Oct 25: India’s Oil Dilemma, $8 Billion M&A Wave

Incase you were not aware, the Asia Cup trophy fiasco is still going on. India still dont have the trophy, which was won over a month ago. The Men in Blue had refused to accept the silverware from PCB head Naqvi and the trophy has now apparently been moved to an “undisclosed location” in Abu Dhabi. Naqvi is now saying that if India truly wants it, they can come to the ACC office and collect it from him. At what point is someone going to decide to make this into a mini-series? 🏆✨

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 6 mins.

The Indian stock market closed lower on Thursday, with the Sensex and Nifty 50 settling in the red. Broader markets, including the Midcap and Small-cap indices, also declined, despite outperforming the benchmarks.

India’s Oil Dilemma: Indian refiners may soon have to recalibrate their crude sourcing strategies following fresh U.S. sanctions on Russia’s two largest oil producers, Rosneft PJSC and Lukoil PJSC. The move, announced by Washington on Wednesday, is expected to push up India’s oil import bill as refiners turn to alternative suppliers in West Asia and beyond.

U.S. Sanctions And India’s Oil Dependence: The U.S. sanctions, part of efforts to choke Moscow’s war funding, target companies that together supply nearly 60% of India’s Russian crude imports, or about 1 million barrels per day. India, which relies on foreign suppliers for 85% of its oil needs, began heavily purchasing discounted Russian oil in 2022 amid Western restrictions on Moscow. Analysts estimate that replacing Russian crude with market-priced oil could raise India’s annual import bill by around $2.7 billion, or roughly 2%, based on FY25 import levels.

Reliance Industries To Scale Back Russian Oil Purchases: Reliance Industries, India’s largest private refiner and the single biggest buyer of Russian crude, is reportedly halting or scaling back imports from Rosneft and Lukoil. The decision comes after the U.S. Treasury’s latest sanctions deadline of November 21 for global firms to cease transactions with these Russian entities. Reliance’s Russian crude accounted for more than 50% of its refining mix, with daily imports estimated at over 600,000 barrels in September. Analysts warn that the shift could pressure Reliance’s refining margins and profitability, though replacement supplies from West Asia, Brazil, or Guyana remain available.

Impact On Other Indian Refiners: Other Indian refiners are also expected to cut back on Russian imports, leading to a near-term spike in costs. Experts note that while India can easily source crude elsewhere, the discount advantage of Russian barrels, typically $2–4 per barrel cheaper than Middle Eastern grades, will disappear.

Trade Dynamics And A Possible U.S. Deal: The sanctions come amid renewed hopes of a U.S.- India trade deal, with President Donald Trump claiming Prime Minister Narendra Modi has agreed to reduce Russian oil imports. Though unconfirmed by New Delhi, analysts at Nomura suggest the short-term economic pain from pricier oil could be offset if a trade agreement leads to lower U.S. tariffs on Indian exports.

Banking Sector: India’s financial sector has seen a surge in mergers and acquisitions (M&A), with deals totaling $8 billion from January to September 2025, marking a 127% increase over the same period last year. Major transactions include Emirates NBD’s $3 billion acquisition of 60% in RBL Bank, Sumitomo Mitsui Banking Corporation’s $1.6 billion stake in Yes Bank, and Blackstone’s $705 million investment in Federal Bank. The wave spans banks, housing finance, gold loans, and insurance, drawing both domestic and international investors.

Major Deals Driving The Surge: Reliance on foreign capital is evident in high-profile deals: Federal Bank approved a Rs 6,196 crore issue of convertible warrants to Blackstone for a 9.99% stake, while Emirates NBD invested Rs 26,853 crore for up to 60% ownership in RBL Bank—the largest foreign investment in India’s financial services sector. Non-banking financiers are also participating, with Abu Dhabi’s International Holding Company infusing $1 billion into Sammaan Capital for a 41% stake. Other significant transactions include Sumitomo’s 24.2% stake in Yes Bank and IDFC First Bank raising Rs 10,124 crore from Warburg Pincus and the Abu Dhabi Investment Authority.

Strategic Implications And Reforms: Analysts say the M&A boom signals growing foreign confidence in India’s financial ecosystem and a possible structural reset in banking - the deals as evidence that the RBI is pivoting on ownership rules, hinting that long-standing caps on voting rights (26%) and corporate stakes (9.99%) may be reconsidered. Veteran bankers welcome the shift, noting that opening the sector to global investors, while ensuring guardrails, could unleash India’s banking potential.              

Airtel And Jio Poised For Profitability Surge: After years of heavy investment in 4G and 5G networks, India’s top telecom players are finally seeing margins improve. Analysts say operational efficiencies and strong subscriber growth are driving the turnaround. The sector, once burdened by massive capital expenditure, could now see record profits. Competition remains intense, but scale and network leadership favor the major players.

Reliance Races To Secure Battery Gear From China: Facing impending Chinese export curbs on battery equipment, Reliance is moving quickly to secure critical components. The push is aimed at maintaining timelines for its EV and energy storage projects.

India VC Funding Slows In Q3, Exits Soar: Investment activity in Indian startups eased during the third quarter, reflecting cautious investor sentiment. Despite the slowdown in new funding, exit activity surged, reaching levels not seen in seven years. Analysts attribute this to strategic acquisitions and successful IPOs.

Bajaj Auto Gets Austria Nod For Pierer Mobility Takeover: Bajaj Auto’s subsidiary has received approval to acquire control over Pierer Mobility AG, marking a strategic expansion into the European market. The move strengthens Bajaj’s footprint in premium motorcycles and mobility solutions.

RBI Turns To Gold For Stability: The Reserve Bank of India is increasing its gold holdings as a hedge against volatility in foreign currency assets. Analysts say this move strengthens India’s reserves amid global economic uncertainty. Gold provides a safe haven, balancing exposure to dollar-denominated assets.

Bharat Taxi Takes On Ola, Uber: A new player, Bharat Taxi, aims to offer a cooperative alternative in India’s ride-hailing sector. The service focuses on driver ownership and shared profits, challenging the dominance of Ola and Uber.