Arvind's Newsletter

1.Tesla In India: EV Market Gets Set For Pricing Competition, Boosting Features

The entry of Elon Musk's Tesla Inc. in India's auto market will fuel intensity in the highly competitive space and pose a challenge for established local carmakers. This can spark a pricing war in the cost-sensitive market or nudge companies to offer additional features, according to Citi Research.

The brokerage said Indian carmakers have excelled in internal combustion engine vehicles with strong manufacturing, vendor networks, and service footprints. In EVs, foreign OEMs gain an edge through advanced technology, EV-only focus, and vertical integration (battery production). Indian OEMs' traditional advantages may not fully translate to the EV market, it added.

Moreover, with new electric models targeting premium-end customers in relatively more urban areas, sales and service networks might not be as big a differentiator for Indian OEMs as it has been in the past with combustion engine vehicles. The increased competition could also be an overhang on valuations for passenger vehicle OEMs.

2.The US-Russia dogfight to sell India fighter jets

As one of Asia’s biggest air and defence shows, Aero India always generates a buzz in the arms trade, not to mention the skies over Bangalore. But there was an extra frisson around this year’s event, which concluded on February 14th. One reason was the presence of Russia’s most advanced stealth fighter jet, the SU-57. 

This was not just its debut in India: it was appearing for the first time alongside America’s equivalent, the F-35.

Then there was a two-day visit to Washington by India’s prime minister, Narendra Modi, which coincided with the show.  After meeting President Donald Trump on February 13th, the two leaders sought to gloss over tensions on tariffs with ambitious agreements to expand trade and defence co-operation. And, most strikingly, Mr Trump said they were “paving the way” to supply India with the F-35, which is currently restricted to American allies.

That only intensified manoeuvring among military officials and arms-makers in Bangalore. They had gathered there mostly to tout their wares to India, which is the world’s biggest arms importer and is steadily diversifying away from Russia as its main supplier. This year, the commercial and geopolitical stakes were especially high given the war in Ukraine, Mr Trump’s return to power and an anticipated Indian order for 114 fighter jets worth $20bn.

3.PhonePe begins IPO process, set to become third fintech to list in 5 years

Walmart-backed PhonePe has begun preparations for a public listing on the Indian stock market, the company announced on Thursday.

The company's valuation reached $12 billion in its most recent funding round conducted in 2023.

In December 2022, PhonePe shifted its domicile from Singapore to India, incurring a tax payment of approximately ₹8,000 crore to the government.

In its annual report, the company stated that the decision was driven by its strong belief that, as a homegrown and highly regulated Indian fintech firm, it should eventually go public on Indian stock exchanges.

4.US President Donald Trump sharpened his broadside against Ukraine, accusing its leader of being a “dictator” in an about-face that analysts said marked a geopolitical rupture.

Republicans were largely silent in the face of Trump’s attacks, while few domestic hackles have been raised over Trump’s calls to take control of Gaza, Greenland, and the Panama Canal. “No one expected Trump to handle global affairs like his predecessors, “ The Wall Street Journal said. “But few expected him to move so rapidly to reorient US foreign policy.”

As a British author wrote in The London Review of Books, the world is grappling with “quite how much of an enemy to its friends America has suddenly become.”

5.A new Microsoft chip could lead to more stable quantum computers

Microsoft has announced that it’s made significant progress in its 20-year quest to make topological quantum bits, or qubits—a special approach to building quantum computers that could make them more stable and easier to scale up. 

The company says it’s developed a chip containing eight of these qubits, and has also published a Nature paper that describes a fundamental validation of the system.

It’s a different approach to competitors like Google and IBM. But, if it works, it could be a significant milestone on the path to unlocking quantum computers’ dramatic new abilities to discover new materials, among many other possible applications. 

Many of the researchers MIT Technology Review spoke with would still like to see how this work plays out in scientific publications, but they were cautiously optimistic. Read the full story.  

