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Luxury Cars Face Forex Hurdle
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Good Morning. India’s millionaire club is growing faster than ever, and that would make it a great market for luxury cars. And it was, in 2024. However, the bumper numbers did not stick in 2025 and among the reasons is a weak rupee, making luxury car imports expensive. It’s a strange moment when the demand for high-end tech and electric vehicles (EVs) is booming, but carmakers are forced to hike prices every few months just to keep up. Turns out, the most important metric for a new car in 2026 will be the exchange rate.
India’s benchmark indices fell for the third straight session on Wednesday. The BSE Sensex closed at 84,961.14, falling 102.20 points or 0.12%. The NSE Nifty50 closed at 26,140.75, 37.95 points or 0.14% lower.
In other news, the government has asked Air India, SpiceJet and Akasa for fare data amid IndiGo antitrust probe. Meanwhile, Indians are choosing comfort and luxury during domestic trips.
India’s Luxury Car Market Heads Into 2026 Under Currency Strain
What?
India has long been seen as one of the emerging growth markets for luxury products, powered by a rising wealthy population, deeper premiumisation and expanding demand beyond metros. That narrative largely held true in the automotive world through 2024, when luxury car sales crossed 50,000 units for the first time.
But 2025 told a different story. Momentum slowed and expectations were reset. Audi India head Balbir Singh Dhillon noted that volumes lacked sharp spikes through the year, even though the second half delivered a meaningful recovery.
Carmakers point to a mix of global and domestic disruptions—geopolitical uncertainty, tariff actions, supply constraints and successive price hikes—that prevented the market from building on its record year.
As the industry looks to 2026, growth is still expected, but the spotlight has shifted to pricing discipline, richer product mixes and electric vehicles (EVs). Dhillon sees expanding demand beyond metros into Tier-II and Tier-III cities as a key growth opportunity.
Why?
Behind the scenes, currency volatility has emerged as the defining stress point. A persistently weak rupee against the euro has pushed up costs for German luxury brands, forcing difficult trade-offs between absorbing margin pressure and passing costs on to consumers. Price increases have already begun—and more may follow.
Hardeep Singh Brar, president and chief operating officer at BMW Group India said sharp currency depreciation against the dollar and euro has pushed up input and logistics costs.
From January 1, Mercedes-Benz India raised ex-showroom prices across its lineup by as much as 2%. BMW Group India followed suit, increasing prices across its portfolio, with car prices rising by up to 3% and motorcycles by as much as 6%.
“This is just the tip of the iceberg,” said Santosh Iyer, managing director of Mercedes-Benz India, adding that the company is considering quarterly price hikes.
Why It Matters
With new model launches, brands are recalibrating strategies to protect profitability in a volatile macro environment. That means selective price hikes, tighter cost controls and a sharper focus on high-margin models, with EVs emerging as a critical lever.
Luxury EV penetration in India is already outpacing the mass market, driven by technology appeal rather than subsidies. As 2026 nears, the luxury car market remains full of promise—but currency volatility, geopolitics and shifting consumer expectations will test how well brands adapt. The real question now isn’t how big the market becomes, but which players are prepared to navigate what comes next.
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Bamboo to Solar: Inside Engineers India’s Renewable Push
The year 2025 was an eventful one, with geopolitics playing a huge role in how India procures energy. While there was much chatter about diversifying oil imports outside of Russia, India is also trying to secure an energy future which is less dependent on traditional energy resources.
For Engineers India Limited (EIL), a significant step in that direction came from the demand side — a solar cooker.
Vartika Shukla, Chairman and Managing Director at EIL, said that the company worked on the challenge of reducing the weight of a solar cooker, which could be used in households to bill. “And it can have a better efficiency as well. So this is one challenge which would probably be a game changer for steering the solar mission as well and using the solar heat for cooking medium,” Shukla said.
The cooker was being developed in collaboration with Indian Oil. “We put an independent mind, and it's always good to have a second round or a third round of in-depth analysis of the elements that can go into improvement of efficiency, reduction of cost, reduction of weight.”
Bamboo To Ethanol
Another interesting project that EIL is working on is a bamboo refinery, a second-generation ethanol project.
“We put together that plant with the most exotic material, metallurgy, with new vendors, both national and international, with the equipment which no one has ever operated before,” Shukla said.
How else is the world of energy changing as India rushes toward net zero?
This series is brought to you in partnership with India Energy Week 2026. Get your delegate passes here.
