Good afternoon, everyone. The prolonged conflict in the Middle East and the ensuing energy price shock are beginning to cast a long shadow over the earnings outlook of India Inc. The pain is already acute in the aviation sector, where carriers are pleading for government intervention as ballooning jet fuel costs threaten ground flights.

But it’s not all doom and gloom on the investment front. Reliance Industries is lining up a massive USD 17 bn investment for a giga-scale AI data center cluster in Visakhapatnam, opening a lucrative new window for GCC capital.

Plus: Kuwait Re has officially landed in Gift City, underscoring the sustained appeal of India's newly liberalized financial zones.

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ECONOMY — India’s fertilizer subsidy bill is expected to jump by around 20% in this fiscal year as prices surge due to the war, Fertilizer Ministry official Aparna Sharma said in an interministerial briefing (watch, runtime: 24:55). The government subsidises fertilizers to keep prices affordable for farmers, meaning higher import costs directly raise fiscal outgo.

Record imports at elevated prices: India has placed orders for a record 2.5 mn tons of urea — about a quarter of its annual imports — at nearly double the price two months ago.

Why it matters: India is the world’s largest urea importer, heavily relying on imports for 60% of its phosphate needs and nearly all of its potash, as well as liquefied natural gas used in fertilizer production. The Middle East accounts for roughly half of urea and DAP supplies, with Saudi Arabia and Oman being key suppliers.

Demand will increase: While current stock levels are comfortable, demand is expected to surge during the June-July sowing season. Last year’s subsidy bill stood at around INR 1.8 tn (USD 19.9 bn), showing the scale of potential fiscal strain if elevated prices persist. While India’s high-cost purchases will ensure a sustained supply, it is likely to put upward pressure on prices globally.

IN CONTEXT- The crisis is exposing India’s bundled dependence on Gulf-linked supply chains for agriculture. Disruptions in the Strait of Hormuz have further strained imports, raising freight and ins. costs and amplifying supply risks.

METALS — Aluminium recyclers in India are scaling back operations as disruptions to imported scrap flows tighten raw material availability and push up costs, Reuters reports.

Why it matters: Secondary production accounts for a large share of India’s aluminium output, making the sector dependent on imported scrap sourced from regions like the EU, the US, and the Middle East. With the Middle East contributing about 30% of shipments, disruptions in the region are directly affecting supply.

Production pressure: Lower scrap inflows have forced producers to cut utilisation, with output reductions of up to 40% reported across units. At the same time, scrap prices have risen by about 30% since the Iran war began, decreasing margins for processors.

Cost build-up: The impact is being compounded by a 2.5% import levy on scrap, which industry participants say is adding to input costs. An industry association has approached the Prime Minister’s Office seeking relief, and the government is examining the request.

Downstream impact: The strain is expected to carry through to the automotive sector, where companies such as Maruti Suzuki, Tata Motors, Mahindra & Mahindra, and Hyundai Motor India account for a significant share of demand for secondary aluminium. Higher input costs are expected to be passed on through the supply chain.

IPO WATCH — Airtel Africa, a subsidiary of Indian conglomerate Bharti Airtel, is considering listing its mobile money arm Airtel Money on the London Stock Exchange, Bloomberg reports, citing people it says are familiar with the matter. Airtel Money had previously secured a regulatory waiver from the UAE’s Securities and Commodities Authority to list in the Emirates; however, London is now the preferred venue for listing, according to the business news service.

The IPO could raise between USD 1.5 bn and USD 2 bn, valuing the business at up to USD 10 bn. The firm is backed by global investors, including an affiliate of Qatar’s sovereign wealth fund, TPG, and Mastercard.

What is Airtel Africa? Part of Indian b’naire Sunil Mittal’s Bharti Airtel group, Airtel Africa operates in 14 countries and is among the continent’s leading telecom players. The IPO captures growing investor interest in Africa’s fast-scaling digital payments ecosystem, offering voice, data, and digital financial services through its Airtel Money platform. Airtel Africa is an extension of Bharti Airtel’s telecom network into emerging markets, leveraging India-built capabilities in low-cost network operations and digital payments.

IN CONTEXT- The fintech has limited operational presence in the UAE, which could weigh on domestic investor demand despite Abu Dhabi-linked shareholders. We previously reported that the listing venue, whether on DFM or ADX, would likely depend on securing a major Emirati cornerstone investor.

TRADE — India and New Zealand inked a comprehensive freetrade agreement (FTA) to expand market access and cut tariffs, according to a Commerce Ministry statement.

What we know: New Zealand will eliminate duties on nearly all Indian goods, while India will reduce tariffs on about 95% of imports. Indian exports will expand in textiles, pharma, and engineering goods, while New Zealand will secure entry for agricultural products such as wool, sheep meat, and fruits.

What’s changed? In contrast to many of India’s earlier FTAs, this pact places a stronger emphasis on mobility and people-to-people linkages. New Zealand has committed to an annual quota of 5k work visas for Indian professionals across IT, engineering, and healthcare, as well as post-study work rights of up to four years for Indian students.

Why it matters:The pact, estimated to bring up to USD 20 bn in investment to India, arrives as India steps up trade diversification to reduce reliance on volatile regions, particularly as domestic disruptions in energy and food markets linked to the Middle East mount.

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The big story abroad

The UAE’s decision to leave Opec on 1 May is dominating the news cycle. The move is sure to create more uncertainty in the Gulf energy scene, which is already grappling with the friction of the US-Iran standoff and the blockaded Strait of Hormuz. Want to go deeper? We have extensive coverage in this morning’s EnterpriseAM UAE edition.

MEANWHILE- The US Federal Reserve will announce its decision on interest rates this evening (Cairo time). Pundits widely expect it to leave rates unchanged.

AND- Transatlantic unity was the main takeaway from King Charles’ address to the USCongress. The UK monarch urged the US to move away from isolation and highlighted the importance of Washington’s participation with Europe, Nato allies, and Ukraine, calling on the countries to “ignore the clarion calls to become ever more inward-looking.”

Drama in the tech world: Elon Musk’s feud with OpenAI founders is heating up after they faced off in court — the Tesla founder is claiming that the founders behind the ChatGPT maker broke pledges to remain a nonprofit AI research lab.

And speaking of OpenAI: Investor confidence in the AI boom wavered yesterday following OpenAI’s failure to meet its targets for users and revenues. OpenAI-linked firms, including Oracle and SoftBank, faced a market sell-off soon after, with some shares sliding over 4%.

Market watch

The INR hovered near its weakest level today as rising crude prices pose downward pressure on the currency. The INR slipped to 94.80/USD before recovering to around 94.73/USD, down about 0.2% on the day and close to its record low of 95.21/USD in March, Reuters reports.

Intervention support: State-run banks, likely on behalf of the RBI, helped contain the decline. Traders opine that the central bank is acting to curb volatility rather than defend a specific level, as per the newswire.

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