% rise in crude prices could shave off around 1.5 percentage points from earnings, coming on the heels of higher input and energy costs.

Why it matters: Foreign investors have pulled out over USD 18.5 bn so far in 2026, while the Nifty and Sensex benchmarks have already declined 6-8% y-o-y, underperforming regional peers. More risks await with uncertainty around global demand and potential disruptions from AI in India’s IT services sector.

Data points

25.2k — That is the projected number of ultra-high net worth individuals (UHNWIs) in India by 2031, up from 19.8k currently, as per a report by real estate consultant Knight Frank. The country’s b’naire count is expected to rise 51 % from 207 to 313 over the same period, on the back of sustained wealth creation across technology, industrials and capital markets.

India now ranks sixth globally in UHNWI population, with Mumbai accounting for 35.4% of the total number.

The big story abroad

The international press everywhere is leading with news of the extended ceasefire between Lebanon and Israel, set to last three weeks now instead of expiring on Sunday. The extension came after Trump hosted Israeli and Lebanese officials in the Oval Office for a round of talks, a day after Israeli strikes killed at least five people including a journalist.

Meanwhile, oil prices surged to USD 106.87 following reports of Iran boarding ships in the Strait of Hormuz and that air defenses in Iran were engaging what it said were “hostile targets.”

Over in business news, Meta and Microsoft are both planning staff reductions this year. Meta is set to lay off 10% of its workforce in May, while Microsoft is offering long-serving employees voluntary retirement for the first time, with an eye to offer redundancy to 7% of its US workforce.

AND- Intel’s shares surged 19% in afterhours trading after its 2Q revenue forecast beat analyst expectations, helping extend its 81% rebound so far this year as demand for its server processors — used for AI in data centers — booms.

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Fertilizer crunch reveals a new layer to India’s war exposure

Fertilizer is becoming a geopolitically priced input for India, joining crude oil as one of its most critical vulnerabilities amid the ongoing regional war. With urea prices for Indian buyers doubling pre-war levels to nearing USD 1k per tonne, the crisis is exposing a bundled dependency on the Gulf region.

“The overlap is most visible in India’s relationship with countries such as Saudi Arabia, a key supplier of both crude oil and phosphates,” Anupam Manur, economist at Takshashila Institution, a Bengaluru-based public policy school and think tank, tells EnterpriseAM. The Gulf region powering India’s energy needs now underpins its agrarian economy, raising the stakes of prolonged supply chain disruptions.

Imports are MENA-concentrated: India’s fertilizer supply relies heavily on imports, bringing in some 18 mtpa, including 60% of its phosphate needs and nearly all of its potash. Around 20% of India’s urea consumption comes from the Gulf. Diammonium phosphate (DAP) is sourced from Saudi Arabia, Morocco, Russia, China, and Jordan, while muriate of potash comes from Canada, Russia, Belarus, and Jordan.

Maritime chokepoints hit supply chain

With the Strait of Hormuz largely blocked since late February and Bab Al Mandab under sustained pressure from the Houthis, two of the country’s primary western sea routes for fertilizer imports stand compromised. Early warning signals are evident, including cancelled fertilizer tenders in neighboring countries as well as rising freight and war-risk ins. costs, notes Manur.

Alternative sources are constrained: Chinese export restrictions have led to a steep drop in DAP shipments to India, while reliance on lower-priced Russian supplies introduces the risk of secondary sanctions, Manur points out. Canadian potash, Moroccan phosphates, and Omani urea remain available, but at elevated prices, as multiple importers compete for the same limited pool outside disrupted routes, he explains.

The political sensitivity of fertilizer pricing: A 45-kg bag of urea still retails at INR 242 (USD 2.9) against a market price of INR 2.2k (USD 26), with nearly 90% of the cost covered by the government subsidy. While the state currently absorbs these costs to protect cultivators, India's subsidy regime is under extreme pressure. The country’s budget for FY 2026/27 earmarked some USD 12.7 bn (INR 1.1 tn) for urea subsidies. However, absorbing global price shocks could drive total fertilizer subsidies to USD 24-25 bn, Manur estimates.