$162.5 billion
That is how much India has paid Russia for fossil fuels since February 2022, roughly 16.26% of Russia’s total fossil fuel earnings since the start of the Ukraine war, according to Finland-based think tank Centre for Research on Energy and Clean Air (CREA).
Breakdown:
Oil: €143.9 billion (≈ $155.4 billion)
Coal: €18.2 billion (≈ $19.7 billion)
Together, this makes India Russia’s second-largest oil buyer after China.
China, the largest buyer, has spent about €293.7 billion (≈ $317.2 billion) on Russian fossil fuels since the war began.
In total, Russia has earned $1.17 trillion from fossil fuel exports since February 2022. More than half of this revenue has come from just two buyers: China and the European Union. The EU alone has spent €218.1 billion (≈ $235.6 billion) on Russian fossil fuels over this period.
Despite India’s share in Russia’s fossil fuel earnings being significantly lower than that of the EU, the country has borne a disproportionate share of political and trade pressure from the United States.
Last year, US President Donald Trump imposed an additional 25% tariff on several Indian goods, citing trade imbalances and India’s support of Putin’s war.
Since then, India and the US have been negotiating a trade agreement, but talks have stalled. Indian exporters and workers are already feeling the impact, through higher costs, lost competitiveness in the US market, and growing uncertainty for sectors dependent on American demand.
India's GDP Under Lens
India’s economy is projected to grow 7.4% in the fiscal year ending March, the National Statistics Office said Wednesday, beating the government’s initial estimate of 6.3%–6.8%, supported by resilient domestic demand and higher government spending. The estimate will form the base for the federal budget due on February 1.
Trigger: Nominal GDP growth, however, is pegged at 8%, well below the budgeted 10.1%, Crisil chief economist Dharmakirti Joshi said, noting that growth has held up despite global uncertainty, driven by investment and consumption.
Setup: HSBC earlier cautioned that headline data may overstate momentum, citing base effects and deflator issues that could have inflated real growth by about 1.2 percentage points, putting underlying growth closer to 7%.
Regulator Probes Airfares
India’s aviation regulator has asked IndiGo, Air India, SpiceJet and Akasa to submit detailed fare data as antitrust authorities probe the unprecedented travel disruption seen in December, Reuters reported. The Directorate General of Civil Aviation has sought route-wise fare data for economy and premium economy seats for December 1–15, including fares on routes affected by operational disruptions.
Backstory: The move follows mass flight cancellations at IndiGo, which controls about 65% of the domestic market, triggered by pilot shortages that led to roughly 4,500 cancelled flights and stranded thousands of passengers nationwide. As capacity tightened, airfares on several routes spiked, prompting the government to temporarily cap ticket prices to curb excessive increases.
Outcome: In December, the Competition Commission of India (CCI) said it was proceeding against IndiGo to evaluate potential abuse of market dominance, though there is no indication the probe has been widened to other airlines. One complaint under review alleges that IndiGo cancelled flights and later offered seats at significantly higher prices.
Indian travellers are increasingly reimagining domestic holidays, shifting away from crowded hotspots towards luxury-led, experience-driven travel. Domestic travel remains robust, with 41% choosing to explore destinations such as Mumbai, Agra and Jaipur, according to a report collaborated by Google and Kantar.
By The Numbers: Spending patterns reflect this shift: the average domestic trip now costs around Rs 71,850, while 33% of travellers prefer business-class travel and 45% opt for luxury accommodation. Cost sensitivity is easing, with more than four in five travellers expecting to splurge on holidays.
Flashpoint: While international trips still command higher budgets—averaging 3.2 times domestic travel spends—the premiumisation trend is firmly taking root at home. This is fuelling interest in lesser-known destinations such as Jibhi, Chakrata, Thiruchendur and Lansdowne, as travellers seek distinctive experiences, boutique stays and slower, more immersive journeys across India’s own backyard.
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Geopolitical Tensions Are In Full Sway Over Indian Markets
On Episode 768 of The Core Report, financial journalist Govindraj Ethiraj talks to Vandana Hari, Founder & Chief Executive Officer, Vanda Insights as well as Gulam Zia, Senior Executive Director, Research Advisory, Infrastructure And Valuation at Knight Frank.
Geopolitical tensions are in full sway over Indian markets
India’s advance GDP estimates reinforce the resilience theme
How America’s move to bring home Venezuelan oil will affect global markets
India’s residential market slowed in 2025 but commercial real estate set new records and 2026 outlook
Rupee rises above Rs 90 to the dollar, at Rs 89.88
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