A prolonged conflict will adversely impact India’s economy

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WHAT WE’RE TRACKING TODAY

Cooking gas security takes priority as Iran war hits India’s energy routes

Good afternoon, readers, it has been a hectic and stressful week with the drums of war expanding each day. We hope you are keeping safe during these troubling times.

Our big story today looks at the broader economic impact of the Iran war on the Indian economy. From LNG disruptions to Washington’s brief reprieve allowing Indian refiners to buy Russian crude, the war is dominating decision-making and policy considerations across the corridor.

Where things stand this afternoon

A prolonged conflict will force the Gulf energy exporters to halt energy production, Qatar’s energy minister has warned while speaking to Financial Times. It will take Qatar “weeks to months” to return to normal exports after Qatar Energy halted its LNG exports. You can read the full story here.
Azerbaijan’s Defense Ministry accused Iran of a drone attack that flew across its border and injured four civilians, and vowed to respond to Iran’s act of aggression, Reuters reports;
Iran’s armed forces denied responsibility for the attack and blamed Israel for the action, according to Iranian state media ;
Bahrain’s main oil refinery was targeted yesterday, resulting in a fire that was later contained;
The latest update from the UAE’s Defense Ministry said it intercepted six ballistic missiles yesterday night, with the final one falling into Emirati territory. It also detected 131 drones, six of which weren’t intercepted.

Watch this space

POLICY WATCH — The Indian government today invoked emergency powers to stabilize cooking fuel supply, requiring oil refiners to maximize liquefied petroleum gas (LPG) production amid ongoing disruptions triggered by the Iran war.

The government comments: State refiners such as IOC, HPCL, and BPCL have been directed to increase propane and butane for household LPG to ensure that state distributors have enough supply, Reuters reports. The government has also barred the diversion of propane and butane for petrochemical production.

In our big story today, we cover in detail how the Iran war is disrupting India’s LNG supplies, which could also have a broader economic knock-on impact, particularly on the price-sensitive farming sector.

Meanwhile, Australia and Canada haveoffered to increase the supply of natural gas as New Delhi seeks alternate sources. India is in talks with global oil producers and traders to secure energy supplies, while the country is also engaging the US to secure ins. coverage for disrupted shipping routes.

CURRENCY — The INR briefly crossed the 92 per USD — an all time low — before recovering to around 91.6/USD today which prompted intervention by the Reserve Bank of India (RBI) to help the steady currency, Reuters reports.

Central bank support: The central bank has deployed some USD 12 bn to stem the decline as economic fall out from the Iran war broadens, Reuters reports. The war has triggered USD 2 bn of foreign investor outflow from the Indian stock market amid rising energy prices and disruptions to trade flows.

Why it matters: The aggressive intervention by the RBI highlights the downward on INR as higher crude prices remain key risks for India’s currency outlook. Persistent disruptions to energy flows could widen India’s current account deficit and add further pressure on the INR.

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The big story abroad

US President Donald Trump just fired Homeland Security Secretary Kristi Noem after months of controversy following fatal shootings of US citizens by federal officers and a controversial USD 220 mn advertising contract. Oklahoma Senator Markwayne Mullin is set to replace her by the end of the month. This marks the first cabinet minister under Trump’s second term to be fired.

The US is also reportedly considering implementing requirements to export Nvidia and AMD chips only to countries who have made investment pledges in the US. This would follow a tiered format, the Financial Times reports, depending on the compute power exchanging hands.

Circle your calendar

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

The Gulf conflict hits the Indian economy

A prolonged conflict in the Gulf impacts Indian corporates through higher energy prices, logistics disruptions, and a possible moderation in remittance inflows. Oil and gas, fertilisers, and airlines are the sectors most exposed to the ongoing conflict, according to Jitin Makkar, senior vice president at the India-based credit rating agency ICRA.

India’s exposure stems largely from its dependence on Gulf-linked energy flows. Around 40% of India’s crude imports transit the Strait of Hormuz, while domestic crude inventories cover only about 25 days of demand. The Middle East also supplied roughly USD 70 bn worth of crude and petroleum products to India in 2025, making the region central to the country’s fuel supply chain.

Gas supply chains disrupted

QatarEnergy’s force majeure on gas export contracts is disrupting LNG supplies to India. Qatar’s plants are unlikely to restart for at least two weeks and may need another two to return to full production, according to a statement. The halt followed Iranian drone strikes that targeted the Ras Laffan industrial complex, the country’s main LNG export hub.