Macro impact: “While this may increase the fiscal deficit — projected at 5.3-5.8% — by 0.2-0.3% of GDP, the impact is manageable in the short term. But, the continued absorption of price shocks will aggravate existing inefficiencies in fertilizer use.”

What’s lacking? India’s strategic reserves of fertilizers are minimal relative to annual import requirements. Meanwhile, subsidy policies continue to encourage overuse and distort nutrient balance, rather than responding to price signals, says Manur.

A critical monsoon sowing season ahead

India’s fertilizer buffers typically cover 30-45 days of stock. But if shipping disruptions persist through April and May, cargoes expected to arrive at Indian ports in early June may not materialize, warns Manur. With demand peaking in mid-June, these stocks that appear adequate on paper could be depleted by late June, threatening the primary sowing season.

Food security to take precedence: An export ban on grains is not immediate but remains a real possibility. India previously imposed restrictions on wheat exports in 2022 after the Ukraine invasion and on non-basmati rice in 2023 under similar pressures.

The triggers for such bans are well established: a 5-10% decline in monsoon crop yields, food inflation above 8-9%, disruptions to the winter sowing cycle, and the political calendar, particularly state elections.

A circular dependency

The Middle East is both India’s primary fertilizer supplier and a major destination for its agricultural exports. The region accounted for 21.8% of India’s total agri-exports in 2025, worth about USD 11.8 bn, making it a critical market for farm products such as rice, spices, meat, and dairy. Disruptions in fertilizer flows from the region could force India to restrict food exports to provide for domestic consumers, impacting Gulf food security, Manur told us.

This mutual vulnerability may drive strategic quid pro quo arrangements, such as long-term supply agreements or equity stakes in exchange for stable food exports — similar to India’s existing partnerships with Saudi Arabia’s Maaden and Oman India Fertilizer Company.

Gulf investors hit pause on Indian alternative funds amid regional conflict

Fundraising momentum from the Gulf to Indian alternative investment firms has hit a speed bump, as regional investors pump the brakes on new commitments amid the ongoing conflict, Economic Times reports.

Fundraising pause: Capital inflows from high-net-worth individuals, family offices, and institutional investors have eased in recent weeks, affecting fundraising pipelines for India-focused venture capital, private credit, and real asset funds.

Dry powder on hold: While investor appetite for Indian assets hasn't vanished, capital deployment is decidedly more measured. One India-based fund courting regional capital has locked in some USD 500 mn in soft commitments, but investors are holding back on final sign-offs until the economic fallout from the war becomes clearer, the daily added.

A pivot homeward: Concurrently, some institutional and sovereign wealth funds are shifting their focus inward. These major players are signaling a preference for deploying capital into home-market sectors that align with domestic strategic priorities, effectively crowding out near-term overseas allocations.

What’s next for fund managers: The slowdown is uneven. Funds that are already close to concluding the investment rounds have been less affected, while those earlier in the fundraising cycle are taking longer to secure commitments. Industry participants told the daily that investor caution is creating a temporary gap in activity as capital remains unallocated. Fund managers are recalibrating fundraising strategies, including extending timelines and diversifying their investor base, while waiting for conditions in the Gulf to stabilize.

International buyers anchor demand in Casagrand’s Dubai project

Chennai-based developer Casagrand has begun construction of its first UAE project, Casagrand Hermina, at Dubai Islands, making its debuting in the Gulf real estate market, as per a press release. Casagrand plans over 6 mn sq ft of development in the UAE with an AED 420 mn investment in Dubai Islands.

Responding to current market sentiment: The recent US-Iran ceasefire has reinforced investor confidence in Dubai, rather than triggering any recovery-driven sentiment, Luthfullah K, Director-Dubai at Casagrand stated in Khaleej Times.

Surging HNI interest: The project has attracted participation from high-net-worth individuals and international buyers from the US, Europe and Russia, alongside GCC investors. Transaction volumes remain strong and a notable trend is the rise in bulk acquisitions with international investors acquiring multiple units in the Hermina project, he said. “The market continues to be driven by long-term conviction and capital appreciation over short-term gains.”

