Current Affairs

Warning Signals for India from NATO’s Ankara Summit

By Ajai Shukla
New Delhi, July 24, 2026

The heads of state or government of the 32 countries that are politico-military allies under the North Atlantic Treaty Organization (NATO) met in Ankara, Türkiye, on July 7-8, 2026 for what is called the Ankara Summit. Their stated objective was to review progress made since the 2025 Summit in The Hague and to set out a roadmap for continuing delivery on NATO’s key objectives .

The gathering in Ankara is being regarded as one of NATO’s more successful summits, despite the abrasive presence of United States President Donald Trump, who devoted most of his speaking time to extolling the putative success of U.S. strategy and talking up the superiority of American weapons systems . Analysts noted that while the softer rhetoric was a relief to European leaders, it remains unclear whether it translates into a fundamental strategic shift. “Probably, transatlantic relations are now at their lowest ebb,” said Gianluca Pastori of the Italian Institute for International Political Studies .

A Strategic Roadmap

Four substantive commitments came out of Ankara. First, the 32 NATO allies—too often divided by divergent objectives and capacities—agreed on their “ironclad commitment to (their) collective defence under Article 5 of the Washington Treaty, and to the transatlantic bond”; second, the unanimous endorsement of “The Hague defence commitment”, in which all NATO members undertook last year to allocate at least five per cent of their respective Gross Domestic Products (GDPs) on defence by 2035—an unprecedented hike over the two per cent spending pledge that existed earlier . Third, NATO declared its “unwavering support for Ukraine in defending its freedom, sovereignty and territorial integrity”, and fourth, the alliance partners vowed to build a high technology, high capacity, Europe-wide defence industrial base (DIB)—the term for the network of firms, factories, laboratories and skilled workers needed to build and sustain a country’s military power .

The focus in Ankara was overwhelmingly on implementation—turning political commitments into military capability through investment, industrial capacity and innovation . More than $50 billion in new procurement commitments were announced, alongside the launch of a NATO Drones initiative worth approximately $40 billion . The alliance is expected to reach a production capacity of around 4 million artillery shells annually by next year, nearly doubling current output .

NATO’s Transformations

NATO, however, sees itself not as expansionist, but as merely adapting to Europe’s changing strategic landscape. In 1990-91, with the relatively peaceful ending of the Cold War and the dissolution of the Warsaw Pact, NATO shifted its focus to out of area operations in theatres such as the Balkans. After the 9/11 strikes in 2001 on the World Trade Center towers, NATO made another strategic shift, joining the Global War on Terror. Now, with Russia and China joining hands in a new era of superpower confrontation, NATO is adapting once again .

Turkish Vice President Cevdet Yılmaz described the Ankara summit as marking the beginning of what he called “NATO 3.0,” with a greater emphasis on burden-sharing and stronger European contributions within the alliance . The next challenge, he said, would be ensuring that higher defence spending translates into industrial capacity and operational capability . Turkish Foreign Minister Hakan Fidan stressed that the concept of burden-sharing in NATO “has ceased to be merely a concept and has now become an implementable policy” .

Europe’s Industrial Dilemma: Spending More, But Spending Where?

It was evident from the discussions at the Ankara Summit that Europe has prioritised the revitalisation of its DIB. The European defence industry was struggling to scale up production even before the five per cent defence spending pledge at The Hague. European defence industry giants, MBDA and Rheinmetall, have warned of shortages in ammunition production . Rutte urged governments to simplify procurement rules, invest in long-term production capacity and strengthen energy supplies, skilled workforces and secure supply chains .

However, the urgency of the summit has masked a deeper structural problem. European defence spending is still heavily fragmented and nationally focused, and the continent continues to depend heavily on Washington for key military assets, including long-range strike capabilities, missile defence, intelligence and surveillance, electronic warfare, and advanced aircraft . As Pastori observed, “The burden-sharing/burden-shifting issue is not only about how much money allies contribute but also about how that money is spent” . If Europe spends its increased budgets on US weapons rather than on developing its own industrial capacity, it will only deepen its dependency on the US .