Why it matters: The Middle East accounted for around 68.4% of India’s LNG, leaving gas supplies exposed if tensions escalate, ICRA told us. Qatar is India’s largest LNG supplier, delivering about 11.4 mn tonnes annually, or more than 40% of India’s LNG imports.

India’s gas supply chain is entering a period due to the disruptions. India's Petronet LNG stated three tankers were unable to reach Qatar’s Ras Laffan terminal, prompting force majeure notices to suppliers and buyers including Gas Authority of India Ltd (Gail), Indian Oil, and Bharat Petroleum Corporation (BPCL). Refiners are quoting three times the price paid a month earlier, which is forcing buyers to walk away.

Industrial supply cuts have already begun: Gail may curb gas supplies to industrial customers even as supplies from other contracts remain unaffected for now. Gujarat Gas has reduced allocations to the ceramic industry in Gujarat’s Morbi by 50%. Meanwhile, the energy retailers are advising industrial consumers to switch to cheaper alternatives like naphtha or fuel oil.

PLUS: India may be looking at a cooking gas crunch within weeks as escalations in the Gulf disrupt liquefied petroleum gas (LPG) shipments, threatening supplies to mns of households and adding to inflation risks, Hindu Businessline reports.

LNG is also a key feedstock for fertilizer production. Fertilizer producers, responsible for nearly 30% of India’s gas consumption, warn production cuts may follow if LNG supplies do not resume soon.

High input costs for farmers

An increase in global fertilizer prices could lead to higher input costs for Indian farmers ahead of the upcoming sowing season. Diammonium phosphate prices are projected to touch USD 1k per tonne, up from roughly USD 850 per tonne. Already urea prices have increased to around USD 530 per tonne from USD 492, Hindu Businessline reports.

Why it matters: About 30 of India’s 32 urea plants rely on natural gas as feedstock, with roughly 60% of LNG used in fertilizer manufacturing imported from Qatar. As the critical supply link between Qatar and India snaps, fertilizer giants are left with no choice but to pass massive costs to the farmers. A surge in alternative fuel procurement could be next, which could alleviate demands to increase fertilizer subsidies for the government.

MRPL stops oil exports

State-owned Mangalore Refinery and Petrochemicals Ltd. (MRPL) has notified customers that it will suspend exports of refined fuels, as crude shipments through the Strait of Hormuz remain threatened. The refiner has informed buyers it may be unable to honor supply commitments if incoming crude cargoes are disrupted. The company, which operates a 300k bbl / d facility in Karnataka, has not formally declared force majeure. MRPL exports diesel, gasoline, and jet fuel, and currently holds crude stocks sufficient for roughly two weeks of refinery operations.

Aviation disruptions easing?

Indian airlines and Emirati airlines are gradually restoring connectivity to the Middle East and long haul destinations as airspace restrictions ease. Carriers including Air India, Air India Express, IndiGo, SpiceJet and Akasa Air have added capacity and scheduled special services to reconnect routes affected by the disruptions, Business Standard reports.

UAE-based Etihad Airways will also resume a limited commercial flight schedule from 6 March, operating services between Abu Dhabi and Indian cities, the airline said on X. SpiceJet and Akasa Air are running select special flights from Fujairah and Abu Dhabi to bring stranded passengers back to India.

Exporters could face earnings pressure

Export-oriented sectors with exposure to Gulf markets — including gems and jewellery, chemicals, pharmaceuticals and agriculture — could face near-term earnings pressure if disruptions persist, ICRA told us.

Why it matters: The Gulf is a major transit and logistics hub for time-sensitive shipments. GCC is India’s largest trade bloc accounting for 15.4% of India’s global trade.

Credit transmission: ICRA told us that if trade disruption is prolonged, then credit stress would principally transmit to Indian exporters via two channels: (a) Revenue loss upon order cancellations and shipment delays; (b) longer payments cycle for exporters where the contractual terms with buyers are on cost, ins. and freight (CIP) basis.

