Best of the Week: despite austerity measures, India braces for wider trade gap

Dear reader,

India’s current account deficit is set to widen sharply this year as higher crude oil prices strain the economy. Economists say disruptions around the Strait of Hormuz could keep oil expensive for months, raising India’s import bill since the country buys nearly 90% of its crude from abroad. Prime Minister Narendra Modi has urged people to cut discretionary spending, from fuel use and foreign travel to gold purchases, to ease pressure on the economy.

Experts say such “economic patriotism” may help a little, especially by reducing gold imports, but won’t fully offset the impact of costly oil and weak foreign investment flows. A wider current account deficit also means more pressure on the rupee, which economists expect could weaken further this year.

Still, most economists don’t see India slipping back into the kind of crisis it faced during the “Fragile Five” era in 2013. They point out that India enters this period with stronger growth, healthier government finances and sizable foreign exchange reserves, even if those reserves have started declining in recent months.

On to, the best of Mint’s journalism from this week:

Fuel prices rise after long freeze

After more than two years of unchanged prices, petrol and diesel just got costlier by about ₹3 a litre. The hike comes shortly after state elections wrapped up and reflects the growing pressure on state-run oil companies, which have been absorbing losses as global crude prices stay high. The increase is expected to be just the beginning, with experts warning that more hikes could follow if oil prices remain high. The move will likely ripple across the economy, pushing up transport, farming and telecom costs, and adding to inflation worries. For consumers already dealing with expensive groceries and utilities, fuel is set to pinch a little harder now.

Courtroom as a marketplace?

A new corner of India’s financial market is taking shape, where investors are backing commercial lawsuits in return for a share of future settlements or court awards. Firms such as Five Rivers, LegalPay and ELF Partners are betting that high-stakes legal disputes can become a serious alternative asset class. The model is simple: fund legal costs, win the case, and share the payout. Returns can be huge, but losses are total if cases fail. Though still tiny in India, the sector is attracting wealthy investors and could reshape how companies fight expensive legal battles.

Cheap e-scooters spark quality worries

India’s low-speed electric scooter market is booming, but established EV makers are getting nervous. Sales of these cheaper scooters, many assembled from imported Chinese kits, have surged and are now matching mainstream electric scooter volumes. Their appeal is simple: prices start around ₹40,000, less than half the cost of a regular e-scooter. But industry executives warn the rapid rise of low-quality products with weak after-sales support could hurt consumer trust in EVs. Since these scooters don't need to be registered, the market has largely grown outside formal oversight. For buyers in small towns and delivery fleets, affordability matters most, but quality concerns are beginning to grow alongside the boom.

Too many funds, too little clarity

India’s mutual fund boom is giving investors more choice than ever, but it's also making decisions harder. With over 50 fund houses now chasing a share of the ₹74-trillion industry, new launches in thematic, passive and quant funds are flooding the market. For many retail investors, picking funds increasingly comes down to social media buzz, rankings or word-of-mouth rather than deep research. New entrants are trying different playbooks, from celebrity fund managers to digital-first platforms and aggressive distributor expansion. But the industry remains dominated by a handful of giants, and profitability is tough for smaller players. As competition intensifies, the real challenge will be standing out in a crowded market while earning investor trust for the long run.

Dubai’s property party pauses

Dubai’s red-hot property market is finally cooling after years of breakneck growth. The trigger this time isn't just high prices or oversupply, but the US-Iran conflict and regional tensions that rattled investor sentiment. Transaction volumes have dropped sharply since February, especially in luxury and off-plan segments, though prices have largely held steady so far. Still, many expats and Indian buyers aren’t rushing for the exits. Instead, investors are becoming more selective, hunting for bargains and flexible payment plans. Brokers say the slowdown may actually be healthy after years of frenzy, with long-term faith in Dubai’s appeal still intact.

Air India lost nearly $3 billion last year. It's eating into Tata's pocket

Air India's estimated loss for FY26 stands at roughly ₹28,400 crore, nearly three times its loss the previous year. To put it in perspective, that's more than the entire dividend Tata Sons earned from TCS last year. The hits came from everywhere: Pakistan's airspace closure, the London crash, the West Asia war, jet fuel prices nearly doubling, and a rupee in freefall, all landing on an airline still mid-transformation. Add to this a CEO exit with no successor named yet. Tata Sons is simultaneously funding four cash-hungry businesses, Air India, Tata Digital, Agratas, and Tata Electronics, having already poured over $11 billion into them.

India pulled the plug on sugar exports again

India produces just about as much sugar as it consumes — roughly 28 million tonnes. That's a razor-thin margin, and this year, the government decided it wasn't comfortable enough. Sugar exports moved from "restricted" to outright "prohibited" until September 2026. The trigger was tighter-than-expected production after late rains hurt sugarcane recovery rates in Maharashtra and Karnataka, a potentially difficult El Niño season ahead, the festive season, and the UP and Punjab elections, where any price spike would sting politically. Closing stocks could fall to just two months of supply. That's too close for comfort. For sugar mills, this hurts hard, and their shares fell immediately. For global buyers in Africa and the Middle East, Brazil and Thailand just became more attractive.

IPL teams are selling for billions

Rajasthan Royals was sold for $1.65 billion. RCB went for $1.78 billion. Both at roughly 30x annual revenue. By any conventional investment metric, that looks expensive. The paradox is, the IPL itself is losing value. Media rights, which fund up to 75% of a team's revenue are expected to stagnate in the next bidding cycle. Fewer broadcasters are willing to overpay, real-money gaming advertising dried up after last year's ban, and the IPL ecosystem's total value has already fallen from $11.2 billion in 2023 to $8.8 billion. The teams are still fetching record prices because owning an IPL team was never a purely financial play. It also about brand, visibility, and a seat at India's biggest sporting table. Cricket is heading to the Olympics, global leagues are expanding, and for families such as the Mittals and Birlas, the returns go well beyond a balance sheet.

The Adani legal saga isn't over

Gautam Adani and nephew Sagar just settled civil charges with the US SEC for $18 million, $6 million and $12 million, respectively. Case closed on that front. But the criminal investigation by the US Department of Justice remains very much alive. The Adanis themselves acknowledged in their consent filings that this settlement grants them zero immunity from criminal liability. The more intriguing subplot is that their defence lawyer flew to Washington last month with a 100-slide presentation arguing prosecutors lacked evidence and jurisdiction. The New York Times reported the DOJ may drop charges. Tucked into that presentation, reportedly, was an offer worth $10 billion investment in the US, 15,000 jobs.

Finfluencers, FOMO and first SIPs

Under-30s now make up 38% of NSE's investor base, up from 29% five years ago. Their mutual fund AUM is growing faster than those of any other age group. By every metric, India's youngest generation has taken to the markets confidently, enthusiastically, and sometimes recklessly: 72% place their first trade based on a friend's tip. Most follow finfluencers over financial advisers. Nearly half their money sits in small-cap stocks. And most entered markets during the post-covid boom, meaning a real downturn hasn't tested them yet. The optimistic view? Starting early, even imperfectly, beats starting late.