The Missile Crisis: Operation Epic Fury and the Tomahawk Shortage

Operation Epic Fury, the U.S.-Israel bombing campaign against Iran, illustrates the inevitability of weapons and ammunition shortages when Asian allies’ demands for U.S. weaponry compete with ongoing European needs. The U.S. has fired more than 850 Tomahawk cruise missiles at Iran during this campaign. At the current production rate of 85 per year, replacing these would take a decade . The U.S. has expended over 5,000 munitions across 35 types in the first 96 hours of the campaign . In the opening phase, the U.S. Navy launched approximately 400 Tomahawk cruise missiles in the first 71 hours .

The shortage is not a temporary blip but the result of decades of post-Cold War consolidation that optimised the U.S. defence industrial base for peacetime efficiency rather than surge capacity. Factories closed, supply chains for explosives and propellants atrophied, and the skilled workforce aged out . Tomahawk production has averaged around 86 missiles per year, yet the Navy has significantly raised its orders to 785 for FY 2027, well exceeding production capacity of less than 200 per year .

A Sellers’ Market: The Impact on India

For the world’s big arms buyers and especially for India, this spike in European demand is bad news. As NATO spends more, the international arms bazaar is shifting inexorably from a buyers’ market to a sellers’ market. The first sign of this was the delay by U.S. firm General Electric Aerospace in supplying India with F-404 fighter jet engines, which are critically needed for the Indian Air Force’s Tejas light combat aircraft programme .

The Tejas Mk1A programme is now two years behind schedule, with GE Aerospace deliveries delayed due to a technical snag in one of the delivered engines . HAL has received only seven F404-IN20 engines to date . The Ministry of Defence has issued a strict directive to HAL to adhere to contractual delivery deadlines . More troubling is the reported near-threefold increase in the price of the GE Aerospace F414 engine, now quoted at ₹200 crore per unit, compared to an initial estimate of ₹70-80 crore .

The Strategic Choice for India

Looking ahead, as India’s defence increasingly relies on new-age defence technologies and weaponry, such as drones, artificial intelligence, cyber and electronic warfare and resilient networks, it will become critical for its defence industry to achieve self-reliance in these technology realms, rather than relying on overstretched suppliers who have their own battles to fight . As one analysis noted, “The dilemma is that Russia, which remains one of India’s major defence partners, is increasingly isolated, while India has deepened strategic ties with the US and Europe. As NATO’s confrontation with Moscow becomes more entrenched, balancing these relationships will become more difficult” .

India’s policy of strategic autonomy remains relevant. Instead of asking whether NATO is relevant to India, policymakers should ask: How can India benefit from Europe’s security transformation while preserving its strategic autonomy? The answer lies in accelerating defence self-reliance and diversifying military procurement. India has a historic opportunity to become a manufacturing partner for a Europe that is desperately trying to rebuild its industrial base. But to seize it, New Delhi must move quickly, before the transatlantic rearmament wave locks in supply chains that leave India on the outside looking in.

Q&A Section

1. What were the main outcomes of the NATO Ankara Summit?

The summit produced four key commitments: reaffirming collective defence under Article 5, endorsing the 5% GDP defence spending target by 2035, declaring unwavering support for Ukraine, and vowing to build a high-capacity, Europe-wide defence industrial base . More than $50 billion in new procurement commitments were announced, alongside a $40 billion NATO Drones initiative . The alliance is expected to reach a production capacity of around 4 million artillery shells annually by next year .

2. Why is the Tomahawk missile shortage a major concern for NATO and its allies?

The U.S. has fired more than 850 Tomahawk missiles in the Iran campaign . At the current production rate of about 85 per year, replacing them would take a decade . The shortage is due to decades of post-Cold War consolidation that prioritised peacetime efficiency over surge capacity, leaving a shrunken supplier base and a crippled solid-rocket motor industry . The Navy has raised orders to 785 missiles for FY 2027, well exceeding production capacity .