India puts banks on high alert over Anthropic’s new AI model

India’s finance ministry has asked banks to step up cybersecurity readiness as concerns rise over the risks posed by Anthropic’s Claude Mythos model to the country’s financial infrastructure, according to a post on X.

Banks were advised to reinforce IT infrastructure, secure customer data, and ensure protection of financial resources. They were also asked to escalate any cyber incidents or suspicious activity to authorities such as Indian Computer Emergency Response Team (CERT-In) and maintain coordination across institutions.

High level engagement: The finance and IT ministry alongside senior executives of commercial banks carried out a review to assess how emerging AI models could be misused to exploit software vulnerabilities in the tech stack and financial data security. The Finance Ministry and the central bank are also carrying out an assessment examining potential vulnerabilities in the financial system.

A common response framework: The Indian Banks Association has been tasked with putting in place a common response framework, while authorities are working toward a system for real-time sharing of threat intelligence across banks and regulatory bodies to enable quick detection and response.

Model scrutiny: Anthropic has not made the Mythos system publicly available, citing misuse risks, and is instead allowing limited access under a controlled programme for defensive cybersecurity use.

UAE-based Alpha Nero taps India’s CleanMax

UAE-based manufacturing and design firm Alpha Nero has installed a rooftop solar system of about 450 kWp at its UAE facilities in partnership with India-based Clean Max Enviro Energy Solutions, according to a press release. The project is expected to generate more than 740k kWh of electricity, reducing 320 tonnes of CO2 emissions annually. CleanMax was responsible for system design, installation, operation and maintenance.

Ceasefire prospect weighs on greenback — until it doesn’t

It’s a battle between the greenback and emerging market currencies as the outlook for the war and the blockade in the Strait of Hormuz changes by the hour.

The USD was down by roughly 2.3% against its peers since its late-March peak, losing value against virtually all major currencies bar Japan’s JPY, the Financial Times reports. The EUR has also clawed back nearly all of its losses since the start of the US’s war with Iran, and riskier wagers in emerging markets were also seeing gains at the USD’s expense.

Yesterday, though, the USD seems to have regained some ground, with the USD index, which measures the value of the greenback against a basket of six major currencies, gaining yesterday. EM currencies and equities also saw a dip as tensions in the Strait of Hormuz persisted and prospects of US-Iran negotiations remain unclear. MSCI's gauge for emerging market currencies shed 0.2%.

What’s happening? Since the conflict began, the greenback has been enjoying a rebound in its safe-haven status, clawing its way back into investors’ favor, while other defensive asset classes like bonds and gold took a hit. However, recent ceasefire negotiations and hopes of an end to the war are sending mixed signals, providing a bit of hope for risky assets but keeping volatility high amid ongoing tensions around the Strait of Hormuz.

While “risk sentiment is improving,” as BNY’s Geoffrey Yu noted, the prospect of the Fed cutting interest rates is clouding the USD outlook. A simultaneous likely uptick in European rates on the back of higher energy costs means foreign capital will probably be looking elsewhere to deposit their funds to secure higher yields.

The outlook: The USD is likely to continue to fall until the war ends as increasingly unpredictable US policy pushes investors to roll back their exposure to US assets. Meanwhile, as things stand, Wall Street lenders predict the EUR will rise to EUR 1.2 next year, up from EUR 1.175 now, while the GBP is also set to inch up.

Conflict duration is the key decider: “The conflict will dictate the near-term direction,” Vanguard’s Roger Hallam said, indicating that the wider macro environment is pointing to a weaker USD.

Now analysts see a ceasefire as the likely outcome: “Our base case remains that it is in the interest of both parties to come to a deal [...] despite hiccups,” Jeffries’ chief Europe economist Mohit Kumar said.

MARKETS THIS MORNING-

Asian markets were mostly in the red this morning, with the only outlier being Japan’s Nikkei, which rose 0.7%. Over on Wall Street, futures are trading flat after a day in the red for Wall Street.

