The Investment Relay: Government-Led Capex and Private Sector Hesitation in India.....

Introduction

The Indian economy currently presents a fascinating dichotomy where macroeconomic growth indicators remain robust while the engine of private sector investment operates below capacity. Over the past five years, the baton for capital expenditure (CAPEX) has been firmly held by the government, which has been driving investment to build foundational infrastructure. This heavy lifting has been necessitated by a prolonged hesitation in private sector investment, driven by a combination of sluggish demand, capacity underutilization, and, crucially, high inflation and volatile price expectations. As India aims for a $5 trillion economy, the reliance on public spending rather than private enterprise poses significant questions about the sustainability of its growth model, especially as inflationary pressures compress corporate margins and create a "wait-and-watch" mentality among investors.

Why the Government Holds the Baton

The shift towards government-driven investment has been a strategic response to structural slowdowns in the private sector since roughly 2012–13. Following the pandemic, the central government intensified this role to revive economic growth, employing a "crowding-in" strategy, where public infrastructure investment is intended to create the necessary conditions to attract private capital. In the 2024–25 Union Budget, the government continued this trend with a massive capital expenditure allocation of INR 11.11 lakh crore, representing roughly 3.4% of GDP. This investment is heavily focused on infrastructure, including roads, railways, and renewable energy, aimed at boosting productivity and reducing logistics costs through initiatives like the PM GatiShakti National Master Plan. Furthermore, the government has used direct incentives to spur manufacturing, notably the Production Linked Incentive (PLI) schemes with an outlay of over INR 1.97 lakh crore, aimed at sectors like electronics, pharma, and automobiles. State governments have also stepped up in certain quarters, with 34.6% growth in their fresh investments in Q3 FY25, providing a crucial boost to the overall investment landscape.

Why the Private Sector is Delaying Investment

Despite high corporate profitability in 2024 and significant corporate tax cuts introduced earlier, the private sector has been reluctant to initiate large-scale greenfield projects. Data indicates that private corporate investment has remained stagnant at around 12% of GDP for over a decade. A primary reason for this, as evidenced by a 1.4% decline in private investment plans in the third quarter (Q3) of FY 2024-25, is the perception of weak demand and fears over rising costs. Many companies continue to operate with capacity utilization below 75-80%, reducing the immediate need for new plants and machinery. Additionally, firms have preferred to pay down debt or return capital to shareholders through buybacks rather than investing in new projects. The lingering impact of high debt levels, or corporate balance sheet issues, has made firms cautious about long-term debt-funded expansion, creating a scenario where, despite having cash, they prefer liquidity.

The Role of Inflation and Price Expectations

Inflation and price expectations have played a critical role in delaying private investment. High inflationary pressures, particularly in the aftermath of global supply chain disruptions and high energy costs, have significantly compressed corporate margins. When input prices rise faster than the selling prices of finished goods, profitability shrinks, and companies become wary of new investment, fearing they cannot pass the costs on to consumers in a weak demand environment. Moreover, high food inflation in India, which has been volatile, can restrain discretionary spending, further suppressing demand.

Price expectations are crucial; if manufacturers anticipate that high inflation will continue, they may hesitate to invest in projects with long gestation periods, as the cost of raw materials and labor might make the project unviable upon completion. Data shows that even when retail inflation was showing signs of easing in early 2025 (4.9% from April to December 2024), input cost fears remained, with 1.4% of private plans being pulled back in Q3 FY25 due to these concerns. The RBI’s inflation-targeting framework, which requires keeping inflation within a 2-6% band, means that when inflation surprises on the upside, it often leads to high interest rates, making borrowing more expensive for companies, thus acting as a deterrent to expansion.

Conclusion

The current investment scenario in India is defined by a "paradox of 2025," where strong macroeconomic performance, driven by public investment, has not yet translated into a robust private-sector revival. The government, through massive infrastructure spending and incentives like the PLI scheme, has taken the lead to bolster the economy's productive capacity, but this cannot be a permanent substitute for private investment. The delay by the private sector is not merely due to lack of funds, but to a cautious approach driven by idle capacity, weak demand, and the erosion of margins due to persistent inflationary pressures and uncertain price expectations. While the 2024-25 budget has attempted to create a better environment with the removal of the angel tax and focus on SME credit, the long-term sustainability of India’s 7%+ growth depends on the private sector regaining the confidence to start investing again. Until inflationary pressures are fully anchored and demand improves significantly, the baton for investment is likely to remain in the government's hands. 