3. What is the “iron triangle” of the defence industrial base?

Analysts describe the iron triangle as the permanent tension between time, capacity, and cost. Deep supply chain constraints mean industry cannot “make it now” just because policymakers want more missiles. A Tomahawk contains more than a thousand precision components from a fragmented supplier base; rebuilding that capacity takes years, not months .

4. How does the NATO defence spending surge affect India’s defence procurement?

As NATO spends more, the international arms market is shifting from a buyers’ to a sellers’ market. The first sign was GE Aerospace delaying F-404 engine supplies for India’s Tejas programme, now two years behind schedule . The F414 engine price for Tejas Mk2 and AMCA has reportedly tripled to ₹200 crore per unit . European demand will compete with India’s needs for high-end weaponry, making self-reliance critical.

5. What strategic choice does India face in response to NATO’s transformation?

India must balance its long-standing defence partnership with Russia against its deepening ties with the US and Europe. As NATO’s confrontation with Moscow intensifies, balancing these relationships will become more difficult . The answer lies in accelerating defence self-reliance and diversifying military procurement. India has an opportunity to become a manufacturing partner for Europe, but must move quickly before supply chains lock in .

Donald Trump Should Change Course if He Wants to End the War with Iran

By Aditi Nayar
New Delhi, July 24, 2026

The decision by Yemen’s Ansar Allah, better known as the Houthis, to impose a blockade on Saudi Arabia signals that the war on Iran has entered its most dangerous phase. The Houthis, a close Iranian ally, had avoided direct involvement due to a fragile but functional ceasefire with Saudi Arabia, despite their controlling most of Yemen’s population centres, including capital Sana’a [citation:original text]. That ceasefire effectively fell apart on July 13 when an airport in Sana’a was attacked by forces of “Yemen’s internationally recognised government”. Based in Saudi Arabia, this government maintains loyal forces inside Yemen, though the Houthis remain the country’s most powerful and influential political and military force. Blaming Riyadh for the attack, the Houthis announced on July 20 a blockade on ships using Saudi ports on the Red Sea [citation:original text].

Saudi Arabia, whose crude and other exports through the Strait of Hormuz have been severely constrained by Iran’s blockade, has increased its reliance on Red Sea ports, especially Yanbu. Tankers from Yanbu to Asian markets must pass through the Bab-el-Mandeb Strait, which links the Red Sea to the Gulf of Aden and the Arabian Sea. The Houthis control much of Yemen’s Red Sea coastline overlooking the Bab el-Mandeb and can enforce a blockade of the chokepoint [citation:original text].

The Double Blockade: A Crisis of Global Proportions

When Iran closed the Strait of Hormuz after the U.S.-Israel war began on February 28, all Persian Gulf states struggled to sustain their exports. Saudi Arabia, however, cushioned the impact by using its East-West Pipeline, which links its eastern oilfields to the Red Sea export terminals. If the Houthis enforce a total blockade on the kingdom, Riyadh could face far deeper economic disruption [citation:original text]. The kingdom had been exporting around 5 million barrels per day from its west coast since March, with roughly four-fifths of those shipments transiting through Bab el-Mandeb . Now, a second chokepoint has become a battlefield.

This, coupled with Iran’s attacks on Kuwait’s desalination plants and power grid – after U.S. strikes on Iranian civilian infrastructure – paints a grim picture of the war and its regional consequences [citation:original text]. If the first phase of Iran’s counter-attack targeted the Persian Gulf monarchies, the second has expanded to include Jordan, which hosts two major U.S. military bases. Now, with the Houthi blockade, the war’s economic pain is set to deepen further [citation:original text].

For the U.S. military, this means stretching resources already focused on fighting Iran and maintaining the United States’ own blockade of Iranian ports in the Gulf. “You’re bifurcating your admittedly fairly robust resources in the region between two active fronts,” said Jason Campbell, a former senior Pentagon official . Addressing the Red Sea threat could mean shifting U.S. warships from the Gulf closer to Yemen . This would worsen what experts have warned are diminished stockpiles of U.S. munitions and air defense interceptors .

