The KG-D6 Problem Returns

Reliance’s KGD6 2.0 Shows Why India’s Gas Revolution Stays Tricky

By Amritha Pillay

What? 

For Reliance Industries Limited (RIL), the oil-to-telecom conglomerate that has spent the better part of a decade repositioning itself around retail and digital services, its upstream gas business is slipping into a production decline. 

The company’s KG-D6 block in the Krishna-Godavari basin was once projected as a transformative discovery for India’s energy sector. That promise faded quickly after its ‘flash in the pan’ success. 

Cut to 2026, KG-D6 is seeing production decline for the second time.

Unlike the first cycle, RIL and its partner BP are operating in a more supportive pricing and policy environment, even as India’s rising gas demand makes clear that no single domestic block can anchor the country’s energy security ambitions anymore.

Why? 

In 2009, RIL said production from the Dhirubhai 1 and 3 discoveries had ramped up to around 30 million metric standard cubic metres per day (MMSCMD) within months of commencement. At the time, the company expected the field to double India’s indigenous gas production.

This success was, however, short-lived.

By 2012, production had begun to fall sharply. Reliance attributed the decline to “unforeseen reservoir complexities and water ingress.”  

"The first time a bunch of purely commercial and regulatory issues deterred RIL from making the needed investments to develop these assets and arrest immediate declines,” Sandeep Jain, Managing Director Oil & Gas Practice, Valpro Consulting and a former oil marketing company executive, told The Core.  

By February 2020, production from the D1 and D3 fields had ceased entirely.

What Now? 

Now, more than a decade after the first disappointment, RIL is investing to make the second revival of KG-D6 tick in a more meaningful way. 

The field once again touched 30 MMSCMD of production in the quarter ended March 2024, after a fresh wave of investments alongside partner BP. 

But once again, the asset has begun declining soon after reaching peak output. RIL executives have noted this to be a natural decline, a term used in oil and gas to reflect the decline in production from gas assets post its peak, owing to pressure drops. 

RIL believes it can offset the fall through incremental drilling and fresh investments.

Industry watchers believe the asset has a fighting chance, provided incremental investments continue.

"The partnership with BP helps with the expertise needed for deepwater. Market freedom, of course, still comes with a ceiling and pre-defined offtake sectors, but it is still better than a decade or so back,” Jain said. 

The optimism also comes because of how dramatically India’s upstream policy landscape has changed since KG-D6 first emerged as a national energy story.

Yet, the bigger question now is whether KG-D6 still matters to India’s larger energy ambitions in the way it once did.

Investors see ANOTHER return from Masterworks (!!!!)

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Rs 96.91

That’s where the rupee slid against the US dollar on Wednesday, extending its losing streak to nine straight sessions and hitting yet another record low as soaring crude oil prices, persistent foreign fund outflows and strong demand for dollars from importers continued to pressure the Indian currency.

Backdrop: Beyond the Iran war, analysts also pointed to rising US Treasury yields, which have pulled capital toward American assets and away from emerging markets like India.

The Pressure: Foreign investors have continued pulling money out of Indian markets, adding further stress on the rupee.

Impact: Reserve Bank of India (RBI) announced that it will conduct a $5 billion dollar/rupee swap auction on Thursday to inject dollar liquidity into the banking system amid persistent pressure on the rupee. The move aims to ease tight dollar funding conditions and calm demand from importers as oil prices and foreign outflows continue straining the currency market.

India Readies Ships For Hormuz

India is preparing to send vessels through the Strait of Hormuz to resume energy imports from West Asia, with plans finalised pending final government approval, Bloomberg reported. Shipping through the strait, which handles roughly a fifth of global oil flows, has been virtually halted since the Iran-US war began in late February.

State-owned Shipping Corporation of India is ready to proceed once it receives clearance from the Indian Navy.

Catch Up Quick: The development coincides with Reuters report of three supertankers carrying approximately 6 million barrels of Middle East crude crossing the strait, bound for Asian markets after waiting in the Gulf for over two months.

Setup: Meanwhile, the Indian government recently said the fuel price hike has trimmed OMC daily losses by 25% to around Rs 750 crore. However, an assessment by ICRA suggests OMC losses are unsustainable even after the hike.

On Friday, the retail price of petrol and diesel was hiked by Rs 3 per litre. A second hike of 90 paise per litre followed on Tuesday.

