Good afternoon, ladies and gents. It’s our final issue of 2025 as we gear up for a long weekend of R&R. Everyone may be packing up and shutting down, but the news cycle showed no signs of respite this week.

Our top story this afternoon tells the story behind India’s real GDP growth hitting a six-quarter high in 2Q 2025-26, and how it paves the way for MENA to find a safe haven as EMs grapple with currency volatility and high interest rates.

ALSO- We look at how India’s rice exports face real trouble due to increasing groundwater stress in key producing states, and what that means for key Gulf markets.

** A QUICK PROGRAMMING NOTE – EnterpriseAM MENA<>India will be off on Friday, 2 January for the long weekend. We’ll be back in your inboxes at the usual time on Monday, 5 January 2026.

Watch this space

ENERGY — India is quietly casting a wider net to shore up oil supplies as Russian sanctions threaten security. India’s key state-run refiner Indian Oil Corporation (IOC) has reportedly bought its first cargo of Colombian Castilla crude from Ecopetrol, Reuters reports, citing sources with knowledge of the matter. The shipment is said to be 2 mn barrels for late-February delivery and is part of a contract structure that allows IOC to lift about 12 mn barrels — roughly six VLCC cargoes — if it chooses to exercise the option. Neither IOC nor Ecopetrol confirmed the report.

Widening scope: IOC rarely books South American grades due to freight and landed-cost disadvantages, despite having optional purchase arrangements with Mexico, Brazil, and Colombia. India’s imports of Russian crude are expected to fall to about 1.2 mn bbl / d in December — a three-year low, down from 1.84 mn bbl / d in November — as tighter US and EU sanctions on Moscow’s producers and vessels disrupt flows, the newswire added, citing Kpler data.

India’s diversification toward non-Gulf grades does not remove its dependence on Middle Eastern supply. Saudi Arabia, Iraq, Kuwait, and the UAE form the core of India’s term-contract volumes of crude. As Russian flows tighten under sanctions, the region’s share has risen to multi-month highs — OPEC and Middle Eastern suppliers accounted for roughly 51-52% of India’s imports in 2024. Pricing, delivery terms, and contract renewals with Aramco, Adnoc, and other Gulf producers therefore remain strategically significant for Indian refiners.

ALSO — India is challenging Saudi Arabia’s long-standing Contract Price (CP) dominance in the domestic energy market by considering a new LPG subsidy formula. State-run oil giants Indian Oil Corp, Bharat Petroleum, and Hindustan Petroleum signed their first-ever one-year supply contract with US exporters for 2.2 mn metric tonnes per annum of LPG in 2026, Economic Times reports.

For years, India has pegged LPG subsidies to the CP benchmark. However, with US imports now covering approximately 10% of India’s annual needs, the country is weighing the introduction of a pricing formula that incorporates US benchmarks.

The rationale: US-sourced LPG is economically viable for India only when the price discount against the Saudi CP is deep enough to offset freight costs — which are nearly 4x higher than for Saudi shipments. Integrating US pricing into the official formula lends state-run companies a permanent incentive to play Gulf and US suppliers against each other to secure the lowest cost.

And there’s more incentive: The government compensates state-run companies when they sell LPG for households below market rates. A more diversified pricing could reduce India’s subsidy burden if US import prices remain lower than the Saudi CP.

The look ahead: We’ll be watching how Saudi Aramco and other regional exporters adjust prices to protect their market share. Whether this formula revamp succeeds will likely determine if India doubles down on US imports in the long haul.

DEFENSE — Is India’s recent INR 790 bn (USD 8.7 bn) home defense order a potential sales pitch to MENA? India’s approved defense procurement proposals to shore up its domestic defense forces bolster domestic manufacturing giants like Hindustan Aeronautics, Bharat Electronics, and Zen Technologies — and are throwing a strategic focus on modern battlefield tech such as loiter munitions and drone detection.

Why is this significant? India is in advanced talks to firm up export agreements for the BrahMos supersonic missile systems to the UAE, Saudi Arabia, Egypt, Qatar, and Oman. GCC countries, specifically Saudi Arabia, are also looking for “transfer of technology” partners, and India’s new hardware could potentially fill their requirement for cost-effective, high-accuracy weaponry.

In numbers: India’s defense exports hit a record USD 2.8 bn in FY 2024-25, a 34x increase over a decade. The target is now USD 5.56 bn by 2029, with the GCC as a prime target market.