The Diplomatic Path Squandered

U.S. President Donald Trump had an opportunity to extricate himself from the conflict when he signed a memorandum of understanding with Iran on June 17 [citation:original text]. The MoU was intended to serve as a bridge to a final peace deal, with a 60-day negotiating window . But by returning to war over disputes surrounding control of the Strait of Hormuz, Mr. Trump has not only squandered the opportunity but has also raised the risk of dragging the U.S. into yet another forever, unwinnable war [citation:original text].

The core of the dispute is control of the Strait of Hormuz. Iran sees itself as having a future role in managing the waterway, possibly even charging fees or tolls, while Trump and U.S. Gulf allies insist on a return to free and safe passage . The June MoU contained ambiguous language about Iran making “arrangements” for safe passage, a clause that has proven to be a fatal flaw . At this point, he is pursuing the same military tactics against Iran repeatedly, expecting different results [citation:original text].

The current U.S. bombing campaign is already in its twelfth consecutive night . The U.S. has reportedly fired more than 850 Tomahawk cruise missiles at Iran, requiring a decade to replace at current production rates. Yet, Iran has proven remarkably resilient, expanding its attacks to U.S. bases and allies across the region . As Aaron David Miller, a former Middle East negotiator, noted, “Trump has put himself in a box. Whether through military or diplomatic means, he doesn’t look likely to gain much from Iran” .

The Human and Economic Costs

The war has taken a severe toll. At least 18 U.S. service members have been killed and more than 450 wounded since the war began . Thousands of Iranians and regional civilians have also died. The economic costs are staggering: U.S. gasoline prices have gained around 65% since the war began, and global oil demand has fallen by nearly 5% in the second quarter of 2026 . A June 23 Reuters/Ipsos poll showed Trump’s approval rating falling to 34%, dimming his party’s chances in the upcoming midterm elections .

A Path Forward

If Mr. Trump wants a way out, he should change course, push for an immediate ceasefire and return to diplomacy [citation:original text]. Regional mediators, including Qatar, Egypt, and Pakistan, have presented a proposal calling for a 10-day ceasefire . The ceasefire would include reopening both shipping routes through the Strait of Hormuz and resuming negotiations on a longer-term arrangement . If the U.S. continues to bomb, the Houthi blockade could become a permanent feature of the conflict, effectively closing the Bab el-Mandeb strait and cutting off an additional 7% of global oil supply . The alternative is a wider, longer, and more destructive war that the United States cannot win. The choice should be clear.

Q&A Section

1. What was the Houthi blockade, and why did it happen?

The Houthis, an Iran-backed group that controls much of Yemen, announced a “maritime embargo” on Saudi Arabia on July 20, 2026. The move was in retaliation for a Saudi-led coalition attack on the airport in Sana’a, Yemen’s capital, which the Houthis blamed on Riyadh [citation:original text]. The blockade threatened Saudi shipping through the Bab el-Mandeb Strait, a vital chokepoint connecting the Red Sea to the Gulf of Aden .

2. Why is the Bab el-Mandeb Strait so important?

The Bab el-Mandeb Strait is a vital shipping chokepoint through which about 12% of global trade, including a significant portion of the world’s oil, passes . Since the Strait of Hormuz was effectively closed by Iran, Saudi Arabia had been using the Red Sea route via Bab el-Mandeb to export around 5 million barrels of oil per day . Closing this strait would create a “double blockade” that would severely disrupt global energy markets.

3. What is the current status of the US-Iran war?

The war, which began with U.S.-Israeli airstrikes on February 28, 2026, has entered a dangerous new phase. A fragile ceasefire from a June 17 Memorandum of Understanding has collapsed . The U.S. is now conducting nightly airstrikes on Iran, while Iran has retaliated by expanding attacks on U.S. allies and commercial shipping in the Gulf . The Houthi blockade has now opened a potential second front in the conflict .

4. What are the economic consequences of the war?

The war has severely disrupted global oil supplies, causing a spike in fuel prices. European diesel prices and U.S. gasoline prices have gained around 65% since the start of the war . Global oil demand fell by nearly 5% in the second quarter of 2026 as a result of the crisis . World Bank economists have warned that the war could cut 2026 global growth to as low as 1.3% .

