On Episode 845 of The Core Report, financial journalist Govindraj Ethiraj talks to Siraj Hussain, Former Secretary at the Ministry of Agriculture and Ministry of Food Processing.

SHOW NOTES

(00:00) The Take

(05:00) Why markets might absorb the ceasefire talk breakdown in their stride.

(10:17) Oil shocks are now spreading to Europe as realisation dawns.

(12:43) Dubai is restricting flights from India.

(13:16) Understanding India’s fertiliser supply challenges even as the planting season approaches.

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Monday the 13th of April and this is Govindraj Ethiraj, broadcasting and streaming weekdays from Mumbai, India's financial capital.

Before we begin, Tuesday, that's tomorrow, is a markets and bank holiday, which also makes this a holiday-shortened week. But do join us on Tuesday for an exclusive interview and insights on what it would take for foreign capital to come back to markets like India and some of the challenges in the economy, particularly structural, with Jahangir Aziz, Head Emerging Markets Research for JP Morgan, who will join us from New York.

And now…

The Take

While India's social media pundits wring their hands over India's absence from the latest US-Iran negotiations, one vital question that deserves more attention at a time like this is this one. Which domestic industries will power India's economy through this era of geopolitical turbulence? Now, history shows that India's economic engine is fairly adaptable.

Looking back more than a decade ago, telecom services drove national advertising spending, a reliable leading indicator of broader economic dynamism, before the sector consolidated into a heavily indebted oligopoly. The vacuum was quickly filled by, among others, telecom hardware, with global giants from Vivo, Oppo, Apple, Xiaomi to Samsung constantly vying for consumer attention, as they still do. Now, this has been a decadal growth story, even as India's smartphone population races towards the 700 million mark.

Similar cycles of creative destruction have played out across other sectors. The insurance industry's massive spending spree eventually gave way to a new wave of fintech aggregators. Then came the e-commerce titans, pumping billions of dollars into subsidising customers to build market share before maturing into platforms focused on targeted, festival-driven deals, for instance.

One industry that has taken the mantle of growth is the automotive industry, which is undergoing a profound and necessary transformation. The energy shock precipitated by the ongoing conflict in West Asia has only accelerated, and will accelerate, India's transition towards electric vehicles. The numbers speak for themselves.

According to data from the Federation of Automobile Dealers Association, the FADA overall car sales grew about 13% to 4.7 million cars in the 2025-26 fiscal year. But the real story is electrification. EV sales were up 84% to about 200,000 units.

Domestic champions like Mahindra and Tata Motors jointly control about 61% of the electric car market, and these are really homegrown technologies. Remarkably, EVs are now a fifth of the 540,000 additional vehicles sold in 2025-26, a sharp increase from just 8% in the previous fiscal year. So 8% to 20%, all of this according to a report in the Mint.

Yet, the most lucrative frontier is not passenger cars, it is commercial transport. Commercial fleets, from ride-hailing taxis to gig economy two-wheelers and heavyweight transporters, consume about 70% of India's transport fuel. As Advantage founder Kunal Khattar told The Core Report's Weekend Edition, electrification represents a colossal near $1 trillion economic opportunity for domestic innovators and venture capital.

As the first round of peace talks between Iran and the United States, ironically brokered by Pakistan, collapses, India must remember where its true priorities lie. It is undeniably unfortunate that Indian consumers and businesses are paying a steep economic and social price in the form of jobs lost for the military misadventures of the United States and Israel in Iran. But while New Delhi may have little sway over the trajectory of a Middle Eastern war, it retains absolute control over its own economic destiny.

Since the liberalising reforms of the 1990s, for every sector that matures or fades, new vectors of growth reliably and invariably emerge to take the lead. Today, despite the very real headwinds of capital flight and AI-driven labour disruptions, India's businesses are fighting to deliver double-digit growth across industries. Now, the rest of 2026 and beyond will be challenging and involve pain for industry large and small.