The exposure is particularly visible in the following sectors:

Gems and jewellery. The Middle East accounts for nearly a quarter of India’s annual gems and jewellery exports of about USD 30 bn, while the UAE supplies more than two-thirds of India’s rough diamond imports, making Dubai a critical trading hub for both exports and raw material sourcing.
Seafood: USD 300 mn worth of seafood shipments are currently stranded at Indian ports as exporters face uncertainty over cargo movement through regional trade corridors.
Pharma: The industry could face losses of up to INR 50 bn (600 mn) this month if export disruptions persist. India exported 1.6 bn worth of pharma products to the GCC in FY 2025 while the region also serves as a key transit hub for shipments to other markets, particularly the US.
Smartphone and electronics: Most high-value smartphone shipments move via Gulf transshipment hubs such as Dubai International Airport and Hamad International Airport in Doha, which connect Indian cargo to Europe, the US and Africa. Large volumes of smartphones are currently stranded at Chennai airport which could prompt exporters to utilize higher cost chartered cargo flights.
Food supplies: Rice exporters have sought government intervention amid shipping disruptions, rising freight and ins. costs. Domestic prices of Basmati rice have dropped by up to 10% over the last few days.

Meanwhile- The government is considering procedural flexibility and facilitation measures to address export disruptions following a review meeting held by the Department of Commerce in New Delhi, Times of India reports. Authorities are coordinating with customs, banks, and ins. agencies to ensure cargo clearance and maintain documentation and payment flows. A 24x7 monitoring mechanism will be set up to streamline inter-agency coordination, with customs authorities, the central bank and the Shipping Ministry involved to sort our trade bottlenecks.

Funding conditions and macro signals

Investors and lenders could become more selective in providing additional funding to companies with significant trade links to Gulf countries. Funding is likely to favor firms with a more diversified geographical footprint, Makkar said.

“However, India's larger economy and enhanced, actively managed macro buffers (including forex reserves, deeper markets, diversified trade, and more evolved risk management practices) allow it to absorb volatility better than in earlier decades when balance-of-payments pressures were a major constraint,” he added.

The US just gave India a 30-day pass on Russian oil

The US has blinked on its campaign to choke off Russian crude, granting Indian refiners a 30-day waiver allowing them to buy Russian oil already stranded at sea, Treasury Secretary Scott Bessent said in a post on X.

Why now? The temporary waiver is intended to stabilize global oil flows amid disruptions from the Middle East conflict, permits transactions involving Russian oil already in transit, to ease immediate supply pressures without delivering significant revenue to Moscow.

Why it matters: India stands exposed with crude reserves covering roughly 25 days of demand. This is a significant retreat from Washington’s stance in January, which forced Indian refiners to cut Russian buys to avoid 25% tariffs. Bessent explicitly stated that he “fully anticipates” New Delhi to now ramp up purchases of US oil. This would inadvertently reduce the share of MENA supplies in India’s crude basket.

India moves quickly to secure supplies: Indian state refiners, including Indian Oil, Bharat Petroleum, Hindustan Petroleum and Mangalore Refinery, are negotiating for prompt Russian cargoes. Around 20 mn barrels are estimated to have already been secured for March and early April deliveries.

Russia open to more sales: Moscow is prepared to supply additional crude if India seeks more volumes, said Deputy Prime Minister Alexander Novak. Around 9.5 mn barrels of Russian crude are currently on vessels near Indian waters and could reach refineries within weeks.

The USD 50 bn reason India won't evacuate its Gulf diaspora (for now)

As tensions escalate in the Middle East, a mass evacuation of the Indian diaspora from the Gulf is unadvisable and practically impossible due to severe logistical, economic, and strategic consequences, several experts told EnterpriseAM. With an estimated 9 mn Indians residing in the Gulf, the sheer scale of a potential rescue operation would dwarf historical precedents.

Gigantic task: “If India evacuates only 25% of them, it would mean almost 2.5 mn people,” Geopolitical expert Dr. Omair Anas told EnterpriseAM, calling it a “gigantic” and an “impossible” task. He noted that the largest successful Indian evacuation in recent memory involved some 50k people from Kuwait. That effort relied heavily on open land borders, “a luxury that does not exist in the ongoing war that has engulfed the entire region,” Anas told us.

“A state-led evacuation of even a fraction of 9 mn Gulf migrants would mean multi-bn-dollar outlays on transport and relief,” Economist Abhijit Mukhopadhyay echoed the views of Anas. He noted such an effort could strain bilateral ties with the GCC nations given these economies' dependence on Indian workers.

