VIP lane and angry men

Hello there!

I have been thinking about what it means to stay informed when the information itself feels like too much. There is a version of keeping up with the news that just leaves you exhausted and vaguely hopeless. I do not want this newsletter to be that.

What I want it to be is more like a conversation you would have with a friend over chai. Someone who has already done the reading, knows which parts actually affect you, and will tell you what to do with the information. Not what to feel. What to do.

This week that conversation is about an active war in West Asia, gold prices, India being non-committal in all its relationships, and Make in India.

Sit down. It is a full week. If I put myself through it, you better too.

And when you are done reading, could you please reply and tell me if this is actually useful? Is it helping you make decisions, or is it just more noise with better jokes? I genuinely want to know. This newsletter lives or dies by whether it is doing what I say it wants to do, and you are the only one who can tell me that. So please just take a minute out of your day for me?

Thanks!

Just the gist

🔗 War is bad for business, worse for households

So here's the situation. The US and Israel bombed Iran on February 28th, kicking off a war that has given the Strait of Hormuz — a narrow strip of water that 20% of the world's energy supply passes through — its very own villain origin story. Trump has since threatened to bomb Iran's energy sites, only to then remember that he is after all a businessman, and announced backdoor talks with Tehran. Very consistent. Very Trump.

A day after that pirouette, Trump picked up the phone and called Modi. Their first conversation since the war started, to talk about, you guessed it, the Strait of Hormuz and keeping it open.

20% of global energy, including the majority of Qatar's gas exports, flows through that strait. Qatar, UAE, Kuwait have all taken a hit. Oil and gas prices have gone up globally, and closer to home, the supply of cooking gas cylinders in India has been affected.

➡️ The West Asia conflict is no longer a distant crisis for those not within the range of missiles. It is actively affecting energy prices globally, including India. Modi is threading a needle — staying friendly with Washington without picking a side in a war India has no interest in being part of. How long that's sustainable is anyone's guess.

🔗 Price at the pump is a blow to public funds

The government slashed excise duty on petrol and diesel by Rs 10 per litre each on Friday. Petrol duty now sits at Rs 11.9 per litre, diesel at Rs 7.8 per litre. But this will not reflect at the pump as a price drop. It only means that this will keep the prices from shooting up.

Since the US and Israel attacked Iran on February 28th, international crude oil prices have gone from roughly $70 a barrel to $122. That's a 50% jump in one month. Every other country has passed that pain straight to consumers — Southeast Asia up 30-50%, North America up 30%, Europe up 20%, Africa up 50%. India's public sector oil companies (the ones that run 90% of fuel pumps) had been absorbing the losses instead of hiking prices. According to Petroleum Minister Hardeep Puri, they were losing Rs 24 per litre on petrol and Rs 30 per litre on diesel.

Now, this is not a sustainable arrangement. So the government cut its own tax take to share the bleeding. The fiscal cost of this generosity is approximately Rs 1.55 lakh crore annually. 🥵 To partially claw some of that back, they have also slapped export duties on diesel (Rs 21.5 per litre) and aviation turbine fuel (Rs 29.5 per litre) to stop refineries from selling abroad so we have enough domestically. But even with the excise cuts, oil marketing companies (OMCs) are still sitting on significant losses.

Now, about the panic buying. Long queues appeared at petrol pumps across the country this week, driven by rumours of a lockdown and fuel shortage. The government has since clarified that there will be no lockdown, there is no shortage, India has 60 days of crude and fuel stocks, and LPG supply for households is stable with additional non-West Asian suppliers being lined up.

The Petroleum Ministry specifically called out "a deliberately mischievous, coordinated campaign of misinformation" spreading panic via social media. Haah, how does it feel when misinformation does not work in your favour, Mr. Big Brother?

➡️ Fuel prices at the pump are holding for now, which means auto fares, vegetable prices, and the cost of basically anything that moves by road should not spike immediately. The LPG cylinder situation is being managed, though "one month firmly arranged" from non-West Asian suppliers is not exactly an abundance of reassurance. Make sure your family keeps an eye on the cooking gas situation without panic buying because that is where the pinch is most likely to show up first for most households.

🔗 Liquid gold doing a number on the solid one

If you bought gold at the peak and are currently staring at your portfolio with the expression of someone who just found out the wedding caterer cancelled last minute, join the club.

Here is a headline that makes no sense. Gold, known to be the best investment during the worst of times has fallen 15% from its record high of $5,600 per ounce to around $4,500 while there is a live war in West Asia, missiles are hitting gas fields, crude oil is above $100 a barrel. The universe has a sense of humour.