Productivity, Market Structure, and the Dynamics of Pricing.....

Introduction

The relationship between productivity and pricing is a cornerstone of economic theory, yet its practical application is fundamentally mediated by the structure of the market. While the productivity theory suggests that gains in efficiency should lead to lower consumer prices, this outcome is not guaranteed. Instead, the final price is determined by the degree of market power held by firms, which dictates whether the benefits of increased productivity are passed on to the consumer or retained as surplus profit. By examining how monopolies and perfectly competitive firms set prices, one can understand the critical role that market entry and supply expansion play in driving price competition.

The Mechanism of Productivity and Market Power

The core of the productivity theory holds that when firms become more efficient—producing more output with fewer inputs—the marginal cost of production falls. In an ideal economic scenario, these cost savings translate into lower prices for the end user. However, market power functions as a filter for these savings. Market power is the ability of a firm to raise prices above marginal cost without losing all its customers. In markets with high barriers to entry, firms can leverage productivity gains to increase their profit margins rather than lowering prices, effectively decoupling productivity from price relief. Consequently, the benefits of innovation and efficiency are often captured by the producer rather than the consumer when competition is absent.

Pricing Disparity Between Monopoly and Perfect Competition

A monopoly and a firm in a perfectly competitive market operate under vastly different pricing incentives. In perfect competition, firms are "price takers" who must accept the market equilibrium price determined by the intersection of aggregate demand and supply. Because many firms sell identical products and entry is free, any individual firm that attempts to price above the market rate will lose its entire customer base. Here, productivity gains almost inevitably lead to lower prices because competitive pressure forces firms to pass savings along to maintain their market share. In contrast, a monopoly is a "price maker" with no close substitutes for its product. A monopolist maximizes profit by restricting output and setting prices where marginal revenue equals marginal cost, often resulting in higher prices and lower output than what would be seen in a competitive environment. For a monopolist, increased productivity may simply result in higher "deadweight loss" or increased producer surplus rather than a cheaper product for the public.

Market Entry and the Catalysis of Price Competition

The transition from a concentrated market to a more competitive one occurs through the entry of new firms. When barriers to entry are low and new participants enter the market, the total supply of the good increases. According to the law of supply and demand, an outward shift in the supply curve—driven by both more firms and their individual productivity improvements—places downward pressure on the equilibrium price. As more firms vie for the same pool of consumers, price competition becomes the primary tool for gaining market share. This competitive process ensures that the "precedents" of high pricing set by former incumbents are challenged. Over time, the influx of competitors transforms the market structure, reducing the market power of any single entity and forcing a closer alignment between production costs and consumer prices.

Conclusion

Ultimately, the theory that productivity leads to lower prices is highly dependent on the competitive landscape. While perfect competition serves as an engine that passes efficiency gains to the consumer, a monopoly can act as a dam, holding back those benefits to maximize private gain. The entry of new firms is the essential mechanism that breaks market power, stimulates supply, and ensures that the fruits of productivity are reflected in the marketplace. Without robust competition, the link between working smarter and paying less is easily severed by those with the power to set the price.

Long-Run Macroeconomic Growth with Deflationary Expectations and Supply-Side Enhancement.....

Economic growth is traditionally viewed through the lens of expanding demand or increased capital accumulation. However, a significant, often overlooked, driver of long-run growth is the interplay between lower prices, downwardly adjusted inflation expectations, and enhanced supply-side efficiency. This model explores how a sustained, lower price environment, supported by lower inflationary expectations, can lead to a rightward shift in the Long-Run Aggregate Supply (LRAS) curve, stimulating potential output. By reducing the nominal cost of inputs and fostering productivity gains, an economy can experience sustainable, non-inflationary growth, reversing the conventional wisdom that lower prices only signify recessionary pressures.

Model Construction

The model relies on the AD-AS framework, operating in the long run where all input costs and expectations are fully flexible. The core equation for Long-Run Aggregate Supply is (Y_{L}=f(K,L,T,P^{e}), where (Y_{L}) is potential GDP, (K) is capital, (L) is labor, (T) is technology, and (P^{e}) is expected price level. In this model, a lower price level (P) and lower inflationary expectations (P^{e}) influence the supply side. When producers expect lower future prices and costs, they invest in cost-saving technology and productive capacity, shifting the Aggregate Supply curve rightward.

