Indian government cuts taxes on retail fuel to control prices

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WHAT WE’RE TRACKING TODAY

Tehran allows India and “friendly” nations limited Hormuz passage

Good afternoon, readers and a happy Friday. We are closing out a turbulent week with a sliver of good news as Tehran has agreed to keep the Strait of Hormuz open for Indian vessels.

But the macroeconomic reality of high crude will still bite hard. India is taking a massive fiscal hit, aggressively slashing excise duties to shield domestic consumers from the global surge in oil prices, even as private refiners like Nayara break the freeze and hike pump rates.

Unsurprisingly, the uncertainty continues to weigh heavily on the capital markets. Indian equities are deep in the red this afternoon, the INR has plunged to yet another record low against the greenback, and the fallout is spilling over into everything from fertilizer subsidies to the manufacturing sector.

Let’s dive in.

From the Dept. of Diplomacy

Iran has selectively reopened the Strait of Hormuz to “friendly” nations including India, Russia and China, according to Iran’s Embassy in India. This move follows sustained diplomacy by New Delhi’s with Iranian leaders over the last few days, including direct phone calls between Prime Minister Narendra Modi and Iran’s President Masoud Pezeshkian.

Leverage over energy flows: The strait, which carries roughly 20% of global oil and liquefied natural gas (LNG) flows, has become an epicentre of the war. Iran has framed its restrictions as a wartime measure, adding that ships tied to its “enemy countries” such as the US and Israel will not be allowed passage. Last week, US President Donald Trump intensified pressure, threatening to bomb Iran’s power plants if the Strait was not opened in 48 hours. Iran did not seem to buckle. Trump backed down from his threat claiming a diplomatic breakthrough had been made with Iran and extended the deadline by 10 more days.

Why it matters: With India’s energy security directly contingent on energy flows through the Hormuz, India has secured a significant win. However, the durability of this arrangement remains in question as war-related instability persists.

Watch this space

AGRICULTURE— India’s fertilizer subsidy bill could increase by INR up to INR 250 bn (USD 2.7 bn) as higher input costs of raw materials and imports ripple through the sector, as per a report by Crisil Ratings. A sustained three-month disruption in LNG and ammonia supplies is projected to slash domestic fertilizer production by up to 15%.

India relies on the Middle East for 65% of its LNG and 80% of its ammonia — two critical inputs for urea production. Rising costs and supply disarray will push the total subsidy expenditure by 12-15% — above the INR 1.7 tn (USD 18 bn) allocated by the government for FY 2027.

Limited buffer: Government measures, including prioritizing gas supply to urea plants and maintaining buffer stocks, may cushion near-term impact, says Crisil. If the disruption continues ahead of the summer sowing season, it may necessitate additional fiscal support from the state.

OIL — Are Indian refiners using AED to skirt USD? Indian refiners are reportedly using the AED, among other alternative currencies to the USD, to buy Russian oil, Bloomberg reports, citing people it says are familiar with the matter. The move aims to hedge against shifts in US policy amid persistent regional turmoil and disruptions at the Strait of Hormuz chokepoint. The US gave India a temporary 30-day waiver earlier this month to purchase Russian oil, but Russia is reportedly pushing India to find a longer-term solution via alternative currencies.

How are the wheels turning? India’s INR is being deposited into overseas bank accounts managed by Russian sellers before being converted into AED or China’s CNY. Singapore’s SGD and Hong Kong’s HKD are also reportedly under consideration, contingent on each bank’s risk appetite, sources told the business news service.

Is a shift to the CNY happening at a wider level? The war is casting doubt on the USD’s position as the de facto currency for trade, with Deutsche Bank flagging China’s CNY as a possible alternative.

FROM THE RUMOR MILL — Reliance Industries has denied purchasing Iranian crude under the US sanctions waiver, refuting the reports as “baseless and incorrect,” according to an exchange filing. The clarification follows reports that the company had bought around 5 mn barrels from the National Iranian Oil Company — in what would have been India’s first Iranian crude import since 2019, when sanctions halted flows.

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Data point

USD 92 bn — That is the projected size of India’s packaging industry by FY 2030, growing at a 9% compound annual growth rate over the next five years, according to an Avendus Capital report.

