Continued West Asia Conflict Could Squeeze India’s Fuel, Currency

By Shubhangi Bhatia

Indian households could face an acute cooking gas shortage in the coming weeks as the escalating West Asia conflict traps critical supplies of Liquefied Petroleum Gas (LPG) behind the blockaded Strait of Hormuz.

India, the world’s second-largest LPG buyer, is dangerously dependent on the Persian Gulf, sourcing over 90% of its supply from the region, Bloomberg reported, citing Kpler data. Unlike crude oil, for which India has established strategic underground reserves, LPG storage is far more limited. Industry insiders say the current crisis can only be averted if March cargoes—currently stranded—begin moving within days, Bloomberg reported.

India’s top gas importer, Petronet LNG also issued a force majeure notice to supplier QatarEnergy and domestic buyers after its vessels were unable to reach the Ras Laffan load port, located in Qatar, amid the West Asia crisis.

If tightness persists, industrial users may shift to alternative fuels such as furnace oil or naphtha, while higher LNG prices could raise fertiliser subsidy costs, Sehul Bhatt, Director at Crisil Intelligence, said in a note.

This comes even as the West Asia conflict intensifies on the fifth straight day after the US military launched major airstrikes on Iran, targeting military and leadership sites across the country and killing the Supreme Leader Ayatollah Ali Khamenei.

Additionally, all Emirates scheduled flights to and from Dubai remain suspended until 2359hrs UAE time on 7 March, though the carrier continues to operate a limited flight schedule where possible.

The Russian Pivot

With nearly 40% of India’s crude imports typically transiting the now-inaccessible Strait of Hormuz, the government has begun scouting for non-West Asia supplies. In a significant move, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Moscow is prepared to increase oil volumes to India and China.

Currently, approximately 9.5 million barrels of Russian crude are already on vessels near Indian waters, capable of providing relief within weeks. This Russian buffer is critical, as India’s domestic crude stocks are estimated to cover only 25 days of demand.

The vulnerability was underscored today as state-run Mangalore Refinery and Petrochemicals (MRPL) declared force majeure on all gasoline exports, prioritising domestic supply over international contracts.

Currency Turmoil

The escalating conflict in West Asia has also pushed the Indian economy into a state of high alert. On Wednesday, the Indian Rupee plummeted past the psychological barrier of 92 per US Dollar, hitting an all-time low.

The collapse of the Rupee has sent shockwaves through the financial sector. Implied volatility has surged to 5.6%, its highest in nearly a year, making it significantly costlier for Indian importers to hedge their dollar exposure.

Rising oil prices from the West Asia conflict are increasing hedging costs for Indian importers, as rupee volatility and forward premiums climb. "The duration is critical," noted analysts at MUFG Bank. If the military campaign exceeds the 15-day mark, the cost of protection for the Rupee may become unsustainable for many MSME importers.

Geopolitical Brinkmanship

The war took a more complex turn with reports that Mojtaba Khamenei, son of the late Supreme Leader Ayatollah Ali Khamenei, survived the initial strikes and is being positioned as a potential successor.

In the US, critics say the attacks exceed President Donald Trump’s authority. While Trump claims the strikes are necessary to eliminate imminent threats, legal experts warn he is testing the boundaries of the War Powers Resolution.

With the US Embassy in Jerusalem stating it cannot assist Americans in departing Israel, and global gold prices hovering near record highs, the spiral of violence shows no signs of an early exit.

IndiaAI’s RegTech Challenge: A Deal Only A Desperate Start-up Would Sign

By Dev Chandrasekhar

What? 

India's financial watchdog is drowning in paper. The National Financial Reporting Authority (NFRA), the body responsible for overseeing India’s financial audit quality and reporting, receives thousands of filings every year and checks them by hand. Human reviewers, manual checklists, and not nearly enough of either.

The obvious fix: an AI engine capable of extracting text, tables, and financial data from multi-format documents, segmenting them, and validating compliance against a configurable regulatory framework. Also included will be an automated analytics layer and a chatbot interface over NFRA's entire corpus 

NFRA and IndiaAI have jointly set out to do that. IndiaAI is an Independent Business Division (IBD) under the Digital India Corporation (DIC) of the Ministry of Electronics and IT (MeitY). It serves as the implementation agency of the IndiaAI Mission.

Their IndiaAI Financial Reporting Compliance Challenge asks India's best AI startups to build an automated compliance engine for the regulator. 

The ambition is real. It's a genuinely important problem. So is the problem being solved. AI is, without a doubt, the right tool. 

The trouble is the deal that’s being offered for the AI solution, structured one-sidedly against the startups most capable of creating it.

Why? 

The winning startup will receive up to Rs 1 crore over two years. In exchange, it builds, deploys, and maintains a mission-critical government system — and surrenders meaningful control over the intellectual property it creates along the way. 

If a dispute arises, the government decides the outcome. If the startup continues improving its own product after the contract ends, it must keep sharing those improvements with the regulator — indefinitely, for free.

The product being sought is not a minimum viable product. It is an enterprise-grade regulatory compliance engine for one of India's apex financial oversight bodies. 

The solution must meet rigorous technical requirements. 

The Rs 5 lakh Stage 2 grant is structured as access compensation rather than genuine R&D support. It requires teams to first sign an NDA before seeing any real data. Applications are submitted and managed via the AIKosh portal. 