Graphically, this involves a downward adjustment in input costs, such as nominal wages and raw material costs, shifting the Short-Run Aggregate Supply (SRAS) curve rightward. In the long run, this persistent shift, coupled with increased productivity from the lower-price environment, causes the vertical LRAS curve to move to the right, indicating a higher level of potential output (Y_{L}).

The mechanism works because, unlike a sudden negative demand shock that reduces output, a gradual reduction in price levels and inflationary expectations (a positive supply shock) allows for lower, more stable production costs. The lower (P^{e}) reduces the need for workers to bargain for high nominal wage increases, which lowers the cost of production and increases the long-run capacity of the economy.

Data Analysis

Data analysis of inflationary periods, such as the Volcker disinflation, indicates that while lower prices initially cause a contraction in output, the long-term impact of lower inflation expectations is stabilizing, enabling stronger growth. Empirical studies on supply shocks show that when price expectations decrease alongside a positive supply-side adjustment, the long-run Phillips curve shows a lower price level without a permanent drop in output.

In a scenario where technology increases productivity, costs fall, leading to lower prices, which allows for increased real income and greater investment in the long run. Furthermore, research suggests that when inflationary expectations are well-anchored at a lower level, the supply chain becomes more efficient, leading to higher, more sustainable output levels. The analysis of decreasing-cost industries, which often accompany lower prices due to technological improvements, confirms that lower prices can coincide with higher supply, shifting the long-run supply curve to the right.

The long-run model of economic growth with lower prices and lower inflation expectations demonstrates that downward pressure on prices can, in fact, drive economic growth. By reducing input costs and aligning inflationary expectations to a lower, more stable rate, an economy enhances its productive capacity, illustrated by a rightward shift in the LRAS curve. While the transition may involve short-run adjustments, the long-run equilibrium achieves higher potential GDP through increased efficiency and lower costs. Therefore, policy frameworks that foster productivity-led, lower price environments are conducive to sustainable, long-term expansion rather than merely causing deflationary stagnation.

RBI’s February 2026 Policy: A Delayed Response to Low Underlying Inflation and Sluggish Demand.....

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decision on February 6, 2026, to maintain a status quo on the repo rate at 5.25% and retain a "neutral" stance, despite a challenging deflationary environment, represents a critical, albeit arguably delayed, acknowledgement of the "low inflation" problem. While headline inflation has shown signs of a slight uptick due to volatile precious metal prices, the underlying economic reality—when excluding gold and silver—is one of exceptionally benign price pressures and weak consumer demand, pointing to a need for continued monetary easing. The decision reflects an excessive, albeit cautious, focus on headline numbers, failing to address the acute need to stimulate spending and rectify the imbalances in supply and demand in the economy.

Low Inflation and the "Ex-Gold/Silver" Reality

The core issue facing the Indian economy in early 2026 is that inflation has consistently operated well below the 4% target. While the RBI projected CPI inflation for FY26 at 2.1% (up from 2.0%), the underlying, or "core," inflation remains exceptionally low, suggesting that the economy is facing a deflationary, rather than inflationary, pressure. The "headline" numbers have been artificially elevated by a sharp surge in gold and silver prices (36% year-on-year in some segments), which are essentially safe-haven investments rather than consumer goods demand. When excluding these components, the underlying price pressures are extremely subdued, bordering on deflationary in some sectors, suggesting the RBI is overreacting to volatility in precious metals.

Delay in Addressing Spending and Demand

The refusal to cut rates is a failure to address the sluggishness in consumer demand. While GDP growth is projected at a robust 7.4% for FY26, this number is heavily supported by government-led capital expenditure rather than widespread private consumption. Urban consumption, in particular, remains weaker than rural consumption, which has only recently shown signs of recovery. The continued high cost of credit, which has not fully transmitted to the final consumer despite 125 bps of easing throughout 2025, is limiting spending. The RBI's "wait-and-watch" approach is a significant delay in acting, as the "real" interest rate remains elevated, hindering economic velocity.