Context: India remains the world’s fastest-growing packaging market, with rigid plastics contributing a significant share of this growth. The sector is expected to outpace GDP growth by 1.3x, with demand surging across food and beverages, pharmaceuticals, personal care and e-commerce. Flexible packaging remains dominant, as low per-capita consumption signals significant headroom for long-term growth.

The big story abroad

US President Donald Trump has once again extended his deadline for Iran to lock in an agreement with the US before its energy facilities are targeted, this time for a 10-day period. He also doubled down on his claims that talks are ongoing and are going “very well,” saying that any claims to the contrary are being propagated by “Fake News Media.” Iranian media has repeatedly claimed that Iranian officials are denying that negotiations are taking place, and the US’ 15-point peace plan was rejected by Iran initially, which demanded undisputed control over the Strait of Hormuz, war reparations, and other conditions.

He also claimed Iran had allowed 10 oil tankers to pass through the Strait this week as a “present” to the US, helping oil prices fall slightly, with Brent Crude dipping to USD 105.94 per barrel.

At the same time… the US is reportedly considering sending over 10k troops to the Middle East in another sign that Trump is preparing for an extended war, the Wall Street Journal reports. That’s up from around 2-3k troops it said it plans to deploy earlier this week.

Markets aren’t very optimistic: The Nasdaq entered correction territory yesterday, falling 2.4%, and more than 10% from recent highs. The S&P 500 also closed down 1.7%.

Speaking of Trump, expect to see his signature on USD 100 bills as of this June, marking the first time a sitting US president signs paper currency in 165 years and dropping the US treasurer’s signature.

ALSO- Elon Musk could be putting 30% of SpaceX up for retail investors as part of its highly anticipated IPO, 3x more than the usual amid what is said to be strong demand among Musk’s large follower base.

Market watch

CAPITAL MARKETS — Indian equities fell sharply today, with the BSE Sensex trading (as of 3:30pm IST) 2.1% lower while the Nifty 50 dropped 2% amid souring investor sentiment following Goldman Sachs’ bleak outlook for Indian stocks.

Downgrade: Goldman Sachs has downgraded Indian equities to “marketweight” from “overweight,” slashing its 12-month Nifty 50 target by 14% due to surging oil prices and an earnings downgrade cycle. The bank also trimmed its India GDP growth forecast to 5.9% and raised its inflation estimate by 70 bps, forecasting a decline in earnings over the next two to three quarters.

Context: The sell-off follows a brief rally earlier this week on hopes of a potential US-Iran de-escalation, which saw the Nifty 50 gain 2.2% and the BSE Sensex rise 2.1%. The indices have declined around 9% since the war started.

Meanwhile- The INR plunges to another record low trading 94.6 to the USD as Brent Crude surged again and uncertainty over Iran war looms.

Circle your calendar

Prime Minister Narendra Modi will attend the G7 Summit in Evian, France kicking off on Monday, 15 June and will run through Wednesday, 17 June, as per a press release from France’s Foreign Ministry. India’s participation was confirmed during talks between External Affairs Minister S. Jaishankar and his French counterpart Jean-Noel Barrot.

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

Crude oil hike will hit Indian government revenues first

Rosneft-backed Nayara Energy has raised petrol and diesel prices in the retail market as refiners come under pressure from rising crude prices and a weaker INR, Reuters reports, citing dealers. Nayara increased petrol prices by INR 5 / liter to INR 100.71 and diesel prices by INR 3 / liter to INR 91.31 across its some 7k retail pumps.

Market imbalance: The revision comes as state-run refiners continue to hold pump prices steady despite crude trading above USD 100 / barrel, creating uneven pricing dynamics across the fuel market.

Government slashes taxes to prevent retail fuel hike

Fearing a steep hike in retail fuel prices, the Indian government has sharply cut excise duties to cushion oil marketing companies (OMCs) from soaring crude prices, as per a notification from the Finance Ministry. The cuts are effective immediately in an attempt to stabilize margins for state-run retailers.

New duty rates: Duty on petrol has been cut by about 77% to INR 3 per litre from INR 13, while diesel duty has been slashed by 100% from INR 10 earlier.