6.Morgan Stanley strategists dropped their bearish view on Chinese stocks, following Wall Street peers in predicting a more sustainable rally spurred by the country’s advances in AI.

Laura Wang and her colleagues now recommended being equal weight, marking up its target for the MSCI China Index by 22% from an earlier target. The gauge entered a bull market earlier this month

7.Apple keeps iPhone from going too downmarket

Apple’s never been great about appealing to bargain hunters. Plus, someone’s got to pay for that new iPhone chip.

The world’s most valuable company announced the newest addition to its largest business on Wednesday. The iPhone 16e succeeds the iPhone SE models as the cheapest smartphones in the company’s lineup—except they are no longer that cheap. The new iPhones start at $599, compared with the $429 starting price of the most recent SE version.

The average price of the new 16e configurations is also just 31% below the average price of all the other iPhones Apple currently sells as new. That compares to a 52% discount that the iPhone SE offered to the rest of the company’s lineup prior to Wednesday’s launch. 

A more premium price tag could limit the appeal of the 16e, at least for those on a tight budget. It also makes the 16e less likely to help lift the current iPhone cycle out of its doldrums. 

8.iPhone components maker Murata eyes supply chain shifts toward India

Japan’s Murata Manufacturing, a top iPhone components supplier, is exploring production in India as supply chains shift. With rising demand, Murata is testing investments, Business Standard reported.
Currently, 60% of Murata’s MLCCs are made in Japan, but this may drop to 50%. The company has leased a plant in Tamil Nadu to package and ship capacitors by FY2026. While India’s incentives attract Murata, infrastructure challenges delay full-scale production. Murata sees smartphone shipments growing 3% annually, with AI-driven server demand boosting future expansion. 

9.Elon Musk spells danger for Accenture, McKinsey and their rivals

It should be a management consultant’s dream. The organisation is immense. Bloat is a problem. And the new boss is eager to shake things up. President Donald Trump and his disrupter-in-chief, Elon Musk, have already begun hacking away at America’s federal bureaucracy. Mr Musk’s Department of Government Efficiency (DOGE) has set itself the target of cutting government spending by a colossal $2trn.

For an industry that helps organisations remake themselves, that seems like an opportunity like no other. Yet consulting firms, which have come to rely on the federal government for a growing share of fees, are looking on nervously. None of them appear to have a seat at Mr Musk’s table. They could instead be on the menu.

Consultants have a long history of cashing in on government projects. McKinsey, the world’s most prestigious strategy adviser, at least by its own estimation, helped Dwight Eisenhower establish the post of White House chief of staff in 1953 and designed NASA’s first organisational structure in 1958. By 1977 Jimmy Carter was grumbling that the federal bureaucracy was employing consulting firms “excessively, unnecessarily and improperly”. That year Booz Allen Hamilton, a consultancy, was paid $320,000 ($1.7m at today’s prices) by the Department of Agriculture to figure out how many chickens its inspectors should examine per minute.

Such a contract would look like chump change these days. The same firm received $9bn from the federal bureaucracy in the most recent fiscal year, according to government data. Add in the other top government consultancies—Accenture, BCG, Deloitte, EY, Guidehouse (formerly part of PwC), KPMG and McKinsey—and the figure exceeds $18bn, up from just $5bn a decade before (see charts).

The importance of America’s government for consulting revenue varies across these firms. Booz Allen Hamilton, which parted ways with its private-sector consulting business in 2008, is nearly entirely reliant on the public sector. McKinsey, whose work for the federal goverment slowed after its association with opioid manufacturers tarnished its reputation, makes less than 1% of its global revenue from federal contracts. Across the firms we examined, though, the federal government accounted for about 8% of total revenue last year. There is no bigger single client.

The importance of America’s government for consulting revenue varies across these firms. Booz Allen Hamilton, which parted ways with its private-sector consulting business in 2008, is nearly entirely reliant on the public sector. McKinsey, whose work for the federal goverment slowed after its association with opioid manufacturers tarnished its reputation, makes less than 1% of its global revenue from federal contracts. Across the firms we examined, though, the federal government accounted for about 8% of total revenue last year. There is no bigger single client.