Supply and Demand Mismatch

The current economic conditions are characterized by a supply-side that has recovered well—supported by favourable monsoons and high production—outpacing the demand-side, which is lagging. The economy has seen a "Goldilocks" scenario turn into a "weak-demand" scenario, where the supply of goods is ample (keeping food inflation low), but consumer purchasing power, especially in urban areas, is not keeping pace. The RBI's decision to pause, thus, fails to address this structural weakness. A cut in the repo rate would have lowered the cost of credit, boosting consumption and helping to bridge the gap between strong supply and weak consumer spending.

In conclusion, the RBI’s decision to keep the repo rate at 5.25% in February 2026 is a "wait-and-watch" approach that acts as a delay in addressing the core problem of low, non-commodity-driven inflation and the need to boost consumption. By focusing on headline CPI, which is distorted by gold prices, the MPC is overlooking the underlying deflationary pressures that require a more accommodative stance. With private demand still weak and supply conditions strong, the status quo acts as a drag on economic potential, delaying the necessary stimulus to make growth more inclusive and robust. The decision is a "delayed acceptance" of the low-growth-demand reality, prioritizing a rigid inflation target over a needed boost to spending.

The Paradox of Rate Cuts: Why Below-Target Inflation and High Real Rates Demand Policy Easing.....

When central bank inflation targets are set, they are generally intended to provide a stable, small positive buffer to encourage spending and prevent deflationary spirals, usually around 2% to 4% depending on the institution. A situation where inflation and expectations are running at 2%—significantly lower than a 4% target—creates a scenario of high real interest rates that can stifle economic activity. Despite the conventional view that rate cuts stimulate spending, the prevailing economic conditions, characterized by high nominal rates (e.g., 5.25%) relative to low inflation (2%), create a "real" interest rate that is higher than the long-run neutral rate. Consequently, this environment raises expectations for rate cuts, which are ironically necessary to prevent a, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further.

The Dynamics of High Real Rates and Low Inflation

In this scenario, inflation and its expectations have anchored at 2%, which is 2 percentage points below the 4% target. According to the Fisher Equation, the real interest rate is calculated as the nominal interest rate (5.25%) minus inflation (2%), resulting in a real rate of 3.25%. If the long-run neutral rate (the rate that neither speeds up nor slows down the economy) is 2%, a real rate of 3.25% is significantly contractionary. This means money is expensive, making borrowing costs for consumers and businesses high.

When inflation is this low (or falling), the real value of debt increases. Savers benefit, but borrowers are penalized, leading to a reduction in consumption and capital expenditure. The high real rate acts as a barrier to investment. As seen in recent economic data, when inflation drops below the central bank’s target range, the real policy rate becomes too restrictive, often acting as a drag on private investment and overall economic growth.

Why Rate Cut Expectations Rise

With inflation running well below the 4% target, the central bank’s monetary policy is deemed too tight. The primary mandate of most central banks is to keep inflation around their target; thus, inflation at 2% versus 4% indicates an over-tightening of policy. Market participants and analysts therefore increase their expectations for rate cuts to bring the real rate back down closer to the neutral rate (2%).

The high real rate (3.25%) represents a "drag" on the economy. To prevent inflation from falling further, or potentially entering a deflationary spiral where consumers delay spending in expectation of lower future prices, rate cuts are necessary to incentivize economic activity. Furthermore, when inflation falls below targets, central banks must act to prevent "low inflation traps" which can lead to weak demand and, ironically, even lower inflation in the future.

How Rate Cuts Reinforce Spending

Cutting the 5.25% nominal rate, for instance, to 4.5% would immediately lower the cost of borrowing. This eases the burden on households and businesses, encouraging increased, rather than delayed, spending. If the 3.25% real rate is currently causing a slowdown, a reduction in the nominal rate reduces this real burden, boosting consumption and investment.

The delay in spending occurs when real rates are high because the cost of capital is prohibitive. By lowering the nominal rate, the central bank reduces the real rate (nominal rate - inflation), thereby reducing the cost of borrowing, which should boost investment and consumption, making loans more affordable. Therefore, contrary to the fear that rate cuts might not immediately spark spending, they are necessary to remove the high-cost barriers that are causing the delay in the first place.