But industry will overcome if it with some help on achieving these economic objectives. So the lesson here is simple and pragmatic. True geopolitical leverage is rarely won by clamouring for a seat at foreign negotiating tables.

It is built at home through relentless economic focus. India's path forward is to double down on the industries of the future and let the economic strength do the talk.

And that brings us to the top stories and themes..

Why markets might absorb the ceasefire talk breakdown in their stride.

Oil shocks are now spreading to Europe as realisation dawns as well.

Dubai is restricting flights from India

And understanding India's fertiliser supply challenges even as the planting or kharif season approaches.

Markets, Mutual Funds, The Rupee and Vingroup

The first round, if one may call it that, of peace talks between the United States and Iran have failed.

President Trump on Sunday said the United States will enforce a naval blockade of the state of Hormuz, stepping up pressure on Iran after the talks between the top Iranian and American leaders in Pakistan failed to produce a result. A naval blockade could be considered an act of war by Iran, according to a New York Times report. Will there be a second round of negotiations? Well, it is possible, but the anger against the U.S.-Israel axis is growing, going by statements made by quite unexpectedly the president of South Korea and maybe less expectedly the president of Turkey.

Now, all of this increases the variables traders have to think about when pricing in risk, whether in oil prices or stocks as markets open this Monday morning. There is, of course, another factor, something we mentioned earlier. The war, including its fragile ceasefire, is entering its seventh week or past a month and a half.

Markets like India are beginning to see this as a long war in which countries like India are finding their own grooves, particularly for importing oil and gas. There is undoubtedly a heavy price on the economy and society through job losses, but it does appear that we are unable to do much, expect to respond tactically and strategically to the problem at hand, most of which is to do with energy. And of course, with earnings season having kicked off afresh, there is some new data for the markets to play with and will also help draw back some of the focus to fundamentals and corporate performance.

The markets are also seeing a large supply of funds inflows into Indian equity mutual funds were up 56% to an eight-month high of about 40,000 crore rupees in March, according to data released by the Association of Mutual Funds of India on Friday. Flows into large-cap funds were up 42% month-on-month and mid-caps a record 6,000 crores. Even systematic investment plan contributions rose 7.5% to a record high of 32,000 crore, according to the data.

Now, whether this is a year-end or other financial year-end anomaly or not, we will know very soon. But this is, of course, encouraging for the markets, particularly because these funds or fund flows are providing a floor. But it's also bad news in some ways because it highlights the perils of capital trapped not just within the country, but also within limited asset classes as investors struggle to find options.

And by the way, that includes savers as well. On Friday, India's main stock indices snapped a six-week losing streak and they posted their biggest weekly gain in over five years ahead of the ceasefire negotiations. While those negotiations have broken down for now, there will quite likely be a continued strain, and maybe a small one, of optimism or hope, depending on which way you see it, that could keep markets somewhat steady, even if in the negative.

The Sensex rose about 6% for the week. The small-cap and mid-cap indices rose 7.6 and 7.8. So both rose just under 8%, respectively, in the previous week, according to Reuter data compilation. The Sensex was up on Friday by 918 points to close at 77,550.

The NSE Nifty 50 was up 275 points to end at 24,050. The Nifty Auto Index, by the way, since we were talking about auto a little while ago, was the big gainer and was up nearly 3%. And the Bank Index was up about 2%, according to a Business Standard report.

Elsewhere, the rupee has become Asia's best-performing currency after the Reserve Bank of India cracked down on speculation late last month, with most positions unwound ahead of Friday's deadline, according to a Bloomberg report that quoted local traders. So the rupee has gained 2.5% since the first curves were announced on the 27th of March, and has outpaced peers like Thai Baht and the South Korean Won, according to that Bloomberg report. And on Friday, it closed out a second consecutive week of gains against the dollar, a feat it last achieved six months ago, thanks to flows from the unwinding of residual arbitrage positions as well as a fall in crude oil prices after that ceasefire, according to Reuters.