TRADE & TARIFFS — India has imposed a three-year import tariff of 11-12% on some steel products to curb cheap inflows, Reuters reports, citing a Finance Ministry order. The decision replaces a 200-day provisional 12% levy introduced in April following a sharp rise in imports causing, or threatening to cause, serious injury to the domestic industry. The fees apply to shipments from China, Vietnam, and Nepal, among others, while imports from certain developing countries and specialty steel products such as stainless steel are exempt.

What this means for the GCC trade corridor: The tariffs mean price floors in India are firming up against Turkish, Korean, and Chinese cargoes. This will have an impact on the UAE, Saudi Arabia, and Oman, where steel consumption is tied to industrial buildouts and construction pipelines. India is the world’s second-largest crude steel producer and a significant exporter: iron and steel shipments were worth just over USD 13 bn in FY 2023, and finished steel exports came in around INR 590 bn (USD 7 bn) in FY 2023-24, according to trade and government data.

Market reaction: Shares of major producers including Tata Steel, JSW Steel, Jindal Steel, and state-run Steel Authority of India rose on the news as investors expect the longer-term duty will support domestic prices.

Market watch

Foreign portfolio investors triggered the largest monthly outflow in five years this month, selling a record INR 143 bn (USD 1.6 bn) in index-eligible Indian bonds in response to a weakened INR and fading expectations of further rate cuts, Bloomberg reports.

Good news for Gulf investors? While Western funds dump Indian bonds because they can’t hedge the currency risk, Gulf-based sovereign funds with long-term vision may see this as an entry point. Speculative hot money from New York and London may be exiting, but corridor investments could replace it if a US-India trade agreement finally stabilizes the INR in 2026.

Happening this week

#1- India will formally assume the Brics presidency on 1 January 2026, taking charge of an expanded grouping that now includes new members such as Egypt, Ethiopia, Iran, Indonesia, and the UAE, with Saudi Arabia invited to join. Under its term, India will chair ministerial meetings and the leaders’ summit, working within a 2026 agenda framed around resilience, innovation, cooperation, and sustainability.

New Delhi is expected to focus on workstreams covering trade settlement, financial cooperation, infrastructure, and energy security — areas that intersect with Gulf priorities including local-currency mechanisms, sovereign wealth fund participation, and supply-chain links with the wider Middle East. This places India’s presidency at the intersection of Brics’ institutional priorities and the strategic interests of its newer Gulf members.

#2- The India-Australia Economic Cooperation and Trade Agreement (ECTA) will go into effect tomorrow, 1 January 2026, and is poised to create a trilateral trade bloc for India, with the infrastructure carrying that growth increasingly being MENA-owned. The ECTA will eliminate remaining tariffs on Indian goods entering Australia, granting zero-duty access for all Indian goods, including pharma, textiles, and gems. The next leg of growth for Indian trade will flow through ports, logistics, and upstream supply chains anchored in the MENA region.

How it works: India’s 2022 CEPA with the UAE creates a low-friction Gulf gateway, with DP World operating key terminals across the route, from India’s west coast to Australia. In late 2025, DP World pledged an additional USD 5 bn to integrate India’s domestic supply chain — covering rail, cold chain logistics handling, and warehousing — with its global port network.

Why it matters: A trilateral trade bloc is emerging where MENA serves as the “back office” and logistics manager for the Indo-Pacific — monetizing trade volumes it doesn’t technically supply or produce. The final 100% tariff removal creates a trade pipe whereby MENA-owned entities own several lucrative sections.

The big story abroad

A couple of stories are making headlines on the last morning of 2025:

#1- Warner Bros Discovery is reportedly leaning toward rejecting Paramount Skydance’s amended USD 108.4 bn hostile takeover bid, despite a personal financing guarantee from Oracle founder Larry Ellison, Reuters reports, citing a person familiar with the matter. The board still favors a lower-value USD 82.7 bn merger with Netflix, viewing it as the path of least resistance with fewer regulatory hurdles.

#2- Fed minutes reveal a central bank at a crossroads: Minutes (pdf) from the Fed’s December meeting showed a committee deeply fractured over the path for 2026, especially when it comes to the timing and size of the cuts to come. While officials voted 9-3 to lower rates to 3.5%-3.75%, the record shows some members only supported the cut by a “fine balance,” while others argued for a hold.