A situation where inflation (2%) is significantly below a 4% target means that a 5.25% nominal rate produces a high real interest rate, which is restrictive. This high real rate (3.25%) is far above the estimated 2% neutral rate, which causes a, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further. The resulting economic slowdown drives expectations for rate cuts. These cuts are designed to reduce the high real cost of borrowing, encouraging consumption and business investment, thereby preventing the economy from falling into a low-inflation, low-growth trap, or, or, paradoxically, to reinforce, a, or delay in, spending, ultimately preventing inflation from falling further. Thus, rate cuts in this scenario are essential to re-accelerate spending and bring inflation back up to the target.

The Great Pivot: Modi’s Strategic Shift from Moscow to Washington.....

In a move that has sent shockwaves through global energy markets and reshaped geopolitical alliances, Prime Minister Narendra Modi has reportedly agreed to halt oil imports from Russia. This dramatic reversal comes after months of Indian reliance on discounted Russian crude, which surged to nearly one-third of India's total imports in 2025. The sudden pivot, likely precipitated by crippling U.S. tariffs on Indian goods and a strategic reassessment of economic gains, signals a pragmatic,, "India-first" foreign policy that prioritizes long-term economic stability over short-term discounted energy gains.

The Economic Logic: Losses and Gains

1. The "Loss" of Russian Oil (High Costs and Risk):

While initially seen as a bargain, Russian oil became increasingly costly due to, ironically, its own success.

Sanctions Pressure: Tightening U.S. and European sanctions on major Russian producers made it harder for Indian refiners to manage compliance risks.

Rising Costs: Shipping costs and insurance for Russian oil increased, and, by late 2025, the logistical nightmare was reducing the value of the "discount".

Tariff Penalties: The U.S. imposed a 25% tariff on Indian goods, specifically targeting India's continued purchase of Russian oil.

2. The "Gain" from Exports (Turning Oil into Opportunity):

India emerged as a crucial global supplier of refined products, with petroleum product exports touching record highs in 2025.

The Refinery Pivot: Indian refiners like Reliance Industries and MRPL, which possess sophisticated, flexible technology, moved away from relying solely on Russian feedstock to diversify their sources.

Record Exports: Despite sanctions, India managed to increase its refined product exports to the U.S. and Europe, benefiting from elevated refining margins caused by global supply disruptions.

Market Diversification: India utilized the shift to secure new export markets, with refined product exports to countries like the US and Australia growing, ensuring higher export revenue.

Precedents of Pragmatism

This is not the first time India has shifted its foreign policy based on changing economic realities:

1991 Economic Reforms: India abandoned its socialistic, Soviet-aligned economic model for liberalization following a balance-of-payments crisis.

The 2008 Civil Nuclear Deal: India moved away from its traditional non-aligned stance to develop a strategic partnership with the United States, prioritizing energy security.

2020 Border Standoff: Following the Galwan Valley clash, India immediately banned over 200 Chinese apps, demonstrating a willingness to sacrifice economic ties for national security interests, similar to the current decision to reduce reliance on Russian energy.

The New Narrative: "India-First"

The narrative surrounding this pivot is not one of "bowing to pressure," but of calculated, pragmatic sovereignty.

Energy Security: The government can argue that "securing energy" now means diversifying suppliers (USA, Venezuela, West Asia) rather than relying on a single, sanctioned source.

Economic Growth: By removing the 25% U.S. tariff, the move protects critical Indian industries like textiles and pharmaceuticals, which were threatened by the tariffs.

Geopolitical Balancing: The move keeps the U.S. relationship steady while allowing India to maintain a "friendship" with Russia, a vital defense partner, without being caught in the sanctions crossfire.

Prime Minister Modi’s agreement to halt Russian oil imports represents a masterful, albeit sudden, recalibration of India's foreign and economic policy. By recognizing that the "loss" of cheaper oil was becoming a greater financial burden—due to trade tariffs and sanction risks—than the "gain" from refined exports, the administration has chosen to pivot towards the U.S. and diversified energy sources. This move, echoing historical precedents of pragmatic decision-making, reasserts India's role as a sovereign, self-interested global power, maneuvering through the complexities of a new cold war to secure its economic future.

The 2026 India-US Trade & Energy Accord: Navigating Geopolitics and Economics.....

