‘India can weather short West Asia shock; IPO, M&A momentum intact’ Q&A with K Balasubramanian, India CEO, Citibank

K Balasubramanian, India CEO & banking head at Citibank, believes the economic fallout from the ongoing West Asia conflict will remain contained if the disruption is short-lived. India’s strong foreign exchange reserves and strategic crude reserves, he says, provide an important buffer against volatility. In an interview with Dev Chatterjee, Bala, as he is widely known, remains optimistic about India’s capital markets, pointing to a strong IPO pipeline and sustained M&A activity, supported by regulatory easing and deepening domestic liquidity. Edited excerpts: How do you see the West Asia conflict evolving, and what impact could it have on business and capital flows? The key question is duration. If the conflict lasts in the short term, markets are likely to move past it quickly—recoveries in such situations tend to be sharp. The uncertainty is whether it remains contained or extends. If it ends within a few days, I don’t see any material impact. Even if it stretches somewhat, it is unlikely to persist for very long. Iran has been under sanctions for years, which limits its capacity for prolonged escalation. The current intensity may last days or a couple of weeks, but eventually things should normalize. For India, three factors matter. First, crude oil. We import 80-85% of our requirements, so that is the biggest risk. However, India’s strategic reserves provide a cushion for a two-to-four-week period. Second, currency volatility. We have seen the rupee move toward 91.50 to the dollar. There could be further movement, but RBI’s reserves — close to $725 billion — provide significant firepower to manage volatility. Third, remittances from the large Indian diaspora in West Asia . If disruption is short-term, I don’t expect material impact there either. Anything lasting one to four weeks is manageable. Beyond that, economic effects could become meaningful. Some companies with exposure to the region may face operational disruptions, but reconstruction later could also create opportunities. Net-net, this is serious geopolitically, but I don’t see major long-term economic damage. Could this affect investment flows into India? India’s economy is not directly linked to West Asia , except through oil. If the conflict resolves quickly and supply improves, crude prices could even move toward the $40-50 per barrel range, which would be very positive for India. Overall, I don’t see this conflict derailing investment flows. RBI recently eased acquisition financing norms. What does this mean for M&A? This is a very positive development. Historically, regulatory constraints limited domestic liquidity in acquisition financing. With these changes, the capital pool expands significantly. This supports domestic consolidation as banks can participate more actively. Earlier, funding relied largely on foreign debt. Now the investor base is broader. It also helps Indian corporates pursuing overseas acquisitions, as they can access additional banking channels. Greater liquidity should translate into more transactions. We are constructive on the outlook. How do you see IPO and M&A activity shaping up this year? The IPO pipeline from January through the first half is strong. I would not be surprised if 2026 turns out to be another record year, similar to 2024 and 2025. What is notable is deal size. We are seeing larger issuances — such as PhonePe, Reliance Jio, NSE, and several pharmaceutical companies. Many are billion-dollar-plus offerings, which increases relevance for global investors and deepens markets. Could volatility disrupt the IPO pipeline? Short-term volatility affects sentiment. But I don’t think the current situation will persist long enough to derail issuance plans. Companies can adjust timing. A one- or two-week disruption is unlikely to impact 2026 materially. What is Citibank’s strategy for the year ahead? Our objective is to remain either number one or within the top three across businesses. In investment banking, we had a record 2024–25. The current pipeline is even stronger than 2025. If markets remain constructive, we expect another record year across IPOs and M&A. We are also seeing multinational companies with Indian subsidiaries exploring local listings to benefit from attractive valuations. This trend began in 2024, continued through 2025, and should extend into 2026. On the markets side, volatility creates demand for risk management — FX, commodities, and interest-rate solutions. We are expanding our spread product books, particularly in securitisation and commercial real estate. In services, we maintain strong market share in digital payments and continue investing in clients’ digital transformation. Structured trade solutions are another focus area, helping corporates optimise balance sheets. How do you see the GCC opportunity in India? India has around 35,000 people in our service centres. The country continues to attract Global Capability Centres, and nearly 50% of global GCCs already have operations here. We are seeing roughly 20 new GCCs entering India every month. If this trend continues, as much as 75% of global GCCs could have an India presence in the next two to three years. These centres now focus on R&D, AI, and advanced technologies — not just cost arbitrage. We have a dedicated practice supporting GCCs entering India, helping them navigate regulations and establish operations. What are you seeing on private capex? Private capex should continue to grow from a relatively low base. Companies increasingly look at private capital as they scale — it sits between traditional debt and equity, cheaper than equity but more flexible than standard debt. It won’t replace debt or equity, but in specific situations it makes strong strategic sense. How do you view the US–India trade corridor? We await details of the trade framework, but the direction suggests rising trade and investment flows. With presence across 94 countries, we are well positioned. The US–India corridor is already our largest multinational corridor, accounting for about 60% of multinational revenues. We are investing to deepen that further. In June, we will host a large India conference with senior ministers, about 500 investors, and over 300 companies to facilitate FDI and portfolio flows. Which sectors are most active in M&A and structured finance? Data centres are a major theme, with strong domestic and foreign capital flows as India becomes a hyperscaler hub. Electronics and semiconductors are benefiting from PLI incentives and policy support. Renewables and climate transition sectors — automotive, batteries, hydrogen — are also seeing strong investor interest. These are the new-age sectors where we see sustained momentum. Citi was the top M&A adviser last year. How do you sustain that? Our strength is breadth — from mid-market firms to large corporates and financial institutions — supported by our global network across 94 countries. We continuously ideate with clients and track inbound and outbound opportunities. If markets remain constructive, 2026 could be another record year in both deal volume and deal size.