00:00Ambassador Syed, let's start with you. I mean, can India actually be neutral, especially after the U.S. sank the
00:08Iranian ship in international waters?
00:13So I think all of us globally are facing a situation which is unprecedented. And for India, it's not a
00:23distant geopolitical theater.
00:25It is something in the proximate neighborhood of India. And therefore, as a democracy, you find diverse opinions being espoused.
00:38And India is actually trying to articulate a position which is bound by its interests rather than by rhetoric.
00:48So I think that's what is playing out. And you will see that there are different people giving different opinions.
00:57But I think increasingly, the government has veered to a position that a calibrated approach is required, not a doctrinal
01:05one.
01:06And therefore, it's trying to engage all sides, neither endorsing an action nor adopting moral postures.
01:14So the Indian approach is simple. Protect Indians, keep sea lanes open, and try to prevent escalation.
01:23And the Indian government's actions should not be judged by what they say, but the outcomes.
01:31So the issue here from the government perspective is, can India speak to all sides?
01:36Can it protect 9 million-plus Indian citizens who are located in the Gulf, who call the Gulf its home?
01:43And can it protect the economic lifelines? Can it reduce escalation risk? All that requires access, not alignment.
01:53So I would suggest judge India's policy by results. Are the market stadia? Are Indians safer?
02:00And can it contribute to a wider diplomatic off-ramp, not applause lines?
02:07But the question I guess is whether India's credibility will be impacted if it doesn't lodge a complaint with the
02:15United Nations.
02:16Remember that this vessel was making its way back from an exercise from being invited by India.
02:24So let's take this issue that you've raised. You know, India's response, again, there is certainly discomfort in India that
02:36what has happened is something which is unusual.
02:42But India's response is guided by its interests, not alignment. It's a sign of caution.
02:49You know, naval incidents in the Indian Ocean affect shipping lanes that carry India's energy and trade.
02:54So therefore, the thinking is that do it quietly before these things appear in public.
03:02Public reactions during naval engagements can harden positions.
03:06And India's priority right now is preventing escalation.
03:10But, yes, there is a discomfort that this has expanded the war or the conflict to closer to home.
03:20And that's not a comfortable situation, either strategically or diplomatically.
03:25There are some in India who think of this, and there are some others who think that perhaps we need
03:32to look at it in a much more strategic way
03:36and try and ensure that we talk to all sides rather than hardened positions.
03:42Would you describe that as calibrated? Because I think that is confounded for many people the understanding of India's foreign
03:49policy.
03:50Your point is well taken. Judge it by outcomes.
03:53Right now, you know, the criticalities are making sure our people are safe and our trade is operational.
03:59But that trip to Israel seems to have confounded many people. What's your take?
04:06I think you've raised a valid issue about the Prime Minister's visit to Israel.
04:11Now, let's start by acknowledging that engagement with everybody is not alignment.
04:17And let's separate the optics from policy.
04:21A visit to Israel before the strikes does not make India complicit in what followed.
04:29Engagement of leaders is a continuous process.
04:32Crisis erupt between meetings.
04:35And if diplomacy meant endorsing every subsequent action of a partner after a visit, no country would maintain relationships anywhere.
04:46So from an Indian perspective, India has evolving ties with Israel.
04:51It has a very dense engagement with the Gulf and it has historic and cultural ties with Iran.
05:01And many Indians have a bond with Iran for a variety of reasons.
05:06So these all these three should not be seen as a weakness.
05:09It should be seen as leverage.
05:11And the Indian government, again, should be judged by how it uses these ties to achieve its outcomes rather than,
05:20say, of a visit which was planned in advance,
05:23which was not connected with any of these issues and to say that India's approach will be judged by a
05:33visit and the subsequent actions of a host is neither fair nor appropriate in this regard.
05:42And Madhavi, let's bring you into this conversation.
05:45How much pain is being inflicted on India's economy?
05:48We talk about energy, airlines and now $50 billion at risk in terms of remittances.
05:56I think the biggest pain that India would be facing would be the terms of trade impact on India's current
06:02account,
06:02which eventually will spill into the capital account as well.
06:05As we stand today, we have strategic reserves of around 9, 10 days and official reserves of close around 45
06:15days or so.
06:16So we are sorted for the time being, but clearly this risk is now moving away from just being a
06:22supply side risk to a more dynamic problem for India,
06:25both in terms of current account and capital account.