Government rationale: With crude prices surpassing USD 100 per barrel, the Indian government is absorbing a significant fiscal impact to protect consumers and OMCs. This comes as retail prices have surged by up to 50% in Southeast Asia and 20% in European markets, Minister of Petroleum and Natural Gas Hardeep Singh Puri noted in a post on X. Fuel retailers are currently facing revenue losses of approximately INR 24 per liter on petrol and INR 30 on diesel, which the government is partially mitigating through these tax cuts.

Plus: India has reimposed windfall taxes on fuel exports, setting levies at INR 21.5 per litre on diesel and INR 29.5 per litre on aviation fuel, as per government orders. Such windfall taxes, last imposed during the Russia-Ukraine War, have returned to stabilize retail supplies and prices. This targets export-oriented refiners as domestic supply is prioritized amid surging global rates.

For context: India exported 14 mn tonnes of gasoline and 23.6 mn tonnes of gasoil between April 2025 and January 2026, though most state-run refiners have since curtailed exports. Reliance Industries remains the country’s largest fuel exporter, making it the most exposed to the new levies.

India’s crude benchmark is different

Remember, India’s crude benchmarks are tied to the Gulf. With the war intensifying, the Indian Crude Basket has surged to around USD 150 per barrel due to its heavy exposure to Gulf-linked supplies. The Indian Crude Basket is a weighted average cost of 78.8% of the Oman-Dubai sour grades and 21.2% of the Dated Brent, which the government uses to determine the retail price of petrol and diesel.

Watch for the macro fallout: While the tax cuts ease pressure on retailers and consumers, they will reduce government revenues and expand the fiscal deficit amid a depreciating INR. By slashing taxes instead of raising pump prices, the government is protecting OMCs from an estimated INR 3 tn (USD 31.7 bn) annual revenue loss while also keeping inflation in check, as per a report by financial services firm Emkay Research. A sustained uptick in crude prices will eventually trigger a major hike in retail prices and fuel inflation down the line.

India turns to Iranian LPG as sanctions window opens

India has reportedly purchased its first cargo of Iranian liquefied petroleum gas in years, in a tactical shift after the US temporarily eased sanctions, Reuters reports, citing unnamed sources. The tanker Aurora, originally bound for China, was diverted and is expected to arrive at Mangalore along India’s west coast.

Crisis response: The cargo will be split between Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation. With LPG imports heavily reliant on the Gulf region, India is also working to move stranded cargoes and explore alternate supplies.

Why it matters: Notably, the cargo payments were settled in INR, bypassing the SWIFT-linked USD system. By securing Iranian supply, India is creating a relief valve for industrial and household users as traditional transit through Hormuz becomes increasingly volatile. This comes after the government refuted reports that India-bound vessels transiting the Strait will be subjected to a transit levy.

Limited barrels, logistics blunt India’s Iran oil plans

On the other hand: India’s attempt to tap Iranian crude under the sanctions waiver is faltering due to tight supply and execution roadblocks, with most available barrels now being redirected to China, Business Standard reports.

Overstated volumes: The scale of Iranian crude available under the US sanctions waiver is far smaller than headline estimates. While Washington suggested up to 140 mn barrels could be unlocked, estimates point to roughly 55 mn barrels in transit and about 15 mn barrels in floating storage — making the actual accessible supply significantly lower. Only 10 mn of these barrels are available for Indian refiners as 40 mn barrels of Iranian crude are stored on shore and 10 mn floating off shore in China.

India’s limited window: Even within the waiver period, India’s access remains constrained by logistics and payment complexity. Much of the trade is handled by entities linked to the Islamic Revolutionary Guard Corps (IRGC), complicating sanctions compliance for Indian buyers.

Our take: China remains the dominant buyer of sanctioned Iranian oil, with established trading networks and onshore storage. For India, Iranian crude remains a tactical option rather than a scalable supply solution. With the IRGC involved, USD payments remain a sanctions minefield. Traders are reportedly demanding CNY — a currency Indian state refiners are structurally averse to using for large-scale energy imports.

In other energy news

SaudiAramco is set to supply lower crude volumes to Asia’s two largest buyers — China and India — for April deliveries due to disruptions in the export routes, Bloomberg reports. Shipments to China are expected at about 40 mn barrels, down from 48 mn barrels earlier, while volumes to India are seen at roughly 23 mn barrels versus 25 mn-28 mn barrels in recent months.

