Fragile Peace, Rising Prices

An ‘Ending’ in Iran That Lifts Oil Prices And Exposes India’s Gas Illusions

US President Donald Trump announced that the war on Iran is nearly over, the US having achieved its goals. But if Iran did not reach a deal with the US, the US would bomb it back into the Stone Age, he threatened. In this, Trump displayed rare historical perspicacity. 

Iran is one of those few places on earth to have hosted continuous hominin and human activity from the time of the Homo erectus to the present.

Whether American bombs would drive Iranian civilisation back in time to the Stone Age or to the Bronze or the Iron Age remains to be seen. The US used up more bombs over its 17-year campaign against Vietnam than it had during World War II, but Vietnam survived, and thrived, to become a major supplier of manufactured goods to the US. 

Bombs might pulverise Iran’s physical infrastructure, but it is unlikely to cripple its civilisational integrity — Iran is one of the few parts of the developing world to not have been formally colonised — or force it to revise its narrative that survival is victory enough.

Alice had the sense, in Wonderland, to understand the distinction between meaning what one says and saying what one means, at least after the March Hare pointed out the difference. Trump has no dearth of people around him who are as mad as the Tea-Party hosting bunny. What he lacks is the sense to either mean what he says or to say what he means.

He said it was never his goal to effect regime change in Iran, although he had called upon the people of Iran to take over after he bombed the regime to obliteration. Now, he says that he has both effected regime change and that he does not care about regime change. The net effect of Trump’s latest announcement of the war’s proximate conclusion is that oil prices shot up, stocks fell, and US treasuries came tumbling after, pushing up yields.

Perhaps the markets paid more attention to what Trump’s statement meant, rather than what he said, especially with the Houthis having joined battle, threatening not only to bomb Israel but also to close Saudi oil’s exit from its Red Sea port by attacking ships passing through Bab-al-Mandab: the war is not ending anytime soon.

India’s Timid Attempt

As things stand, with Europe’s diesel futures touching $200 a barrel, India’s attempt to prevent Reliance from exporting petrofuels by levying additional duties on exported fuels seems timid. It would make sense for a refinery to pay the extra duty and still make a killing in the export market.

The government continues to put off oil companies having to raise retail prices, on account of the elections to state legislatures in Kerala, Tamil Nadu, Puducherry, West Bengal and Assam now underway. 

The government continues to maintain that there is no cooking gas shortage, but The Indian Express reports that trains to Bihar leaving Mumbai are packed with people fleeing a city where they get no fuel with which to cook. Clearly, of some type of gas, there is no shortage.

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$4.1 billion

That’s the worth of defence equipment in FY26, a 62% jump from the previous year, according to a government statement. 

In rupee terms, exports rose to Rs 38,424 crore, up from Rs 23,622 crore in FY25, adding roughly Rs 14,800 crore in a single year.

The Turning Point: India expanded both scale and reach. It now exports defence equipment to over 80 countries, signalling growing global acceptance of its systems, including in regions like Southeast Asia, the Middle East and parts of Africa. The export basket has also become more sophisticated, moving beyond spare parts and components to include ammunition, artillery systems, radars and complete platforms.

The number of authorised exporters rose to 145 firms, up from 128 a year earlier, as more private companies entered the space. The government also streamlined export clearances and eased licensing norms, allowing firms to secure approvals faster and fulfil international orders at scale.

How We Got Here: Still, public sector units drove a large share of the surge. Defence PSUs contributed about Rs 21,071 crore, while private firms added Rs 17,353 crore. PSU exports alone jumped over 150% year-on-year, showing how aggressively state-run firms scaled shipments.

Defence Minister Rajnath Singh said on X that India, once import-dependent, is now “moving fast in exports as well.”

Gas Supplies Trigger Job Losses

The West Asia conflict is crippling India’s manufacturing heartland, as Firozabad’s historic glass industry forces thousands out of work amid dwindling gas supplies, Reuters reported.