Wait and watch: “Many Indians who are residing there and working may not want to come back. They’d rather wait and watch, of course, with a certain amount of risk,” he observed, adding that the government would also “patiently wait and watch” as long as the crises remain in control. The scale of evacuations from the Gulf would include heavy use of “military lift plus private carriers, and close cooperation with host states. It seems feasible, but not without friction and bumps (for India),” Abhijit noted.

Quiet and need-based evacuation

The Indian government has so far organized 58 domestic flights to various Gulf cities to facilitate the movement of stranded passengers. At least 12k Indians in the Gulf, mostly stranded passengers in the UAE, have asked for government help to evacuate amid airspace closures, Indian Express reports. Indian embassies and consulates across the Middle East are working to evacuate mainly stranded passengers, citizens in Iran, and individuals in dire medical or financial need, an Indian diplomat told us on condition of anonymity.

No budgetary pressure as yet: The government is so far using funds of the Indian Committee Welfare Association — which are topped up with 3% of the visa fees collected by each embassy and consulate — for evacuation support.

Only panicked travellers: So far, most Indians residing in GCC countries feel safe because they have not faced any major harm and are not panicking. However, a large number of stranded passengers would like to return home or to their country of residence instead of being stranded at an airport.

Does India want them back?

The Indian diaspora in GCC countries is estimated to send back USD 45 to 50 bn home in remittances every year. A mass exodus would dry up crucial remittance flows and trigger a domestic economic crisis as mns return home unemployed, similar to the hurdles Kerala faced during the 2008 financial crisis, Anas noted. During the 2008 financial crisis, thousands of Indian workers abroad returned home, “at that time the government had to announce a special economic and employment package to rehabilitate them,” he said.

In the scenario of a protracted conflict that adversely affects economic activity in the Gulf region, remittance flows into India could see a moderation with a lagged ripple effect on consumption-linked sectors, ICRA told us. Remittances from these workers fund household spending on housing, education, and consumption. “They have also historically provided a stable source of foreign exchange for the country, partly offsetting its structural trade deficit,” ICRA’s Makkar told us.

Asia loses altitude

The “sell America, buy Asia” trade has hit turbulence. One of 2026’s cleanest positioning calls is suddenly wobbling, as oil, war risk, and a firmer USD force investors to ask whether Asia’s rally was built for geopolitics after all, Bloomberg reports.

The market reaction has been blunt: The MSCI Asia Pacific Index is down about 6% this week, versus a 0.1% drop for the S&P 500, as funds rotate back toward US assets and the USD regains haven status. Taiwan is flashing a similar strain, as foreigners dumped USD 6.3 bn of equities in just the first three days of the week, putting the market on track for one of its largest weekly outflows on record.

The problem for Asia: Asia imports the shock more directly than most, with Japan and South Korea especially exposed to Hormuz-linked shipments. China, Japan, Korea, and Taiwan are all heavily import-dependent, making this oil spike “exponentially more corrosive” for Asia than for the West, Vantage’s Hebe Chen said. Goldman Sachs estimates a 20% jump in Brent would shave as much as 2% off regional earnings.

The AI trade is now part of the unwind. Investors are trimming last year’s hardware winners — especially South Korea and Taiwan — as higher energy costs collide with rich multiples and make capital-heavy tech stories harder to defend.

Credit is flashing the same warning: A Julius Baer note seen by EnterpriseAM says Asian CDS spreads are widening across oil-importing economies, with India up 6.6 bps in a week and higher-risk Southeast Asian names moving 4-6 bps, as markets begin pricing a steeper regional risk premium if the war drags on.

Truth is, some of that fatigue predated the geopolitical jitters: Foreign investors sold Asian equities for a fourth straight month in February, Reuters reports, with South Korea alone posting record outflows of USD 13.7 bn, as AI valuation nerves had already started spilling far beyond Wall Street.

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MARKETS THIS MORNING-

The selloff across Asian equities continued this morning, with South Korea’s Kospi falling 1.9% and Japan’s Nikkei down 0.3%. Hong Kong’s Hang Seng seemed to be the only outlier, gaining 0.7%. Meanwhile, Wall Street futures were edging higher as investors await nonfarm payroll data for February out later today.