Shielding steel and auto industry amid fuel shortages

India’s steel ministry has sought assistance from the Ministry of Petroleum and Natural Gas to ensure steel plants are not affected by liquefied petroleum gas (LPG) shortages, Reuters reports, citing a source. The move comes as gas shortages could shutter down some of the steel plants.

Crisis at mills: Supply constraints are beginning to affect smaller steel producers, who rely on LPG for operations. Industry executives have production disruptions, with potential knock-on effects on costs, employment and planned investments, if the situation persists. The current disruption marks the most severe LPG supply crunch faced by the sector in decades, the newswire added.

Remember- India has invoked emergency steps to prioritize natural gas for essential sectors after LNG shipments through the Strait of Hormuz were disrupted, tightening fuel availability for industries.

India pushes auto manufacturers to cut oil dependence

The government of India is advising automakers to cut dependence on oil-based fuels in manufacturing and shift toward electricity in manufacturing operations as part of efforts to limit exposure to fuel disruptions, Fortune India reports, citing a government advisory.

Policy signal: The Ministry of Heavy Industries has issued a formal communication to industry bodies, including the Automotive Component Manufacturers Association of India and the Society of Indian Automobile Manufacturers, outlining measures to reduce fuel consumption and improve energy efficiency across automotive manufacturing. Companies have been asked to optimize production cycles, reduce fuel use during idle and standby periods.

The advisory also points to changes in material usage, including greater reliance on recycled aluminium and the use of alternative materials such as polymers and high-strength steel in select applications, without affecting product quality.

Gulf SWFs asked to partially trim stakes in Jio Platforms’ blockbuster IPO

Reliance in talks with Gulf investors to trim stake in the IPO: Indian giant Reliance’s digital arm Jio Platforms — which counts the Abu Dhabi Investment Authority (Adia), Mubadala Investment and Saudi Arabia PIF as shareholders — has been in discussions with 13 foreign investors to sell down small fractions of existing equity ahead during the upcoming IPO, Reuters reports, citing sources it says are familiar with the matter.

Each investor could divest roughly 8% of their holdings, which collectively would represent about 2.5% of Jio Platforms’ total shares in the offering, based on the newswire’s calculations. However, final sale percentages remain subject to change.

Currently, Mubadala holds 1.85% of the company, while Adia owns 1.16%. If Adia were to sell 8% of its 1.16% stake, it would still be left with a c.1.1% stake in the company, while an 8% sale of Mubadala’s 1.85% stake would leave it with about 1.7% of the company, according to our calculations.

The IPO is expected to follow an offer-for-sale structure, a common approach in India where existing shareholders sell their shares to the public without the company raising fresh capital. None of the existing investors want to fully exit the company. While final details on the numbers and valuations are yet to be determined, previous estimates valued Jio Platforms at around USD 180 bn, with the IPO potentially raising up to USD 4 bn.

India reroutes evacuations from the Gulf

India expands alternate evacuation routes

India is expanding alternate evacuation routes for its stranded nationals as airspace restrictions across parts of the Gulf continue to disrupt direct connectivity, ANI reports, citing the Ministry of External Affairs.

Managing the evacuations: Over 1.4k Indian nationals, including students, have been moved out of Iran through land routes connecting to Armenia and Azerbaijan with government assistance. Similarly, 326 Indians have been evacuated from Israel via Jordan. The government has also set up a dedicated control room and 24x7 helplines, coordinating with embassies and state authorities to provide visa and logistical support.

Why it matters: Airspace restrictions across parts of the Middle East have sharply reduced India-Gulf aviation connectivity, with around 75% of the 3.3k scheduled flights cancelled since the war started. The scale of cancellations is constraining connectivity on a key corridor for passenger movement and evacuations, while forcing airlines to operate limited and rerouted services.

Air connectivity with UAE, Oman and Saudi Arabia is partially operational with hundreds of flights operating daily. However, the flights to Kuwait and Bahrain are still facing disruptions, prompting the government to reroute evacuations from these countries through Saudi Arabia. Over 426k passengers have traveled on more than 2.1k flights between India and the UAE, even as restrictions over some airspaces continue to affect direct routes.

