📰Competing for Africa

Africa, a continent of 54 countries and 1.5 billion people, is similar to India in its diversity and size. India’s bilateral story with Africa goes back millennia, and that story has never mattered more than it does today. Today, we investigate India’s role in competing for influence in the African continent.

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Macro

• India will reduce long-tenor bond issuance in the next six months as demand from insurers and pension funds wanes, while keeping its borrowing target at $76.4 billion (₹6.77 trillion). The shift toward shorter maturities may flatten yields and support fiscal goals.

• India, the world’s biggest vegetable oil buyer, is set to boost soybean oil imports as bumper crops make it cheaper than palm oil, according to Patanjali Foods. The shift may cut palm imports and reshape India’s edible oil consumption mix.

• India’s festive gold jewelry demand is set to drop up to 27 percent this season, as record bullion prices push buyers toward smaller, lightweight ornaments. Rising costs have led many consumers to delay or cut purchases.

Equities

• India’s Supreme Court upheld JSW Steel’s $2.2 billion (₹195.1 billion) acquisition of Bhushan Power & Steel, rejecting lenders’ demand for extra payments and affirming the resolution plan. The ruling secures JSW’s ownership, boosting its steel capacity by nearly 65 percent since 2021.

• Indian tech stocks are set for their worst week since April, with the Nifty IT Index down 5.6 percent as Trump’s H-1B visa fee worsens earnings outlook. TCS and Infosys led losses, erasing over $21 billion (₹1.9 trillion) in value.

Alts

• US prosecutors allege an Indian-linked murder-for-hire plot extended beyond the US, targeting victims in Nepal or Pakistan, and tie suspects to Sikh activist Hardeep Singh Nijjar’s 2023 killing in Canada. New evidence suggests a broader, coordinated scheme, straining international relations.

• KKR-backed Advanta Enterprises has hired various banks to arrange a $500 million (₹44.3 billion) IPO in India, aiming for a potential $4 billion (₹354.7 billion) valuation. The UPL-owned seeds firm operates in 80+ countries under multiple brands.

Policy

• India defended the benefits of skilled worker mobility after Trump imposed a $100,000 (₹8.8 million) fee on new H-1B visas, a move that disproportionately impacts Indians. Officials stressed ongoing trade talks with the US, despite strains from tariffs and immigration curbs.

• Prime Minister Narendra Modi announced $845 million (₹74.9 billion) in cash handouts to 7.5 million women in Bihar ahead of state elections, aiming to bolster BJP’s support. Economists warn such subsidies strain federal and state finances, already at fragile levels.

• The US is pressing India to halt Russian oil purchases as a condition for reducing tariffs and finalizing a trade deal, complicating ongoing negotiations. India offered concessions, including easing farm import rules and pledging more US defense and energy buys.

• A regulatory crackdown on India’s options market is boosting BSE, with the 150-year-old exchange now capturing over 50 percent of premium turnover on expiry days since mid-July. The Thursday expiry switch has helped BSE chip away at NSE’s dominance.

• Trump unveiled sweeping new tariffs, including a 100 percent duty on patented drugs unless producers are building plants in the US, alongside levies on heavy trucks (25 percent), cabinets/vanities (50 percent), and furniture (30 percent). The move expands his trade war and pressures global drugmakers.

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Competing for Africa

India’s ties with the Middle East are often simplified to oil deals and controversial labor agreements to build skyscrapers and gilded palaces in the Gulf. The Gulf is no longer just a fuel stop or a labor market; it’s becoming a political stage where India is auditioning for great-power status. Trade corridors, investment pacts, and even defense alignments are now part of the story, pulling India deeper into the region’s shifting balance. And here’s the catch: for decades, Delhi prided itself on being a “friend to all” in West Asia. Today, that balancing act is harder to maintain, and the cost of getting it wrong is much higher.

Historically, India’s relationship with the Gulf and the broader Middle East was shaped by necessity. Post-independence, New Delhi relied heavily on oil imports (from what were often unstable suppliers), and waves of migration to the Gulf underpinned remittances, employment, and economic freedom. The classic triangular script was simple: the region provided India with energy; India provided manpower; and both benefitted from trade in staples like spices, textiles, and in modern times, pharmaceuticals and machinery.

Over the past decade, especially, that script has evolved. Under Modi, India began pushing more aggressively into diversified economic ties: things like clean energy, food security deals, fintech cooperation, and investment treaties. India-UAE relations are the model many look to: CEPA (Comprehensive Economic Partnership Agreement) signed in 2022 has helped cause non-oil trade to surge, bilateral investments to rise, and trade overall to cross the $100 billion (₹8.8 trillion) mark in FY 2025. At the same time, India has made moves to stretch its strategic footprint: the India–Middle East–Europe Economic Corridor (IMEC) is an effort to knit connectivity from India through the Gulf to Europe, bypassing chokepoints and aligning more of trade, logistics, and geopolitical strategy in Delhi’s favour.