Gold initially did what gold is supposed to do. When the US and Israel attacked Iran on February 28th, gold futures jumped to over $5,400/oz by March 2nd. Then came the fall.

The problem is oil. When oil prices surge, inflation follows. When inflation rises, central banks stop cutting interest rates or start thinking about hiking them to keep inflation in check. But this means that for investors government bonds are offer decent returns and gold becomes less attractive by comparison.

On top of that, the US dollar is strengthening because rising energy prices and inflation fears make investors run toward dollar assets. A stronger dollar makes gold, which is priced in dollars, more expensive for everyone else to buy, which kills demand.

This is called the "oil-shock paradox" — the very thing that should be driving gold up (a war, geopolitical chaos, energy disruption) is instead strengthening the dollar and keeping rates high, both of which are bad for gold.

➡️ Even at $4,500/oz, gold is up 35% compared to a year ago and 95% compared to two years ago. So if you or your family bought gold before the frenzy, you are still sitting on significant gains. Plus, gold premiums in India had already halved earlier this year when prices dipped. With prices down further now, if there is a wedding in the family, this is a profitable window.

🔗 Iran's VIP lane through the Strait of Hormuz

Your WhatsApp-dependent relative might have told you that due to Modi's vishwaguru status Indian vessels have a free pass through the Strait of Hormuz. Well, Iran has confirmed that the Strait of Hormuz remains open for ships from countries it considers "friendly" which includes India but is not limited to it. China, Russia, Pakistan, Bangladesh, Iraq, and India have made it to the VIP list.

The logic is straightforward. Countries that reached out to Iran, coordinated with them, and are not involved in the war get safe passage. Countries that are involved in the war, or allied with those who are, do not.

This matters enormously for India. Roughly 20% of global energy supply passes through the Strait, and India imports the majority of its crude oil. The fact that Indian vessels have already been moving through with Iranian coordination is why the government could confidently say this week that crude procurement for the next two months is sorted.

➡️ The immediate crisis for India's energy supply is less dire than it looked two weeks ago. But the longer-term picture depends entirely on how long this war goes on and whether India's "friendly nation" status holds. Right now, India's studied neutrality — not joining Western sanctions on Iran, maintaining trade relationships, buying Russian oil during the Ukraine war — is the reason Indian ships are getting waved through while others are not. But during an active war, how long can you not pick a side?

Read with me

🔗 Make in India made very little in India

This one is less breaking news and more a cold bucket of water over a decade of government press releases, so settle in.

India set out after independence with genuine ambitions for technological sovereignty. What it ended up with instead is a very sophisticated way of being dependent on other people's technology while calling it progress.

The early technocrats understood that hardware capabilities had to underpin software expertise, that research institutions needed to connect to manufacturing, and that industrial development required more than foreign investment flowing in. What they underestimated was how resilient global capitalism would be in absorbing India's ambitions and redirecting them in ways that suited everyone except India.

Modi launched Make in India in 2014 with targets — 100 million manufacturing jobs by 2022, manufacturing at 25% of GDP, India as the new factory of the world. A decade later, manufacturing's share of gross value added fell to 14.7%, its lowest since 1968-69. The sector lost nearly a million workers between 2016-17 and 2022-23. FDI did surge, from $36 billion to $85 billion annually, but out of $80 billion in foreign investment in 2020-21, only $21 billion went into actual manufacturing. The rest went into IT services and other sectors, which is great for those sectors but does not make India the "factory of the world".

Then in 2020, Make in India got rebranded as Atmanirbhar Bharat — Self-Reliant India — which is one of history's more ironic naming choices, given that the program it replaced had just spent six years deepening import dependency.

India's research and development spending fell from 0.83% of GDP in 2009-10 to 0.64% in 2020-21. China's share of global R&D spending hit 22.8% by 2017. India's was 2.9% and going nowhere. India is now one of the few major economies where public institutions account for more than half of domestic R&D spending — not because the government is generously funding science, but because the private sector has largely stopped bothering.

Basically, India became very good at writing code for other people's computers while accepting that it would always buy the chips from someone else. Silicon Valley gets the talent and the market while India gets the outsourcing contracts.

➡️ If you are in the diaspora working in tech, there is a decent chance your career trajectory was shaped by this exact dynamic of India producing the engineers, other countries capturing the value. The AI summit India hosted in February, the defence tech partnerships with the US being announced this week, the semiconductor ambitions — they are all happening against this backdrop. Whether they represent a genuine break from the pattern or just the latest iteration of it is the question worth asking every time you read a press release about India's technological rise.

That's it folks! See you next week!

Take care, stay safe, make good choices!