Against this backdrop, Prime Minister Narendra Modi’s recent visit and the announcements around strategic petroleum reserves and LNG supplies have sparked cautious optimism in financial markets. However, experts believe the developments offer only partial relief in a far more complex global environment shaped by shifting alliances, energy competition, and technological rivalry.
Speaking to ET Now, global market strategist, Arnab Das highlighted that while the immediate measures could help soften some of the pressure on India’s external finances, the broader geopolitical picture remains complicated.
“Look, there are some important short-term elements to this that might help to relieve some of the concerns about India’s balance of payments because of the energy price rise. I think that is important. But it is only one part of the story,” said Arnab Das.
He pointed out that the developments must be viewed within the larger framework of changing geopolitical and geoeconomic alignments across Asia and West Asia.
“What seems to be taking place is the UAE tilting closer to the United States and to the west and India is moving in that direction, continue to move in that direction as well,” he said.
Das also noted the emergence of what he described as a “middle power alignment,” driven partly by concerns around the perceived unpredictability of major global powers.“There is also this kind of middle power alignment that is going on given the perceived unreliability of the United States and for the case of India also because this détente, if that is the right word, between the US and China even though it is probably just at a surface level, the tension, the competition will continue. That détente probably works against India’s interests to some degree,” he added.
He further referred to the Saudi-Pakistan mutual defence pact signed earlier and suggested that regional equations may be witnessing subtle changes.
“There seems to be a bit of a potential split taking place within the region. I would not want to overstate it, but maybe a bit of a tilt by Saudi away from the US somewhat towards Pakistan and by extension towards China,” Das observed.
According to him, markets remain primarily concerned about the continuing conflict in the Middle East and the possibility of disruptions around the Strait of Hormuz.
“It is pretty clear that not much is really going to be changing in the very short term, at least that is what the market is concerned about with regards to the action, the war, and the conflict in the Middle East and the blockade of the Strait of Hormuz,” he said.
Das noted that despite diplomatic engagement between global leaders, investors were hoping for more concrete outcomes.
“The Trump-Xi meeting does not seem to have led to anything beyond fine words on this front and the words are important but the actions would be more important and would seem to be less than what the market had been hoping for,” he said.
He added that this uncertainty has contributed to weakness in global bond markets and pressure on currencies, including the rupee.
On the issue of strategic petroleum reserves and LNG partnerships, Das acknowledged that such agreements can improve India’s resilience during periods of energy shocks.
“Yes, these sorts of partnerships and any kind of access to strategic resources whether in a domestic storage context or preferential supply agreements in case of shocks and crises would help,” he said.
However, he cautioned that the world is entering a prolonged phase of intense competition for resources and technology.
“The underlying issue is that we are looking at a world where the competition for resources, whether it is critical minerals, whether it is fossil fuels and technology will continue to be a major part of the story in the competition rivalry between states,” Das said.
While acknowledging India’s rapid economic growth, he stressed that the country still trails China in several strategic areas.
“India is doing well, but it is well behind on many of these fronts relative to China in particular,” he said.
Das added that future governments are likely to continue focusing on strengthening India’s access to strategic resources and critical technologies.
“India is growing very rapidly but is still behind on a number of fronts especially the technological frontier and, of course, still will continue to be dependent on imported commodities and energy for the foreseeable future,” he noted.
He also flagged concerns around India’s long-term energy mix, particularly dependence on coal and imported technology for renewable energy infrastructure.
“The domestic sources of energy besides wind and solar in particular, which might depend on China for the technology, that is mainly coal which is perhaps not in the best interest of the country in terms of global warming and in terms of the environment within India,” Das said.
Summing up the broader picture, Das said India is moving in the right direction but still has significant ground to cover in securing long-term economic and strategic stability.
“So, a lot of angles here where India is making a lot of progress, doing a lot of the right things but needs more progress on all these fronts in my opinion,” he concluded.