Some contracts are enormous. EY has made nearly $70m since 2020 supporting a reform plan at the Department of Housing and Urban Development. BCG has been allocated $380m since 2022 by the Defence Health Agency, which provides medical care to the armed forces, as part of an initiative called “Workforce 3.0”. Accenture has received $700m from the Department of Education since 2019 to build and manage a website, mobile app and virtual assistant for student aid.

The scale of spending partly reflects the magnitude of the mess. America’s federal government collects around 140bn forms a year, most of which are still paper-based. Agencies struggle to compete with the private sector for talented techies to help change that. The growth in government consulting over the past decade has been driven largely by digitisation efforts, notes Fiona Czerniawska of Source Global Research, which tracks the industry.

Could that offer some protection from Mr Musk’s woodchipper? The executive order establishing DOGE tasks it with modernising the government’s technology. Ron Ash, who oversees Accenture’s federal-government business, expects that agencies will be pressed to automate faster. Firms such as his will be ready to help.

The problem, however, is that doge and the consultants come from very different worlds. Take Mr Musk’s methods. He has been brutal and abrupt, and made little effort to engage those affected. Consulting firms have spent years trying to distance themselves from that type of approach, says Tom Rodenhauser of Kennedy Intelligence, another industry analyst. Protesters have gathered outside the showrooms of Tesla, Mr Musk’s carmaker, to protest against his cuts. Consultants will be loth to attract such attention.

For his part, Mr Musk may see consultants not as the solution, but part of the problem. Many of them are frustrated with how little they have been able to achieve in government compared with their private-sector efforts, says Max Stier, head of the Partnership for Public Service, a non-profit which works to improve government. Bureaucratic inertia and political meddling are partly to blame. But Mr Musk may conclude that, having tried for so long, consultants are not up to the task.

He may instead be drawn to options from his own sphere. Palantir, an analytics firm chaired by Peter Thiel, who worked with Mr Musk at PayPal, has gained a foothold in the Department of Defence and is spreading quickly across the federal government. Among other things, it helps organisations feed their data into artificial-intelligence (AI) tools. In the final quarter of 2024 its revenue from America’s government grew by 45% year on year. Its share price has been on a remarkable ride, more than doubling since Mr Trump’s election in November. Booz Allen Hamilton’s has fallen by a third.

Unlike most other software providers, Palantir embeds teams of engineers with its clients to help them make use of its technology. For now, it works on many projects alongside firms such as Accenture and Deloitte. But some also view it as a potential competitor to the big consultancies, particularly when it comes to AI. Mr Thiel has described conventional consulting as a “total racket”.

The Trump administration poses another conundrum for the consulting industry. Besides costs, officials also want to strip the government of wokery. Diversity, equity and inclusion (DEI) efforts are a particular target. An executive order issued last month bans federal contractors from operating any programmes “promoting DEI that violate any applicable federal anti-discrimination laws”. That has put the big consultancies, which have been vocal champions of dei, in an awkward spot.

Some have remained defiant. McKinsey has insisted that it will continue its pursuit of a “diverse meritocracy”. Yet it has little to lose. Other firms have quickly sought to placate the new administration. Accenture has informed staff it will be “sunsetting” its diversity goals. Deloitte’s American branch has told those working with the federal government to remove their pronouns from their email signatures. Such moves have ruffled employees, and may irk private-sector clients that have been preached to on the merits of DEI. Consulting bosses will have to decide what price they are willing to pay to keep their biggest client happy.

10.How a tiny village became India's YouTube capital

In Tulsi, a village in central India, social media has sparked an economic and social revolution. It's a microcosm of YouTube's effect on the world.

As villagers head into the fields of Tulsi, a village outside Raipur in central India, on a muggy September morning, 32-year-old YouTuber Jai Varma asks a group of women to join him for his latest video. They gather around him – adjusting their sarees and sharing a quick word and a smile.