5. What is the proposed diplomatic solution?

Regional mediators, including Qatar, Egypt, and Pakistan, have proposed a 10-day ceasefire . The proposal includes reopening both shipping routes through the Strait of Hormuz and restarting negotiations on a longer-term agreement about how the strait will be managed. The plan also includes discussions about Iran potentially collecting limited service fees for maritime security and environmental protection, or placing such fees into an internationally managed fund .

The Updated Index of Core Industries Rounds Out Economic Data Upgrades

By Aditi Nayar
New Delhi, July 24, 2026

The Index of Core Industries (ICI) has finally joined the country’s other economic metrics in becoming up-to-date and representative of the economy. The other metrics such as the national accounts, Consumer Price Index (CPI), Wholesale Price Index (WPI), and the Index of Industrial Production (IIP) were updated earlier this year, although even those were after considerable delays. The ICI has now joined their ranks with the June data being based on a new series with an updated base year, an additional sector being covered, and revised weights and methodologies. This is a welcome upgrade [citation:original text].

The performance of these core industries is a vital barometer of the state of the economy. In the new series, the previous eight sectors have become nine, with the vital inclusion of the iron ore sector. Improvements have also been made to how the steel and coal sectors are measured in order to remove the previous double-counting that was taking place [citation:original text].

The New ICI: A Statistical Overhaul

The previous ICI had a base year of 2011-12, which was significantly outdated . Updating the base year to 2022-23 ensures that the index reflects the current structure of the economy . The revised series now includes iron ore as a new core industry, expanding the index from eight to nine sectors . The combined weight of the nine core industries in the IIP basket now stands at 32.88%, down from 40.27% in the previous series . The inclusion of iron ore, with a weight of 4.905%, reflects its intensive use in industrial production and its significant contribution to industrial development .

Revised Weights: The addition of a new sector has naturally redistributed the weights among the core industries . The weights in the new series are derived from the weights of the same sectors in the updated Index of Industrial Production (IIP) for 2022-23, proportionately adjusted to sum to 100 . Key changes include:

• Electricity: Weight increased significantly from 19.853% to 30.932% .

• Refinery Products: Weight decreased from 28.037% to 22.572% .

• Steel: Weight decreased marginally from 17.917% to 17.584% .

• Coal: Weight decreased significantly from 10.334% to 5.596% .

• Crude Oil: Weight decreased from 8.983% to 7.43% .

• Natural Gas: Weight decreased from 6.88% to 3.841% .

• Cement: Weight decreased from 5.372% to 4.41% .

• Fertilizers: Weight increased marginally from 2.628% to 2.731% .

• Iron Ore: New addition with a weight of 4.905% .

Methodological Changes: For the steel sector, the revised series now uses gross production data instead of net production data, aligning its methodology with that of the IIP . For the coal sector, the index now only measures raw coal, excluding “middling” and “washed” coal, to eliminate double counting .

June 2026 Performance: A Statistical Story

The new index shows the nine core industries grew at a five-month high rate of 5% in June . The rise was led by iron ore, which grew 43.9%, followed by cement and electricity at 9.8% each . Steel grew 4.6%, and coal grew 1.4% . The growth in electricity production benefited from increased demand amid higher temperatures and lower rainfall in June .

However, two of the strong growth numbers – iron ore by 43.9% and electricity by 9.8% – were due to a statistical base effect since both sectors had contracted in June last year . Iron ore output had contracted 16.4% in June 2025 . It remains to be seen whether the numbers will remain this positive once that base effect wears off in the months ahead [citation:original text].

The pickup in core industries growth was not broad-based and was led by an improvement in the performance of just four of the nine sectors . Output of crude oil, natural gas, refinery products, and fertilisers contracted year-on-year in June . Crude oil output fell 4.2% y-o-y in June, the same as in May. Natural gas production declined even more in June, contracting 7.4% against a 5% fall in May . The contraction in energy-related sectors can be attributed to higher imports with global crude prices cooling off .