Transworld deploys cargo airlift

UAE-based Transworld Group chartered a cargo flight between Sharjah and Mumbai on 24 March to transport food and essential supplies as Gulf disruptions impact regular freight movement, according to a company statement. The move highlights an increasing reliance on ad hoc air capacity to maintain high-priority cargo flows on the India-UAE corridor. The logistics firm also deployed its SSL Godavari vessel, using sea capacity to further support trade during the disruption.

Lulu ramps India-GCC food shipments

UAE’s Lulu Group is increasing food shipments from India to GCC markets. The company has transported approximately 15k tonnes of food from India using 34 chartered flights, cargo vessels, and regular shipping services. Chairman Yusuffali M.A. met Prime Minister Narendra Modi, to ensure continued supply of essential food items during the war, according to PTI.

A wider wealth gap?

The ongoing war didn’t feature much in Larry Fink’s latest annual letter, but what did is AI — unsurprising given the amount of developments in that space since he wrote his last letter, when energy infrastructure and pragmatism took precedence.

Another topic that’s once again absent? ESG and climate — topics that featured prominently in his older letters but not since last year, as the AI infrastructure narrative begins to push them further into the margins and bring the more balanced concept of “energy pragmatism” into focus.

Why Fink’s letter matters: He’s the co-founder of the world’s largest asset manager, with some USD 14 tn. His annual letter to shareholders is now regularly read and scrutinized by the world’s top investors and traders.

So, what about AI? Fink mentions its potential, yes, but also its potential downside. He argues that asset ownership remains the driving line in wealth creation, and that AI risks amplifying that gap unless more people gain access to markets. “Companies with the data, infrastructure, and capital to deploy AI at scale are positioned to benefit disproportionately” from the AI boom, Fink cautions.

And the solution? More investing, Fink says. “When market capitalization rises but ownership remains narrow, prosperity can feel increasingly distant to those on the outside,” he explains.

Financial education is part of it, but so is widening the avenues for participation. Early-stage investing accounts for children is an option and can often lead to wider economic growth further down the line. Better social security systems, tweaked for longer-term investments and wider access to tokenization, are others. His argument? The growth of the individual should come with the growth of a country. “[Y]our future and your nation’s future become linked. You help finance its growth. It helps finance yours,” he writes.

Yes, but: The letter fails to acknowledge that it’s not just the lack of access to capital markets that’s stopping people from investing, but also the lack of access to capital itself, as the Financial Times ’ Simon Mundy writes.

You can read the full letter here, and read what others are saying here: Bloomberg | Reuters | The Wall Street Journal | CNBC.

MARKETS THIS MORNING-

Asian markets were mostly in the red amid a global sell-off as the outlook on the war remains uncertain. South Korea’s Kospi was leading the declines, falling 2.6%, while Japan’s Nikkei was close behind, down 0.9%. Over on Wall Street, indices are set to open in the green after Trump extended his deadline for Iran to secure an agreement overnight.

Sensex	73,690	-2.1% (YTD: -13.1%)
NIFTY 50	22,885	-2% (YTD: -12.09%)
ADX	9,595	-0.06% (YTD: -4.07%)
DFM	5,519	+0.02% (YTD: -8.7%)
Tadawul	11,090	+0.09% (YTD: +5.7%)
EGX30	47,002	-1.0% (YTD: +12.3%)
Boursa Kuwait	7,716	-0.6% (YTD: -7.06%)
QSE	10,160	-1.2% (YTD: -5.6%)
S&P 500	6,477	-1.7% (YTD: -5.3%)
FTSE 100	9,925	-0.4% (YTD: +0.4%)
Euro Stoxx 50	5,519	-0.8% (YTD: -3.8%)
Brent crude	USD 109	+1.7%
Natural gas (Nymex)	USD 2.97	-1.1%
Gold	USD 4,406	-0.1%
BTC	USD 67,737	-2.6%

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

CALENDAR

MARCH

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

15-17 June (Monday-Wednesday): Prime Minister Narendra Modi to attend G7 Summit 2026 in Evian, France.

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 FreeTrade 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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