There are also new tensions that underscore the shifting balance. The recent Saudi-Pakistan defence pact, where Riyadh and Islamabad agreed to mutual defence obligations, rekindled old sensitivities for India. India’s response has been diplomatic but firm: emphasising “mutual interests and sensitivities” with Saudi Arabia, and noting its deepening strategic partnership with Riyadh including energy cooperation and joint petrochemical or refinery sector dialogue. This is significant, not merely a diplomatic nuance but a reminder that India’s Middle East relationships no longer operate in a vacuum. Regional defense pacts, security alignments, and the changing U.S. posture in the Gulf all affect Indian strategy.

What all of this adds up to is a turning point. Economically, India is diversifying its dependencies. Oil remains central: Saudi Arabia and Iraq remain large suppliers, and the Gulf still supplies over half of India’s crude imports. But beyond hydrocarbons, Delhi is betting on things like supply chain resilience (factories, trade corridors), alternative energy, food security (investment from Gulf states into India’s agriculture), and using its diaspora (8–10 million strong in the Gulf) not just as remittance senders but as bridges for investment, ideas, and influence. Politically, India is more willing to partner with Israel, Saudi Arabia, UAE, Qatar etc., in multilateral security, counterterrorism, and supply chain initiatives. Its policy stances have shifted: less ideological distance, more transactional alignment, and an appetite for institutional mechanisms like corridors and treaties.

Still, none of this is without risk. For one, the balancing act is getting harder. India must avoid being seen as aligned too closely with one bloc at the expense of others (Iran, for instance), especially as regional tensions escalate. The new Saudi-Pakistan defence pact could put pressure on India to either distract more diplomatically or deepen its own security infrastructure in the Gulf, which will cost political capital. Also, rapidly increasing economic interdependence means exposure: disruption in energy, geopolitical instability in the Gulf (e.g. spillovers from Israel-Iran tensions), or volatility in oil prices, will ripple back strongly to India’s macroeconomy.

Looking ahead, the future of India-Middle East relations seems likely to follow three intertwined trajectories. First, deepening economic corridors and infrastructure linkages. Projects like IMEC are emblematic of this. India is building deep-water ports, expanding rail and road connectivity at its western coast, exploring rupee-dirham settlement mechanisms, and trying to draw investment in clean energy, tech, and food supply chains. These will give India more control over logistics, reduce dependency on intermediaries, and improve trade efficiency.

Second, a more institutionalised defense and strategic component. India is likely to expand joint military manufacturing, intelligence sharing, maritime cooperation, and even coordination in regional security dialogues. While India still avoids formal alliances (in part due to non-aligned legacy, in part domestic politics), the lines are getting blurrier: shared strategic threats (terrorism, supply chain security, regional instability) are pushing cooperation. India’s reactions to agreements among other Middle East actors (like the Saudi-Pakistan defence pact) already show it is watching closely and ready to calibrate its policy accordingly.

Third, soft power and diaspora will remain levers. The Gulf diaspora remains a cushion and conduit for influence. Remittances matter. Cultural ties, religious pilgrimage (especially to Saudi Arabia’s Hajj and Umrah), and education exchanges all of these help India retain goodwill even in uneasy moments. But increasingly, the diaspora also expects investment, employment, and returns. India will need to deliver more than nostalgia: concrete opportunities, business ties, and legal protections.

What does this mean for India’s global positioning? Quite a bit. If India successfully builds stronger economic, political, and strategic ties in the Middle East, it gains something rare: a platform to project power not simply across its neighbourhood, but across the Indo-Pacific and Europe. It softens security gaps (energy and logistics), strengthens foreign investment inflows, and gives India wiggle room in global diplomacy (e.g. balancing U.S., China, Russia interests in the region).

On the economic front, the numbers suggest the promise is already materialising. India-UAE non-oil trade aimed at $100 billion (₹8.8 trillion) in 3-4 years is one such marquee target. Bilateral investment flows are rising. Joint ventures in infrastructure and energy are multiplying. And India is no longer just a buyer of oil or manpower, but increasingly a partner in infrastructure, clean energy, trade finance, and strategic connectivity.

If India wants to make this shift durable, it must focus on consistency and institutional depth. That means ensuring that trade corridor projects aren’t just MoUs, but get built; that investment treaties provide protection, that regulatory alignment (tariffs, customs, logistics) follows through; that energy supply contracts include diversification and contingency; and that security cooperation is anchored in both political will and technical capacity.

All told, India-Middle East relations have entered a new era, not just transactional, but strategic. The shift is well underway, and its breadth suggests this is more than diplomacy for show. For India, the Middle East is no longer merely a region of necessity; it is becoming a region of opportunity. Markets, supply chains, energy, and strategic posture are all being recalibrated. And in a world where geography meets geopolitics, that recalibration may define India’s next decade on the global stage.

See you Monday.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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