With the Strait of Hormuz effectively closed, Asian LNG spot prices have surged to $20–25/MMBtu, according to Crisil Intelligence. The disruption pushed HSBC’s India manufacturing PMI to over a four-year low in March.

Flashpoint: In response, India on Thursday gave a customs duty waiver on critical petrochemicals until June 2026 to stabilise supply chains for the textiles, pharma, and auto sectors.

While India diversifies its resource mix, Crisil warns that a return to normalcy for gas supplies will take longer than oil. Meanwhile, a total of 18 Indian-flagged vessels with 485 Indian seafarers continue to remain in the western Persian Gulf region

Setup: Global tensions spiked further after President Trump reportedly vowed “extremely hard” strikes on Iran, pushing Brent crude toward $120/bbl. While the US signals a potential quick exit, the UK is hosting a 35-nation coalition to force open the Strait of Hormuz, Reuters reported.

For India, the crisis remains evolving and uncertain, with high-risk logistical constraints expected to keep domestic energy costs elevated through the first quarter of FY27.

Manufacturing Momentum Slows

India’s manufacturing momentum slowed in March as rising costs and global uncertainty weighed on activity. The HSBC India Manufacturing PMI, compiled by S&P Global, fell to 53.9 from 56.9 in February, marking the slowest expansion in nearly four years, though it remained above the 50 mark that signals growth. 

Backdrop: Firms reported sharp increases in input costs, driven largely by higher oil prices linked to escalating tensions in the Middle East. Supply chain disruptions and softer demand also dampened output and new orders.

Pivot: Still, business sentiment remained resilient. As Pranjul Bhandari, Chief India economist at HSBC, noted, “growth moderated… amid rising cost pressures,” highlighting how external shocks are beginning to test India’s manufacturing resilience despite an overall expansionary trend.

Tesla Misses, Again!

Tesla Inc reported a disappointing first quarter, missing Wall Street expectations as it navigates a cooling electric vehicle market, Bloomberg reported. The carmaker delivered 358,023 vehicles worldwide, falling short of the 372,160 units analysts had projected. This marks the second consecutive quarter that Tesla has failed to meet market estimates.

Overview: Despite the miss, deliveries rose 6.3% year-on-year. This modest growth comes after a turbulent period last year, which saw global production pauses for the Model Y and significant consumer backlash against CEO Elon Musk. However, the current figures suggest Tesla is still struggling to regain its dominant footing.

Critical Moment: Even in India, the EV maker has been struggling since launching sales in mid-July last year. According to the data sourced from the Federation of Automobile Dealers Association (FADA), the company retailed just about 29 units in February, recording numbers that have fallen short of the company's own expectations.

Green Power Penalties Delayed

India’s power regulator has delayed stricter penalties for wind and solar generators by one year, with new deviation charges now set to take effect in April 2027, Reuters reported. The move follows concerns from industry groups, who warned that aggressive regulations could erode revenues and dampen investor interest.

Context: The revised rules target the gap between scheduled and actual power supply, which often forces grid operators to curb other plants to maintain stability. Under a new, complex calculation, generators will face higher financial penalties for failing to meet their committed supply targets.

Setting: The delay offers a crucial buffer for the sector as India pursues its ambitious goal of 500 gigawatts of renewable capacity by 2030. By balancing grid discipline with investor confidence, the government aims to modernise the national grid without stalling the clean energy transition.

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Indian Markets Gain on a Fresh Round of Optimism of War End

On Episode 837 of The Core Report, financial journalist Govindraj Ethiraj talks to Shivkumar Kalyanaraman, Chief Executive Officer (CEO)  Anusandhan National Research Foundation (ANRF) as well as Ajay Vij, Senior Country Managing Director at Accenture.

• Indian markets gain on a fresh round of optimism of war end.

• Jet fuel and commercial LPG prices rise as the Government tries to fend off pressure on domestic consumers

• The government said it would not apply its strict tax evasion rules on foreign investments made before ​April 2017.

• How India’s DARPA-like fund, the ANRF, is gaining momentum

• AI Business Use Cases are Moving from Experimentation to Execution