Systemic Issues Persist

The new series highlights some of the systemic issues that the old series did, such as the persistent contraction of the crude oil and natural gas sectors. They have contracted continuously for 18 and 24 months, respectively. If India does not have these resources, that is one thing. But if it has them and still is not able to extract them economically, then that is a serious shortcoming [citation:original text].

India’s crude oil production has been in a steady decline for years due to maturing fields and limited new discoveries. India produced 29.2 million tonnes of crude oil in 2024-25, significantly lower than its peak of 37.2 million tonnes in 2011-12 . The country’s import dependence for crude oil has increased from 82.3% in 2014-15 to 85.7% in 2024-25 . The government has introduced policies to boost domestic production, including the Hydrocarbon Exploration and Licensing Policy (HELP) and the Open Acreage Licensing Policy (OALP), but the results have been slow to materialize .

Natural gas production has also been declining, although less sharply. India produced 35.2 billion cubic metres (BCM) of natural gas in 2024-25, down from a peak of 36.2 BCM in 2019-20 . The government has been promoting natural gas as a transition fuel and has set a target to increase the share of natural gas in the primary energy mix from 6% to 15% by 2030 . However, achieving this target will require a significant increase in domestic production or a further increase in imports.

A Call for Statistical Reorganisation

The update of the ICI and the recent upgrade of the WPI would have been a good time for a broader statistical reorganisation. With the Ministry of Statistics and Programme Implementation handling the CPI and the IIP, it only makes sense for the WPI and ICI to move to it from their current home in the Ministry of Commerce and Industry. That change can still be made [citation:original text].

The Ministry of Statistics and Programme Implementation (MoSPI) is the nodal ministry for statistical matters in India. It already compiles the CPI and the IIP. The WPI and ICI, on the other hand, are compiled by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry. This creates a fragmented statistical system. Moving the WPI and ICI to MoSPI would provide a more coherent and integrated framework for economic data, ensuring consistency in methodologies and improving the quality of data analysis. The current arrangement also raises the possibility of data conflicts, where the WPI and ICI might reflect a different reality from other economic indicators, even though they are measuring complementary aspects of the same economy.

Q&A Section

1. What is the Index of Core Industries (ICI) and why has it been updated?

The ICI is a key measure of the performance of the main industrial sectors in India’s economy. It was updated to make it more representative of the current economic reality by shifting the base year from 2011-12 to 2022-23, adding iron ore as a new sector, and revising weights and methodologies [citation:original text]. This update aligns the ICI with other major economic indicators like the national accounts, CPI, WPI, and IIP .

2. What are the key changes in the new ICI series?

The key changes include: (1) adding iron ore as a ninth sector; (2) updating the base year to 2022-23; (3) significantly revising the weights of sectors—electricity’s weight increased to 30.9% while coal and natural gas weights nearly halved; (4) methodological improvements for steel and coal to remove double counting [citation:original text].

3. How did the core industries perform in June 2026?

The nine core industries grew at a five-month high rate of 5% in June 2026. Iron ore grew 43.9%, cement and electricity grew 9.8% each, and steel grew 4.6%. However, crude oil, natural gas, refinery products, and fertilisers contracted year-on-year [citation:original text]. The strong growth in iron ore and electricity was partly due to a statistical base effect from contractions in the previous year .

4. What systemic issues does the new ICI highlight?

The new series highlights the persistent contraction of the crude oil and natural gas sectors, which have contracted for 18 and 24 months respectively. This reflects India’s inability to economically extract its domestic resources, which is a serious shortcoming for an economy that is heavily dependent on imports for its energy needs [citation:original text].

5. What statistical reorganisation does the article suggest?

The article suggests that the WPI and ICI should be moved from the Ministry of Commerce and Industry to the Ministry of Statistics and Programme Implementation (MoSPI), which already handles the CPI and IIP. This would create a more coherent and integrated statistical framework, ensuring consistency and improving data analysis .