06:28On a static basis, if Brent increases by around $10 per barrel, we will be seeing a current account impact
06:37of almost 0.5% of GDP on a static basis.
06:40Now, unfortunately, the world doesn't, you know, really work on a static basis and we will see a lot of
06:45dynamic moves across, you know,
06:47our balance of payment, which essentially will imply that the current account would actually worsen to as high as, you
06:54know,
06:541.92% of GDP if we, you know, end up seeing Brent close to $90 billion and $90 per
07:01barrel.
07:01And the balance of payment would be as bad as $60-70 billion worth.
07:05So I think we need to be prepared for that pain, which eventually will spill on to the currency and
07:12to the reserve bank dilemmas as well.
07:14Are you seeing a sense of relief across markets today?
07:18Because at least in terms of crude oil supply, you know, the Russian route has opened up a little bit.
07:23The irony is not lost on me that we needed permission to be able to buy Russian crude.
07:29But nonetheless, does that sort of calm some of your fears?
07:32Well, at the margin, to be very honest, the current supply of Russian crude will also be, you know, eyed
07:37by the likes of China, right?
07:39And just to give you a context around that, until end of this fiscal, end of December,
07:46we were getting Russian supply to the extent of around 50% or 40% of our total supply,
07:52which is drastically cut down to less than 20% in January after we signed the deal with the U
07:57.S.
07:57So my sense is that while whatever supply of the Russian oil is available, there will be a lot of
08:03competition.
08:04Even the margins that, you know, we were, or the discounts we were getting from Russia would also be sort
08:08of suppressed
08:08or compressed to the extent that we would not enjoy the economic bargain as well as the, you know,
08:16political bargain that we have with Russia pre the U.S. deal.
08:20And my, you know, my sense is that China would get a large chunk of that available supply that you
08:25have at this point in time in the...
08:27Quick follow-up. Look, I think over the last week, we have, you know, sort of widely discussed the impact
08:32on,
08:33like you said, the current account, the capital account, the currency, the markets, you know, and the bond markets as
08:38well, right?
08:39I'm just wondering, at what point do you start seeing this war scenario seep into, you know, even things like
08:47consumption demand,
08:48which might be second-order, you know, effects, but is what will hurt the economy for a longer, longer time
08:54because that revival has already been very sticky.
08:56So the terms of trade impact eventually feeds into the growth story, right?
09:00There will be two or three ways by which this will be impacted.
09:03One would be the, you know, lower real purchasing power of consumers.
09:07Two would be, you know, fiscal hit to the government of India,
09:10which would imply that they may not be able to do adequate spending if they end up subsidizing oil and
09:15fertilizer.
09:16And third would be, you know, margin compression of companies as well as, you know,
09:20their inability to probably execute their investment plan, say, for example,
09:25which eventually will imply that the growth hit could be as high as 30-40 bps if this continues, yeah?
09:34Saad, let's pick up a conversation earlier.
09:36You talked about how India must do what is right for India.
09:40Are there red lines for Prime Minister Modi?
09:44Has it got to do with energy security, the diaspora of Indians overseas?
09:49What might that be?
09:51So it's pretty clear that India sees this conflict as not its war,
09:59but something which will impact its, not only foreign policy,
10:08but its economy and the safety of its citizens.
10:12So Prime Minister Modi is in a calibrated manner.
10:15Yesterday he mentioned wars do not lead to solutions.
10:18So you need to understand that we are facing a difficult situation.
10:25And in that situation, it's best to not to raise rhetoric, but to do things quietly.
10:33So all of us are used to public statements as being the only form of diplomatic interaction.
10:41But that need not be so.
10:43Quiet diplomacy is also substantive diplomacy.
10:46And you can see the phones are continuously being engaged.
10:52Prime Minister has talked to all Gulf leaders.
10:56You know, one of the things that has not been looked at in serious measure
11:02is that in the last 10 years, India's engagement with the Gulf states is unprecedented.
11:11Frankly, Prime Minister Modi is the first Indian prime minister who visited every Gulf state,
11:16including UAE, I think about seven or eight times.
11:19So India's investment in the Gulf is immense.
11:23And therefore, India would like to protect those investments while also not crossing any boundaries.
11:32And that's a difficult trapeze act.
11:35And they're trying to do the best in difficult circumstances.
11:38Then I'd like to be sure it needs to be my interest.
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