Let’s be honest about where we are.
Crude oil has surged past $110 a barrel on the back of the Iran conflict and Strait of Hormuz disruptions. The rupee has weakened roughly 10% over the past year, with strategists warning it could breach 100 to the dollar. Every $10 rise in crude adds $13–14 billion to India’s import bill and pushes the current account deficit wider. The government has already slashed excise duty on fuel by ₹10 a litre — a crisis move, not a routine one.
Add to this the tariff overhang. Even after the US-India deal brought reciprocal tariffs down to 18%, key sectors — gems, textiles, auto components — remain under pressure. IT services face a double squeeze: client budget cuts from a slowing US economy and the structural displacement from AI adoption. FII outflows continue. Bond yields are elevated. The mood, frankly, is grim.
But before we conclude that this time is different, it’s worth asking — has India not been here before? And what did it build each time?
Go back to the very beginning — 1947
Per capita income was about $100. Life expectancy was 32. Most of the 70-odd countries gaining independence around the same time focused on bare survival. India did something audacious — it passed the Atomic Energy Act, set up TIFR, built five IITs in fifteen years, and established eleven national research labs.
A desperately poor country had no business making these bets. But those bets seeded everything that followed — the nuclear programme, the space programme, pharma, IT. IIT alumni alone have created over a trillion dollars in enterprise value globally. The institutional DNA of the 1950s is still generating returns seven decades later.
Then came the food crisis
In the 1960s, back-to-back droughts brought India to its knees. Food availability had dropped to 417 grams per person per day. The country was surviving on American wheat shipments — literally ship-to-mouth. Instead of accepting permanent dependency, India engineered its way out.
The Green Revolution under Swaminathan transformed wheat production from 12 million tonnes to 73 million. The White Revolution under Kurien made India the world’s largest milk producer by 1998. Today, India is also the world’s biggest rice exporter. The cooperative networks built during that crisis — ICAR, agricultural universities, Amul-style cooperatives — still power rural India six decades later.
Nuclear sanctions tell the same story
After the 1974 Smiling Buddha test, the Nuclear Suppliers Group was created specifically to cut India off from technology. India’s response was to build everything indigenously. When Operation Shakti delivered five successful tests in 1998 — including a thermonuclear device that fooled CIA satellites — the US invoked the Glenn Amendment and blacklisted over 200 entities.
Yet the BSE rallied. And by 2008, the Indo-US Nuclear Deal admitted India into the very club that had tried to exclude it. Technology denial didn’t break India. It forced a self-reliance in nuclear, missile, and space capabilities that no peer economy possesses.
1991 remains the defining case study
Forex reserves had fallen to three weeks of imports. The Gulf War spiked oil prices. The Soviet collapse wiped out India’s largest trading partner. The RBI airlifted 67 tonnes of gold to London and Zurich as collateral for a $600 million lifeline. India was days away from sovereign default.
What happened next? Rao and Manmohan Singh didn’t just stabilise — they dismantled the Licence Raj, devalued the rupee, established SEBI and NSE, and opened up trade. The gold was repaid in months. In 2009, India bought 200 tonnes from the IMF — three times what it had pledged in desperation.
Think about that arc for a moment. The country that was pawning its gold was buying gold from the world’s lender of last resort eighteen years later.
2013 was eerily similar to today
Morgan Stanley called India one of the “Fragile Five.” The current account deficit hit 4.8% of GDP. The rupee was in freefall. Global capital was running for the exits. Rajan’s FCNR swap brought in $26 billion almost overnight. India was the only Fragile Five member to stabilise within seven months — and the only one with a stronger currency today.
That crisis catalysed inflation targeting, the Insolvency and Bankruptcy Code, GST, and a fiscal discipline framework that left India’s macro fundamentals unscathed during 2022’s brutal global tightening — the most aggressive in 40 years.
The newer chapters are just as striking
In 2014, India had exactly two mobile manufacturing units. Today, it has over 300. Mobile production has grown 28-fold. India overtook China as the top smartphone exporter to the US last year, and electronics exports crossed $48 billion.
Defence exports surged 30x in a decade, indigenous production share rose from 35% to 65%, and India commissioned Asia’s largest indigenous aircraft carrier. ISRO sent a spacecraft to Mars for $74 million — one-ninth of NASA’s cost — and became the first nation to land near the Moon’s south pole.
During COVID, India manufactured over 2 billion vaccine doses, supplied 90-plus countries, and quietly scaled UPI to 18 billion transactions a month. No country at India’s income level has ever had digital infrastructure this advanced.
The thread connecting every one of these episodes is identical: external pressure triggers institutional innovation, which produces structural advantages that outlast the crisis by decades. This isn’t optimism. It’s documented, observable history.
What separates India from other emerging markets that faced similar pressures is precisely this conversion mechanism. Brazil stayed commodity-dependent. Turkey hollowed out its institutions. Thailand got trapped by foreign debt. India systematically addressed each of these vulnerabilities, one crisis at a time — building a 70% consumption-driven economy, maintaining savings rates above 30%, and strengthening institutions like RBI and SEBI over time rather than weakening them.
Today’s macro fortress — $640 billion in reserves, a near-zero CAD before this shock, digital rails a decade ahead of its income level — was itself built from the wreckage of the last time everyone panicked.
So what could get us out this time?
The building blocks, at least, are visible. India just crossed 1 billion tonnes of coal production for the second straight year, and an ₹85,000 crore coal gasification programme is underway to convert that abundant domestic resource into synthetic fuels and chemicals — potentially substituting a meaningful share of crude imports over time.
The SHANTI Act passed in December 2025 has opened nuclear energy to private participation for the first time, targeting 100 GW by 2047 — a twelve-fold expansion from today’s base. Renewable capacity has already crossed 266 GW, with India hitting its 500 GW non-fossil target five years ahead of schedule.
Four semiconductor fabs are starting operations this year. And the India-EU trade deal, combined with reduced US tariffs, begins to diversify export markets away from single-country dependency.
None of these are silver bullets. Coal gasification is capital-intensive and unproven at scale in India. Nuclear expansion will take years to show up in the energy mix. Trade diversification doesn’t happen overnight. But the direction of travel matters — and if history is any guide, it is precisely in moments like this that India tends to accelerate the reforms and investments that define the next decade.
At roughly $3,000 per capita, India is likely entering its consumption S-curve as the most crisis-tested large economy in the developing world. The pressure is real. But the pattern — across 78 years and multiple domains — suggests that the probability of India converting this crisis into its next structural upgrade is considerably higher than the market is currently pricing in.
Nakul Sarda is founder of ProfitGate Capital Services LLP, a SEBI-registered PMS fund focused on Indian equities.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a qualified professional before making investment decisions.