India’s Edge In War Economy

India’s True Leverage Is Economic, Not Geopolitical

By Govindraj Ethiraj

While India’s social media pundits wring their hands over New Delhi’s absence from the latest US-Iran negotiations, one vital question that deserves more attention at a time like this is this: Which domestic industries will power the Indian economy through this era of geopolitical turbulence?

History shows that India’s economic engine is remarkably adaptable.

Looking back, more than a decade ago, telecom services drove national advertising spending — a reliable leading indicator of broader economic dynamism — before the sector consolidated into a heavily indebted oligopoly.

The vacuum was quickly filled up by, among others, telecom hardware, with global giants from Vivo, Oppo, Apple, Xiaomi to Samsung constantly vying for consumer attention.

This has been a decadal growth story even as India’s smartphone population races towards the 700 million mark.

Similar cycles of creative destruction have played out across other sectors. The insurance industry’s massive spending spree eventually gave way to a new wave of fintech aggregators.

Then came the e-commerce titans, pumping billions of dollars into subsidising customers to build market share before maturing into platforms focused on targeted, festival-driven deals.

The Trillion Dollar Shift

One industry that has taken on the mantle of growth is the automotive industry, which is undergoing a profound and necessary transformation.

The energy shock precipitated by the ongoing conflict in West Asia has only accelerated India’s transition toward electric vehicles (EVs).

The numbers speak for themselves.

According to data from the Federation of Automobile Dealers Associations (FADA), overall car retail sales grew 13% to 4.7 million units in fiscal year 2026.

But the real story is in electrification: EV sales surged a staggering 84% to roughly 200,000 units.

Domestic champions Mahindra & Mahindra and Tata Motors jointly command some 61% of the electric car market.

Remarkably, EVs accounted for a fifth of the 540,000 additional vehicles sold in FY26, a sharp increase from just 8% in the previous fiscal year.

Yet, the most lucrative frontier is not passenger cars; it is commercial transport. Commercial fleets — from ride-hailing taxis to gig-economy two-wheelers and heavy freight transporters — consume 70% of India's transport fuel.

As AdvantEdge founder Kunal Khattar told The Core Report’s Weekend Edition, electrification represents a colossal near $1 trillion economic opportunity for domestic innovators and venture capital.

India's Real Power Play

As the first round of peace talks — ironically brokered by Pakistan — collapses, India must remember where its true priorities lie.

It is undeniably unfortunate that Indian consumers and businesses are paying a steep economic and social price for the military misadventures of the United States and Israel in Iran.

But while New Delhi may have little sway over the trajectory of a Middle Eastern war, it retains absolute control over its own economic destiny.

Since the liberalising reforms of the 1990s, for every sector that matures or fades, new vectors of growth reliably and invariably emerge to take the lead.

Today, despite the very real headwinds of capital flight and AI-driven labor disruptions, India’s businesses are fighting to deliver double digit growth across industries.

The rest of 2026 and beyond will be challenging and involve pain for industry, large and small. But industry will overcome it if it stays focussed with some help on achieving economic objectives.

The lesson here is simple and pragmatic.

True geopolitical leverage is rarely won by clamoring for a seat at foreign negotiating tables.

It is built at home, through relentless economic focus.

India’s path forward is to double down on the industries of the future and let its economic strength do the talking.

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Rs 4.13 lakh crore

That’s how much the combined m-cap of eight of the top-10 valued firms jumped last week. Analysts say easing geopolitical tensions following the US-Iran ceasefire, along with falling oil prices and supportive global cues, lifted market sentiment.

Gainers:
HDFC Bank → added Rs 91,000 crore
ICICI Bank → added Rs 76,000 crore
Bajaj Finance → added Rs 61,000 crore
Larsen & Toubro → added Rs 48,000 crore
Bharti Airtel → added Rs 46,000 crore
State Bank of India → added Rs 44,000 crore
Tata Consultancy Services → added Rs 26,000 crore
Hindustan Unilever → added Rs 21,000 crore

Decliners:
Reliance Industries → shed Rs 1,000 crore
Infosys → shed Rs 3,000 crore

What’s Next?: Banking and financial stocks led the rally, signalling renewed confidence in domestic growth and credit demand.

Hormuz Talks Collapse

Peace talks between the US and Iran collapsed after a marathon 21-hour negotiation in Islamabad, with Iran's chief negotiator blaming the US for the failure. President Trump responded by ordering the US Navy to immediately blockade the Strait of Hormuz and interdict vessels that had paid transit tolls to Iran — dramatically escalating tensions. Two supertankers attempting to pass through the strait reportedly turned back as talks broke down.

Overview: Global oil markets were already in crisis. North Sea crude traded above $140 a barrel last week, with 40 bids for cargoes met by just four offers.

Shell stepped up LNG supplies to India, winning major fertiliser tenders, as refiners scoured the globe for available supply, PTI reported.

Setting: The fallout is widening. The IMF and World Bank spring meetings open Monday in Washington, with the Iran war dominating the agenda, Bloomberg reported. India's rupee came under pressure from arbitrage trades, drawing a sharp rebuke from RBI Deputy Governor T Rabi Sankar.

Israel disclosed the war has already cost its budget $11.52 billion, Reuters reported.

India Outflows Surge

Foreign portfolio investors (FPIs) continued their sell-off in April, pulling out Rs 48,213 crore from Indian equities in just 10 days and extending March’s outflows. The sell-off follows a record outflow of Rs 1.17 lakh crore in March, the worst monthly exodus on record, after FPIs had infused Rs 22,615 crore in February, the highest monthly inflow in 17 months. With the latest withdrawals, total FPI outflows have reached about Rs 1.8 lakh crore in 2026 so far.

How We Got Here: Recent geopolitical tensions in West Asia had pushed up crude oil prices, worsening India’s inflation and trade outlook, although easing tensions following a US-Iran ceasefire have since helped stabilise sentiment. A weakening rupee also reduced returns for foreign investors, prompting further exits. Analysts said elevated valuations also in Indian markets drove investors to shift funds to cheaper global markets.

What This Means Going Forward: The sustained outflows have weighed on benchmark indices, particularly financial stocks, and reflect a broader shift in global risk sentiment away from emerging markets like India.

Delhi Rewrites EV Rules

Delhi's government has released a draft electric vehicle (EV) policy for 2026-2030, proposing a 100% exemption on road tax and registration fees for electric cars priced at or below Rs 30 lakh, valid till March 2030. Strong hybrid vehicles will receive a 50% exemption, while EVs priced above Rs 30 lakh will get no relief. The draft is open for public feedback for 30 days.

Catch Up Quick: The policy also proposes that from January 2027, only electric three-wheelers will be permitted for new registrations in the capital — a significant push toward zero-emission last-mile mobility.

Setup: The move builds on Delhi's original EV policy launched in August 2020 under the AAP government, which has been on extensions since its three-year term lapsed in 2023.

AI Reshapes IT Hiring

Tata Consultancy Services (TCS) has made 25,000 fresher offers for FY27, with CEO K Krithivasan telling PTI that further hiring will depend on business demand, signalling a continued shift toward cautious, demand-led recruitment. 

Backdrop: The company hired about 44,000 freshers in the previous year, reflecting a pullback from its earlier high-volume hiring model. 

Pivot: At the same time, hiring trends are diverging across the industry. Demand for senior tech and AI leadership roles has surged, with digital leadership hiring rising over 70%. This contrast highlights a structural shift, where firms reduce entry-level hiring while prioritising high-skill, strategic talent.