Arvind's Newsletter

1.End of funding winter? Indian startups set to raise $8-10 billion this year

In 2021 the fundraise by startups had touched a new high of $41.4 billion, Tracxn data showed. In 2022, it was at $25 billion. Then in 2023, it was down to $7 billion—a fraction of the previous years.

Rajan Anandan, Managing Partner of venture capital firm Peak XV Partners (formerly Sequoia India), hinted at a reversal of the funding winter. Indian  startups are expected to raise around $8-12 billion in funding this year, according to Anandan.

Anandan pointed out that funding will be relatively steady for the next few years, progressing at a natural pace. Before the record funding numbers of 2021 and 2022, India's annual run rate was around $8-10 billion, he said. 

The startup ecosystem, he added, is currently sitting on $20 billion – around Rs 1.6 trillion – in dry powder that is waiting to be allocated. Dry powder refers to unallocated capital raised by private equity and venture capital (PE/VC) players that is ready to be invested.

2.Explained: How India's New EV Policy Treads Where PLI Scheme Doesn't

India's new electric vehicle policy stands out from the previous one in how it incentivises local manufacturing with a 60% cut on import duties as a start.

The government will offer a reduced import/customs duty at 15%, as opposed to current 70-100% duty, for a cap of 40,000 units over five years. 

This comes with the condition that the auto company commits an investment of a minimum $500 million, or Rs 4,150 crore, and sets up a manufacturing facility in India in the first three years.

India's auto Production Linked Incentive or PLI was launched in 2021 and offers incentives on sales value for five fiscal starting from FY23 till FY27. 

The scheme has a budgetary outlay of Rs 25,938 crore, for incentives where the total incentive per group company(ies) was capped at Rs 6,485 crore. 

The new EV policy, however, allows for reduced duty while the company sets up a manufacturing unit, unlike the PLI scheme which offers incentives on the sale of finished goods manufactured in India. While the policy doesn’t offer any extra incentive on the sale of manufactured vehicles, it allows for the import of CBUs at a concessional rate during the initial years.

The new EV policy is not without riders. The reduced import duty is not an unlimited cap. "It is important to note that the actual duty saved cannot be more than the investment made," said Abhishek Jain, head of indirect tax and partner at KPMG. "Even the 8,000 units per year import cap is linked to investment made." The new policy states that the duty foregone on the total number of EV allowed for import would be limited to the investment made or Rs 6,484 crore (equal to incentive under PLI scheme), whichever is lower.

Read more at: https://www.ndtvprofit.com/business/explained-how-indias-new-ev-policy-treads-where-pli-scheme-doesnt

3.India’s direct tax collections jumps 20% to ₹18.9 trillion

India’s direct tax collections, after adjusting for refunds, has jumped nearly 20% to ₹18.9 trillion this financial year until 17 March, the Central Board of Direct Taxes (CBDT) said in a statement on Tuesday. 

Net direct tax receipts, which includes four instalments of advance tax payment, accounts for 86% of the full-year target of ₹21.98 trillion. In the comparable period during the previous financial year, the tax authority had collected ₹15.76 trillion.

4.Electoral bonds: What we know so far, what we will know soon – and what we may never know

Here is an explainer in Scroll to help you navigate this big, developing story that could have far reaching implications in India. We start with some important background.

5.Nvidia unveils powerful chip in push to extend dominance in AI market

Nvidia has unveiled its latest more powerful artificial intelligence chips as it sets its sights on extending its dominance in the burgeoning industry. 

Chief executive Jensen Huang on Monday said Nvidia’s Blackwell graphics processing units would massively increase the computing power driving large language models. The Blackwell GPU has 208bn transistors, compared with 80bn in last year’s H100, in a measure of its increased power. Huang said the chip was twice as powerful when it came to training AI models as its current generation of GPUs, and had five times their capability when it came to “inference” — the speed at which AI models such as ChatGPT can respond to queries.

“The inference capability of Blackwell is off the charts,” he said, adding that there was “unbelievable excitement” about it.

Nvidia Chief Executive Officer Jensen Huang showed off new chips aimed at extending his company’s dominance of artificial intelligence computing, a position that’s already made it the world’s third-most-valuable business.

 A new processor design is many times faster at handling the models that underpin AI, the company said at a conference in San Jose, California. That includes the process of developing the technology—a stage known as training–and running it, which is called inference.

6.Apple is said to be in talks to build Google’s Gemini AI engine into the iPhone, setting the stage for a blockbuster agreement that would shake up the AI industry. 

The two companies are in active negotiations to let Apple license Gemini to power some new features coming to the iPhone software this year. Apple also recently held discussions with OpenAI and has considered using its model. Google’s stock got a boost because Apple’s interested in using its AI in iPhones.

7.Elderly people in the U.K. will be given robot pets to treat loneliness, in a government-backed trial.

Around 20% of British people are over 65 and about 900,000 people are living with dementia. Both figures are expected to grow rapidly, but the country lacks social care workers, and it is hoped that the animatronic cats and dogs could provide a low cost complement to human staff. A small earlier study suggested that the pets reduced symptoms such as delusions and depression in dementia patients. Japan, another aging society, has tried similar things in the past, including Paro, a robotic seal, although MIT Technology Review reported last year that the country’s $300 million investment in automated elderly care has not paid off.

8.SpaceX is building a spy satellite network for US intelligence

And China isn’t happy about it.

Chinese military and state-run media on Sunday accused the United States of threatening global security, days after a Reuters report which found Elon Musk's SpaceX was building hundred of spy satellites for a U.S. intelligence agency.

SpaceX's Starshield unit is developing the satellite network under a classified $1.8 billion contract with the National Reconnaissance Office (NRO), Reuters reported on Friday, citing five sources familiar with the programme.

A social media account run by the People's Liberation Army (PLA) said the SpaceX program exposed the United States' "shamelessness and double standards" as Washington accuses Chinese tech companies of threatening U.S. security.