In a major realignment of global energy and trade, India and the United States finalised a comprehensive trade and energy agreement on February 2, 2026. This deal, announced following a high-level conversation between US President Donald Trump and Indian Prime Minister Narendra Modi, brings an end to months of heightened trade tensions and punitive tariffs. The core rationale of this deal is to trade India’s commitment to halt, or significantly reduce, its purchases of Russian crude oil—a major source of tension—for relief from steep US tariffs on Indian goods. This agreement marks a critical shift in India’s foreign policy, aiming to strengthen strategic ties with the US while managing the economic implications of moving away from discounted energy sources.

Rationale of the Trade Deal: The "Oil-for-Tariff" Exchange

The primary driver behind this deal is the intense diplomatic pressure from the Trump administration regarding India's import of Russian crude oil, which had served as a vital, cheaper alternative for India since 2022.

Tariff Relief: In 2025, the US had imposed punitive tariffs, pushing the total duty on Indian exports to nearly 50% (combining a 25% "reciprocal" tariff and a 25% "penalty" for Russian oil purchases). The 2026 deal slashes these tariffs on Indian goods to 18%, providing massive relief to Indian manufacturers, particularly in sectors like textiles, gems and jewellery, and pharmaceuticals.

The Russian Oil Constraint: The US has linked this tariff rollback directly to India’s commitment to cease or severely curtail its purchase of Russian oil. While Russia was a top supplier (peaking at ~40% of India's imports in 2025), the US aims to shrink Russia's war chest.

Strategic Pivot: As part of the deal, India has agreed to significantly increase imports of American energy products, including oil and liquified natural gas (LNG), and potentially explore other suppliers like Venezuela.

Impact on India’s Oil Imports

The shift away from Russian oil will significantly alter India’s energy import basket.

The Transition from Russia: Russian oil, which was often purchased at a discount (sometimes up to $10-$20 less than Brent), helped keep domestic fuel prices stable. The 2026 agreement implies a sharp reduction, or "winding down," of these imports, which had remained high at around 1.1 million barrels per day (bpd) in early 2026.

Increase in US/Other Imports: India is expected to shift to alternative suppliers, primarily the United States, whose imports to India had already risen by over 92% (April-November 2025) even before the deal. India has also committed to purchasing approximately 2.2 million tonnes of LPG from the US in 2026.

The "Buy American" Commitment: India has pledged to purchase over $500 billion worth of US goods, including energy and agricultural products, over the coming years.

Economic Impact on India: Domestic Oil Prices and Gains

The deal brings both immediate gains and potential long-term risks.

Impact on Domestic Oil Prices: Replacing discounted Russian crude with US or Middle Eastern crude might increase India's annual oil import bill by roughly 5-10% ($9–11 billion). This higher cost could exert pressure on domestic fuel prices if global prices rise. However, the reduction of import tariffs to 18% offers significant cost savings that might balance out the increased energy import costs.

Gains in Trade and Economy: The primary gain is the 18% tariff, which makes Indian goods more competitive in the US, India’s largest market (21% of total exports). The deal is expected to boost India's GDP by improving the competitiveness of labor-intensive industries.

Stabilising the Rupee: The removal of trade uncertainty and the reduction in punitive tariffs are likely to stabilize the Indian Rupee and encourage foreign institutional investor (FII) inflows, which saw outflows in 2025.

Historical Comparison

2022-2025 (The Russian Discount Era): Russia was a negligible supplier before 2022. Following the Ukraine conflict, Russia became a top supplier, often providing crude at significant discounts, shielding India from high global prices.

2026 (The US Partnership Era): The 2026 deal mimics the 2019-2020 era of high-pressure negotiations but results in a deeper, more structured partnership. It moves India from a "beneficiary of Russian, discounted oil" towards "secure energy supply from the Western hemisphere".

The 2026 India-US trade deal is a strategic compromise that favors long-term, stable trade relations over short-term energy cost savings. While the abandonment of discounted Russian oil poses a risk of rising import bills and potential inflationary pressure on domestic fuel prices, the significant reduction of US tariffs to 18% is a major win for Indian exporters. The deal ensures that India remains a favoured, high-growth partner for the US, positioning it to benefit from shifting global supply chains, while simultaneously securing its energy needs through diversified, though potentially more expensive, sources. The success of the deal will depend on the final implementation of the "Buy American" commitments and the ability of the Indian economy to navigate the transition away from Russian oil.