The reward for the NDA and the data exposure is the chance to compete for a contract that, spread across twenty-four months, implies Rs 4.17 lakh per month before GST, overheads, employee benefits, and licensing costs. For context, a single mid-level machine learning engineer in Mumbai currently commands Rs 1.5–2.5 lakh per month in total cost to the company. 

The Rs 1 crore envelope is not sufficient to retain a team of three competent engineers for two years, let alone build, deploy, and maintain an enterprise AI system.

India's most technically capable are being asked to subsidise a government IT infrastructure in exchange for title without value, under a contract where the buyer adjudicates disputes, at a price that does not cover costs. 

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92.16

That’s how much the rupee fell against the dollar, hitting a record low and making it Asia’s worst-performing currency this year.

Catch Up Quick: Analysts say the biggest reason for the currency’s fall is India’s heavy reliance on imported crude oil. After US and Israeli strikes on Iran escalated tensions in West Asia, markets fear disruptions to shipments through the Strait of Hormuz, a narrow passage that carries about 20% of the world’s oil supply and a large share of India’s crude imports.

Indian markets were already seeing foreign investors pull money out in recent months. Now, the escalation in West Asia has intensified risk aversion, prompting investors to sell more Indian equities and move toward safer assets.

Break: Earlier, optimism around a possible US-India trade agreement had supported investor sentiment. But analysts now warn that the conflict could undermine those gains. Economists at Kotak Mahindra Bank say a prolonged regional war could hurt both remittances from West Asia and capital inflows into India, adding further pressure on the rupee. 

The Pioneer presents India Finance & Innovation Forum 2026 convenes policymakers, regulators, financial institutions and industry leaders to examine India’s evolving financial architecture. Over three days, senior decision-makers will explore fiscal and monetary priorities, capital markets, digital finance and innovation-led growth through focused dialogue, networking and collaborative sessions on what’s changing, what works and what comes next.

Services Growth Holds Firm

India’s services sector remained resilient in February, with the HSBC India Services PMI easing marginally to 58.1 from 58.5 in January, signalling continued robust expansion. Output growth was broadly stable as the fiscal year neared its end, though new orders rose at the slowest pace in 13 months amid intensifying competition.

Why It Matters? While stronger client enquiries and marketing efforts lifted sales for some firms, others flagged pressure on growth. International demand improved, prompting companies to step up hiring. Input and output price inflation accelerated, with higher food and labour costs passed on to customers.

Flashpoint: Business confidence touched a one-year high. The composite PMI rose to 58.9, led by manufacturing strength. Finance and insurance outperformed, while real estate and business services lagged.

India Weighs US Standards

India will, within six months of an interim trade pact with the United States coming into force, decide whether to accept American or international standards — including testing norms — for select US exports, Business Standard reported, citing the 2026 Trade Policy Agenda and Annual Report 2025 released by the US Trade Representative (USTR).

Highlight: The move is aimed at easing market access for American goods. India has also committed to addressing long-standing non-tariff barriers in sectors such as food, agriculture, medical devices and information and communication technology products.

What's Next? Negotiations launched in March 2025 led to a joint statement on February 7, 2026, outlining the interim deal. While the US rolled back punitive tariffs, a recent Supreme Court ruling has prompted both sides to reassess timelines as they work toward a broader bilateral trade agreement.

Pharma Flags Gulf Risks

Indian drugmakers are reviewing shipments to West Asia as tensions in the region threaten shipping routes, Business Standard reported. Companies say a prolonged conflict could disrupt cargo movement, delay deliveries, and raise freight and insurance costs.

Implications: The region accounts for roughly $1.7 billion of India’s pharmaceutical exports, with key markets including the UAE, Saudi Arabia, Iraq, and Egypt. Industry executives say firms are assessing logistics risks and exploring contingency plans such as rerouting shipments, advancing dispatch schedules, or increasing inventories in destination markets.

Next Steps: Companies have not halted exports yet, but executives say they will reassess shipping plans if the conflict drags on and logistics disruptions worsen.

Urban Investing Shift

Urban women are increasingly taking charge of investment decisions, even as many investors remain confident but poorly prepared financially, according to the DSP Winvestor Pulse 2025-26 survey. The study, conducted by DSP Mutual Fund with YouGov, surveyed 5,050 respondents across 13 Indian cities in Q4 2025, focusing on working adults aged 25-60 involved in household investment decisions.

By the Numbers: The report found that 56% of women now make investment decisions independently, up from 44% in 2022, while men remain higher at 68%. At the same time, 84% of investors say they feel confident investing alone, but only 33% have both a financial goal and a structured plan.

The Shift: The survey also shows changing aspirations: 41% of women prioritise travel over buying a home, signalling a tilt toward lifestyle spending and financial independence.

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Markets Take A Fresh Knock

On Episode 814 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Bhalotia, General Secretary of All India Rice Exporters Association (AIREA) as well as Sudhir Sethi, Founder and Chairman at Chiratae Ventures.

• Markets take a fresh knock but still doing better than expected

• LNG gas supply crunch builds up as Indian importers declare a formal force majeure

• India’s basmati exports are blocked from going to the West Asia

• India has major AI ambitions. Where will the funding come from?