Investing in India: What the Supply Chain Recalibration Means for European Investors

India and the Hormuz Closure: What It Means for India Investment Opportunities

Two months ago, when we wrote about Operation Epic Fury, the working assumption was a contained conflict. That assumption no longer holds.

Since 1 March, the Strait of Hormuz has been effectively closed to commercial transit. Houthi forces formally entered the war on 28 March, pushing shipping off the Bab-el-Mandeb route and onto the Cape of Good Hope. Brent crude, which sat at $65–67 before the strikes on Iran, has at points crossed $100 per barrel.¹ And yet QatarEnergy has declared force majeure on LNG deliveries, taking roughly 20% of global LNG supply offline.² The International Energy Agency now describes the disruption as the largest in the history of the global oil market.

India is not insulated from this. India’s finance ministry, in its March Monthly Economic Review, formally flagged risks to energy security, the inflation outlook, and the external account.³ LPG prices have risen domestically, the rupee has come under pressure, and the fertiliser channel, India sources close to half its urea and the majority of its ammonia and sulphur from the Gulf, has emerged as a quieter but meaningful transmission mechanism into rural inflation and the fiscal subsidy bill.⁴ None of this is trivial.

And yet, and this is the point worth making to investors right now, India’s growth trajectory is holding up better than the exposure would suggest. Those asking why invest in India now have a clear answer in the data. The IMF’s April 2026 World Economic Outlook still projects Indian GDP growth of 6.4% for 2026, retaining its position as the fastest-growing major economy.⁵ The same report downgraded global growth to 3.1% and emerging market growth to 3.9%. The gap between India and everyone else has, if anything, widened.

The reason is structural. Three forces, all moving independently of the war, are pulling capital and capacity into India faster than the shocks can push them out. For European investors assessing India investment opportunities, each of these forces deserves close attention.

First, manufacturing capacity is now real, not announced.

India's Production Linked Incentive scheme has crossed ₹2.16 lakh crore (roughly USD 26 billion) in committed investment, exceeding the original outlay. Incremental production has surpassed ₹20.4 lakh crore; PLI-linked exports have crossed ₹8.3 lakh crore.⁶ The clearest case is Apple: over five years, USD 70 billion of iPhones manufactured in India, with USD 51 billion exported. India's share of global iPhone assembly is projected to reach 28% in 2026, up from 14% in 2024.⁷ Indian suppliers are now shipping printed circuit board assemblies to China, a reversal of the historical trade direction. This is not labour-cost arbitrage; it is the build-out of an integrated electronics ecosystem.

Second, services exports are absorbing global capability work at a pace the conflict has not slowed.

India's services exports reached USD 387.5 billion in FY25, with a services trade surplus of USD 188.8 billion, larger than the entire GDP of most emerging economies.⁸ India now hosts more than 1,800 Global Capability Centres employing close to two million professionals; GCCs took 38% of office leasing across India's top seven cities in 2025, the highest volume on record.⁹ Roughly 40% of GCC value now comes from R&D, product development, and digital transformation rather than back-office work.¹⁰ The Middle East crisis has not interrupted this, if anything, it has accelerated multinationals' interest in concentrating engineering capacity outside conflict-adjacent geographies.

Third, the trade architecture closed around India in January, just before the war began.

On 27 January 2026, the EU and India concluded a Free Trade Agreement covering a combined market of roughly two billion people and around 25% of global GDP. Tariffs will be eliminated or reduced on more than 96% of EU goods exports to India, once ratified in the EU states.¹¹ Combined with the UK–India FTA signed in 2025, India is now inside the preferred trading perimeter of two of the world’s largest consumer markets. As European investors interested in India reassess sourcing exposure to the Gulf, India offers a tariff-preferred alternative with the manufacturing infrastructure to absorb the volume.

There is also a fourth point worth naming, even briefly. The IMEC corridor, connecting India through the Gulf to Haifa and onward to Europe, was conceived as commercial infrastructure. The Hormuz closure has converted it into strategic infrastructure. Gulf states are now actively reviving these plans.¹² If the war achieves anything durable, it is the political consensus to build second or fall-back routes. India sits at one end of those routes.

Why Invest in India Now: The Structural Case vs the Macro Volatility

The macro picture is therefore split-screen. On one side: oil above $100, LNG shortages, input-cost pressure across energy and agriculture, fiscal strain on importing economies, downgrades across emerging markets. On the other: an Indian economy that absorbs the shock through its import bill but whose productive capacity, services exports, and trade integration are all expanding through the disruption rather than because of its absence. The high rate of installed renewable energy production capacity is an additional shield against oil price volatilities.

For investors, this is the distinction that matters. Short-term macro volatility — oil, inflation, currency, the subsidy bill — is real and visible in the public-market print. The structural recomposition of where global capacity is being built is slower, less visible, and largely indifferent to it. Understanding how to invest in India today means reading this India supply chain recalibration correctly, not as a disruption, but as a structural shift in where global productive capacity is being built.

At RootBridge, our capital is deployed primarily into private markets, where value creation follows operational growth rather than daily sentiment. Whether through India private equity or a blended India growth fund structure, the investment case for India is not that the country avoids global shocks. It is that India is increasingly the place those shocks are being routed toward, not away from.

India’s growth story has never depended on a calm world. It is being shaped by something larger, the deliberate repositioning of one economy at the centre of an industrial and socio-economic reorganisation that the war has accelerated rather than interrupted. For those considering an India investment fund, the structural case has rarely been stronger.