Core Infra Sector Ticks Up

India's core infrastructure growth increased by 1.7% in April 2026, recovering from 1.2% in March and 1% in the same month last year, driven by higher output in steel, cement, and electricity, according to government data released Wednesday.

Overview: The uptick was not broad-based. Coal, crude oil, natural gas, refinery products, and fertiliser all recorded negative growth during the month, sectors directly tied to the ongoing energy market disruption from the West Asia conflict. Steel, cement, and electricity carried the headline number.

What it means: The uptick is still modest, and the drag from energy-linked sectors tells a more cautious story. With crude imports under pressure and refinery output contracting, the core sector recovery remains narrow and uneven.

Fewer Trips, Fuller Baskets

India's FMCG market posted 13.3% value growth in FY26, but the interesting story is how shoppers are adjusting their behaviour as prices rise. Purchase occasions have dropped from 158 trips a year to 156, yet average spend per trip in the March quarter has climbed from Rs. 130 to Rs. 145 year-on-year, meaning people are buying less often but more deliberately when they do, according to Worldpanel by Numerator's FMCG Pulse May 2026 report.

What it means: Larger packs, planned stock-up missions, and fewer impulsive top-ups are becoming the norm. Even impulse-heavy categories like biscuits, snacks, and noodles are increasingly landing in planned baskets. When price pressure is system-wide rather than confined to premium niches, the shopper response turns structural; fewer store visits, greater planning, and a sharper focus on value per trip.

Forecast:  The report states that starting from a 4.5% volume growth base in FY26, there are three scenarios: volume edging toward 5% if macro conditions stabilise, staying range-bound at 4–4.5% if crude prices remain elevated, and softening to 3–4% if energy and food inflation coincide. Cutting across all three is LPG stress, now a mass phenomenon, nearly 8 in 10 households report difficulties, setting the stage for sharper trade-offs ahead.

Two-Wheeler Boom May Slow

India's domestic two-wheeler industry is projected to post moderate wholesale volume growth of 3–5% year-on-year in FY2027, constrained by a high base effect and a weak monsoon forecast, according to ICRA.

Despite a strong April start with wholesale volumes up 29% at 1.9 million units following GST 2.0 rationalisation, retail demand grew at a more moderate 13%, supported by stable rural incomes and an extended wedding season.

Overview: Electric two-wheelers continued their strong run, posting 68% retail growth in April with 1.54 lakh units sold, lifting the penetration to 8% of the broader market. Exports also surged 38% year-on-year in April, building on 23% growth in FY2026.

Future: ICRA flagged key downside risks, including an El Niño-led weak monsoon, input-cost inflation, and the West Asia conflict, which threatens supply chains and export shipments.

The Parle-G(ate)

During his visit to Italy for strategic partnership talks, Prime Minister Narendra Modi pulled Italian PM Giorgia Meloni aside and handed her a quintessentially Indian gift: a packet of Melody toffees from Parle Products.

Meloni recorded the moment and posted the video on X. 

She smiled and thanked Modi for the “very, very good toffee.” The internet immediately reacted. Supporters praised the gesture as a fine example of India’s soft power. Critics, however, slammed Modi for making light at a difficult time in the country for many.

The stock market delivered the biggest twist, though. 

By the Numbers: Meloni’s post went viral. Investors rushed in and pushed shares of Parle Industries up nearly 5%, triggering the upper circuit. The stock price at closing was Rs 5.25

One big problem remained: Parle Industries makes zero toffees. The company operates in waste management, infrastructure, and recycling. The real maker of Melody and Parle-G, Parle Products, stays unlisted and private.

In the “Melodi” frenzy, investors had bought the wrong Parle.

Markets Look Up as The Rupee Hits Fresh Low

On Episode 879 of The Core Report, financial journalist Govindraj Ethiraj talks to Abhishek Bisen, Head- Fixed Income at Kotak Mahindra AMC as well as Yashwant Deshmukh, Founder-Director of C-Voter.

• Could there be curbs on dollar outflows?

• The markets look up as the rupee hits fresh low

• Consumers have cut down their average purchase occasions

• US Treasury yields are in the danger zone, what the India impact could be?

• A leading economist says the Government is winning elections but losing the economy. A deep dive.