Sensex	76,717	-1.2% (YTD: -10%)
NIFTY 50	23,888	-1.1% (YTD: -8.5%)
ADX	9,749	+0.03% (YTD: -2.4%)
DFM	5,833	+0.3% (YTD: -3.5%)
Tadawul	11,109	-1.2% (YTD: +5.9%)
EGX30	52,375	+0.8% (YTD: +25.2%)
Boursa Kuwait	8,387	+0.9% (YTD: +1%)
QSE	10,662	-0.1% (YTD: -0.9%)
S&P 500	7,108	-0.4% (YTD: +3.8%)
FTSE 100	10,383	-0.7% (YTD: +4.2%)
Euro Stoxx 50	5,850	-0.7% (YTD: +1%)
Brent crude	USD 107	+1.9%
Natural gas (Nymex)	USD 2.56	-2%
Gold	USD 4,682	-0.2%
BTC	USD 77,531	-0.1%

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.

CALENDAR

APRIL

22-24 April (Wednesday-Friday): RenewX, Chennai Trade Centre, Chennai.

MAY

1 May (Friday): Buddha Purnima.

4 May (Monday): Counting of election votes for all polling Indian States and Union Territories.

8-9 May (Friday-Saturday): ICC World Technology Convention, Jio World Convention Centre, Mumbai.

26 May (Tuesday): Eid Ul-Adha.

JUNE

15-17 June (Monday-Wednesday): Prime Minister Narendra Modi to attend G7 Summit in Evian, France.

18-21 June (Thursday-Sunday): Bharat Buildcon, Yashobhoomi, Dwarka, Delhi.

24-25 June (Wednesday-Thursday): India Homeland Security Expo, Bharat Mandapam, Pragati Maidan, New Delhi.

26 June (Friday): Muharram.

Signposted to happen sometime in 1H 2026:

Signing of India-Qatar FreeTrade Agreement (Details yet to be announced);
India-EU Trade and Technology Council Ministerial Meeting, Brussels, Belgium;
India to host the Brics Summit.

JULY

1-3 July (Wednesday-Friday): Seafood Expo Bharat, Chennai Trade Centre, Chennai.

3-4 July (Friday-Saturday): Rail & Transit Expo (RailTrans), Bharat Mandapam, New Delhi

3-4 July (Friday-Saturday): SOMS 2026 International Exhibition & Conference, Gandhinagar, Gujarat.

8-10 July (Wednesday-Friday): India Energy Storage Week, New Delhi.

14-17 July (Tuesday-Friday) Bharat Tex, New Delhi.

22-24 July (Wednesday-Friday): Rail & Metro Technology Conclave 2026, Bharat Mandapam, New Delhi.

AUGUST

15 August (Saturday): Independence Day.

26 August (Wednesday): Prophet Mohammad’s Birthday.

SEPTEMBER

1-3 September (Tuesday-Thursday): India Energy Week, Dwarka, New Delhi.

7-9 September (Monday-Wednesday): iPHEX 2026 International Pharmaceutical Exhibition, Bharat Mandapam, New Delhi.

8-11 September (Tuesday-Friday): Global Fintech Fest, Mumbai.

17-19 September (Thursday-Saturday) : Semicon India Conference, Yashobhoomi, Delhi.

OCTOBER

2 October (Friday): Gandhi Jayanti (Mahatma Gandhi’s Birthday).

20 October (Tuesday): Dussehra.

NOVEMBER

24 November (Tuesday): Guru Nanak Jayanti.

DECEMBER

8-11 December (Tuesday-Thursday), Expand North Star, Dubai.

25 December (Friday): Christmas Day.

Signposted to happen sometime in 2H 2026:

Monsoon Session of Parliament is expected to be held in July/August in New Delhi (TBA);
Reserve Bank of India’s Monetary Policy Committee meeting for the September cycle (TBA);
India Mobile Congress will likely be held in October in New Delhi (TBA).

JANUARY 2027

30 January-3 February (Saturday-Wednesday): Printpack India, India Expo Centre, Greater Noida (Delhi NCR).

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