Sensex	79,125	-1.2% (YTD: -6.1%)
NIFTY 50	24,561	-0.8% (YTD: -5.2%)
ADX	9,906	-1.3% (YTD: -0.8%)
DFM	5,963	-2.4% (YTD: -1.6%)
Tadawul	10,776	+0.7% (YTD: +2.7%)
EGX30	47,516	+2.2% (YTD: +13.6%)
Boursa Kuwait	7,887	+1.3% (YTD: -5%)
QSE	10,699	+1.04% (YTD: -0.5%)
S&P 500	6,830	-0.5% (YTD: -0.2%)
FTSE 100	10,414	+0.01% (YTD: +4.8%)
Euro Stoxx 50	5,760	-0.3% (YTD: -0.1%)
Brent crude	USD 86	+1.5%
Natural gas (Nymex)	USD 2.98	-0.9%
Gold	USD 5,087	+0.2%
BTC	USD 70,486	-2.8%

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

CALENDAR

MARCH

9-10 March (Monday-Tuesday): Pune International Business Summit, Pune.

12 March (Thursday): ET Entrepreneur Summit & Awards 2026, Bengaluru.

19-22 March (Thursday-Sunday): Bharat Urja Manthan - Global Energy Conclave, New Delhi.

20 March (Friday): Eid Ul-Fitr.

23-25 March (Monday-Wednesday): Indiasoft 2026: International IT Exhibition & Conference, New Delhi

23-25 March (Monday-Wednesday): Smart Cities Expo, Bharat Mandapam, New Delhi.

23-25 March (Monday-Wednesday): PLASTIWORLD India 2026, Jio World Convention Centre, Mumbai.

27-29 March (Friday-Sunday): Vizag International SME Business Expo, Visakhapatnam, Andhra Pradesh.

31 March (Tuesday): Mahavir Jayanti.

Signposted to happen sometime in March 2026

Election Commission of India is expected to announce polling dates for elections in the states of Tamil Nadu, Kerala, West Bengal, Assam, and the union territory, Puducherry.

APRIL

3 April (Friday): Good Friday.

6-8 April (Monday-Wednesday): Reserve Bank of India’s Monetary Policy Committee Meeting

7-10 April (Tuesday-Friday), India Rubber Expo 2026, ITPO, Pragati Maidan, Delhi.

16-17 April (Thursday-Friday): Entrepreneur Tech & Innovation Summit 2026, Bengaluru.

22-24 April (Wednesday-Friday): RenewX 2026, Chennai Trade Centre, Chennai.

23-25 April (Thursday-Saturday): Rail & Metro Technology Conclave 2025, Bharat Mandapam, New Delhi.

29 April-2 May (Wednesday-Saturday): Bharat Buildcon 2026, Yashobhoomi, Dwarka, Delhi.

MAY

29 April-2 May (Wednesday-Saturday): Bharat Buildcon 2026, Yashobhoomi, Dwarka, Delhi.

1 May (Friday): Buddha Purnima.

26 May (Tuesday): Eid Ul-Adha.

JUNE

24-25 June (Wednesday-Thursday): India Homeland Security Expo 2026, Bharat Mandapam, Pragati Maidan, New Delhi.

26 June (Friday): Muharram.

Signposted to happen sometime in 1H 2026:

Signing of India-Qatar Free Trade Agreement (Details yet to be announced).
India-EU Trade and Technology Council Ministerial Meeting 2026, Brussels, Belgium.
India to host the BRICS Summit.

JULY

1-3 July (Wednesday-Friday): Seafood Expo Bharat 2026, Chennai Trade Centre, Chennai.

3-4 July (Friday-Saturday): Rail & Transit Expo (RailTrans) 2026, Bharat Mandapam, New Delhi

8-10 July (Wednesday-Friday): India Energy Storage Week 2026, New Delhi.

14-17 July (Tuesday-Friday) Bharat Tex 2026, 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.

8-11 September (Tuesday-Friday): Global Fintech Fest 2026, Mumbai.

17-19 September (Thursday-Saturday) : Semicon India Conference 2026, 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 2026, Dubai.

25 December (Friday): Christmas Day.

Signposted to happen sometime in 2H 2026:

Monsoon Session of Parliament, New Delhi is expected to be held between July-August. Dates yet to be announced.
Reserve Bank of India’s Monetary Policy Committee meeting for the September cycle. Dates yet to be announced.
India Mobile Congress 2026, New Delhi will likely be held in October. Dates yet to be announced.

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