And the rupee ended marginally lower after a choppy session that's on Friday again, which saw it touch a three-week high of Rs 92.41 before going to Rs 92.75. The Reserve Bank of India's deadline to limit banks' daily open positions to $100 million took effect on the end of Friday's trading. It's also banned lenders from offering non-deliverable rupee contracts to clients. Elsewhere, we spoke of the economic opportunities.

Reuters is reporting Vietnam's largest conglomerate, Win Group, on Friday signing a MOU with the state of Maharashtra to explore $6.5 billion in investments aimed at building a multi-sector ecosystem in and around the state. Winfast already has a manufacturing facility in Tamil Nadu, and it has also said it intends to build a $3 billion ecosystem in Telangana state. Win Group could explore investments across sectors, including urban development, electric mobility, renewable energy, and public infrastructure in Maharashtra.

It's considering integrated townships spanning about 1,000 hectares near Mumbai at an estimated investment of about $5 billion and looking to deploy a fleet of about 60,000 electric taxis at a $1.5 billion investment, according to that Reuters report. And all of this is expected to or likely to fructify in about three to five years and will create or could create tens of thousands of jobs.

Oil and Cargo Turbulence

Europe is now beginning to feel the heat of fuel supply disruptions, something that hit Asia and countries like India first and in the previous weeks and had already been projected to come to Europe next.

Ireland's Premier Taussig Michael Martin convened a cabinet meeting on Sunday afternoon as waves of protests spread over government's handling of rising fuel costs. Across Ireland, hauliers and farmers blockaded fuel depots and oil refineries and disrupted traffic in a number of cities, including Cork in the south and Galway in the west, according to a Bloomberg report. Elsewhere, another report in oilprice.com says jet fuel shortages will start hitting Europe in three weeks' time if there are no changes in ship movements through the state of Hormuz.

Roughly 30 percent of Europe's jet fuel imports typically come from the Gulf area, and pressure is already showing up on ground. Seven airports in Italy, for example, have restricted access to jet fuel in recent days as supply tightens. Brent crude prices are near $96 as of Friday, and that of course could change on Monday when markets open.

Meanwhile, among other signs of a growing sense of panic in western markets, a desperate scramble for cargoes has been playing out in the oil market this week as traders and refiners scoured the globe for immediately available supplies, according to Bloomberg. In the North Sea, the world's most important physical crude market, traders submitted 40 bids for cargoes this week, only four of which were met by offers. And Bloomberg quoted Sultan Al-Jubeir, CEO of Abu Dhabi National Oil Company, saying in a LinkedIn post on Thursday that the final cargoes that transited the state of Hormuz before the conflict are now arriving at their destinations.

This is where the paper-traded markets are meeting physical reality, and the 40-day gap in global energy flows is truly exposed. Cargoes for delivery in the coming weeks has changed hands at unprecedented prices above $140 a barrel, according to that Bloomberg report, even as refiners have been hunting increasingly further afield for supplies, leading to unusual trades and surging premiums for any oil that's ready to ship right now. Traders told Bloomberg that these panicky moves across the world's key physical oil markets demonstrated the scale of the shortfall in crude that's due to be felt in coming weeks.

They also said that these rising prices are signalling that some European refiners will likely need to follow those in Asia and cut back on production, which might help balance the market for crude oil but would deepen the shortfalls in products like diesel and jet fuel. Meanwhile, among other energy and geopolitical risk impact, Dubai has restricted foreign airlines to just one flight to its airports until the 31st of May due to the Iran crisis, which of course is going to hit Indian carriers quite hard because they had been planning more flights than other airlines from any other country, according to a Reuters report. The Federation of Indian Airlines, which represents airlines like Air India, Indigo and SpiceJet, has asked the government to push Dubai authorities to lift the curbs and failing that to consider reciprocal measures on Dubai carriers including Emirates and FlyDubai.

War Impact on Fertiliser Production

Fertiliser production is energy intensive, relying heavily on natural gas as a feedstock, with energy making up as much as 70% of production costs. The most important fertilisers near term are nitrogen-based products like urea. Reuters in a recent report quoted researchers saying that urea fertilisers account for more than 50% of the world's nitrogen fertiliser usage for crops like corn, wheat, rice, some fruit and vegetables.

Now, the global fertiliser market was already tight with China restricting exports this year to ensure domestic availability while producers in Europe cut output due to a loss of cheap Russian gas supply, according to analysts who spoke to Reuters. Meanwhile, India on Wednesday raised its nutrient-based subsidy for summer sown crops by about 11.5% from a year earlier to shield farmers from rising global fertiliser prices, according to a Reuters report. The government approved a nutrient-based subsidy scheme worth about Rs 41,000 crore for the summer crop season, according to the government, and it aims to ensure that farmers continue to get a 50 kilogramme bag of diammonium phosphate or DAP at the current price of Rs 1,350, despite that rally in prices.

India of course imports fertilisers like urea, DAP and muriate of potash as well as LNG, which is of course the feedstock for urea production, and the Middle East accounts for roughly half of India's DAP imports with Saudi Arabia being the largest supplier. Global DAP prices have risen about 20% since the conflict in the Middle East disrupted fertiliser supplies from the region, according to Reuters. To better understand the dynamics of fertiliser production, consumption and imports, particularly in the context of the current war and also the Kharif season, where crops are sown in June or July with the onset of monsoons and harvested in September or October, I reached out to Siraj Hussain, former Secretary of Agriculture of the Government of India, in a special weekend edition of the Corps report, and I began by asking him to take us through the broader issues at hand.

INTERVIEW TRANSCRIPT

Siraj Hussain: Now, there are three main fertilisers which are used in India. The largest consumption is that of urea and the reason is that urea is highly subsidised and therefore farmers prefer using urea even when it is not needed. In certain states like Punjab, Haryana, Uttar Pradesh, even Bihar, the consumption of urea is much more than what is recommended by scientists based on the soil tests.

So, urea is consumed in the largest quantity. The second is the DAP which is not as much subsidised as urea but still it is also a bit subsidised. It is under the nutrient-based subsidy scheme where the government of India fixes subsidy at a certain level and the market prices are supposed to take care of the rest.

So, DAP is very important for the crops. Unfortunately, because it is more expensive than urea, then farmers do not use it in the quantity which is required in many states. Then, there are other combinations, NPK, sulphur, zinc, boron, etc.

We are not going into that. Since these two are the main, it is important that they are available at the time of transplantation. Now, another important thing is when are they used?

Urea is used in case of paddy. We are taking the example of paddy because that is the largest creep crop. It is used as the basal dose which is at the time of transplantation.

So, in terms of months, let us say it will be around middle of July or something in many areas. Of course, it depends when the monsoon reaches and when the rains come. So, basal dose of urea is needed at that time and similarly, the basal dose of DAP is also needed at that time.

It is very important to have good availability of DAP and I think we are not very badly off.

Govindraj Ethiraj: Give us the context of imports and what were we importing before the war broke out on the 28th of February in West Asia? What has been affected and what is the downstream impact of that?

Siraj Hussain: First of all, there was a very good decision taken in the initial years of the Modi government that was to rejuvenate five urea plants which have added about 7.1 million tonnes of urea capacity in India. Of course, it is another matter that urea consumption has also gone up since then and therefore, in the overall terms, the dependence on import continues. Now, as far as Harif proper is concerned, the estimated demand of urea is about 18 million tonnes.

I am making approximate figures, I am not going into the details. So, about 18 million tonnes is the demand for urea in the Harif season. When the season began on 1st of April, the government had a stock of about 6 million tonnes.

So, there is a gap of about 12 million tonnes. Now, we can produce about 2.2-2.3 million tonnes every month but because of shortage of LNG, we are producing about 1.8 million tonnes every month. So, which means in these five months, we can produce 9 million tonnes.

So, 9 plus 6, 9 million tonnes of domestic production, 6 million tonnes of carryover stock, 15 million tonnes. So, there is a gap of about 3 million tonnes in case of urea which can be met by imports and India has been trying to import from various countries. China has restricted export but there are other countries like Kingdom of Saudi Arabia, Russia, Morocco, etc.

Govindraj Ethiraj: Sure. So, just to come back, we were importing urea and we were importing raw materials to produce fertilisers. So, I am just trying to understand what's the difference between the two.

Siraj Hussain: You see, for production of urea, you need LNG. About 80% of LNG goes, the cost of urea is in the form of raw material that is LNG. So, LNG is very important and as we know, the import of LNG has been adversely affected and the government has also restricted the supply of LNG to fertiliser plants, capping it at about 70-80%.

Now, if the supply of LNG improves, then I think the domestic production of urea can go up from about 1.8 million tonnes as I mentioned to about 2.2-2.3 million tonnes. So, that will be a good respite from the war. But having said this, the dependence on raw material that is LNG will continue even if the war comes to an end.

Also, we have plants in Oman. You know, IFCO had set up a joint venture in Oman. So, that was a good decision taken many years back.

So, new ideas have to come up how to secure India's urea availability going forward. But there is another thing, there is enormous disparity in use of urea across the states. Some states are using very high quantity which should be going down.

Govindraj Ethiraj: And you talked about DAP or Di-Ammonium Phosphate, what's the difference or in terms of capacity, in terms of actual usage, what's the difference between urea which you said subsidised versus the non-subsidised part?

Siraj Hussain: You see, if we take Harif crop alone, the demand for urea is about approximately 18 million tonnes. The demand for DAP is about 5-6 million tonnes. So, DAP is not used as much as urea but it is equally important.

The availability on 1st of April was approximately 2.5 million tonnes. So, there is a gap of about 3 million tonnes. For DAP, you know, we are even more import dependent for raw material, rock phosphate, etc.

Everything comes from various countries in the Middle East, Russia, etc. The domestic production is about 4 lakh tonnes, 0.4 million tonnes. So, we can produce 2 million tonnes in these 4-5 months.

So, 2 million tonnes of domestic production plus 2.5 million tonnes of buffer stock, opening stock, that will make it about 4.5 million tonnes. That will still leave a gap of 1 million tonnes of DAP. And, you know, tenders have been floated.

As far as I know, the response has been very poor or nil response has been there. So, the global situation is tight because every country was affected by the closure of Hormuz and the war on Iran. So, every country is scrambling to get DAP, urea, etc.

And since China has restricted export, you know, a very large exporter is out of reckoning. But I think on the whole, we should not be facing too much of a crisis. If peace continues, then supplies will improve.

And India has signed long-term agreements for supply of DAP with Kingdom of Saudi Arabia, Russia, Morocco, etc. So, I do not think for Kharif itself, there is too much cause for worry.

Govindraj Ethiraj: Right. So, we're also looking at slightly lower intensity of monsoons this year, that's 2026, as per the first prediction from SkyMet. We're still waiting for the Indian Meteorological Department.

And SkyMet said that it's likely to be 94% at 94% levels. My question really is, is there an intersection now between where we are in terms of our fertiliser stock, including potential imports and domestic manufacture, versus where we are headed towards the actual planting season?

Siraj Hussain: You see, all the models, including the Australian model, whose reports are out and they are available in public domain, they show that El Nino effect will come from August onwards, which means that monsoon rains may be lower than the normal rainfall. That may delay planting of paddy crop in various parts of India. So, if monsoon is delayed, then paddy transplantation will be delayed, which means that the demand for urea and DAP will also be delayed.

That will provide a cushion, but I do not think that will be a very good situation. The availability of good monsoon is as important, even more important, much more important than the availability of DAP or urea. Because you see, the soil retains urea and DAP.

If you have applied in ruby, then it is not that the yield will come down immediately or drastically. But if there is no water, then there is a real impact on production.