Arvind's Newsletter

1.Tata Motors signs MoU with Tamil Nadu govt to set up ₹9,000-crore vehicle manufacturing facility

In a regulatory filing, the company said the MoU envisaged an investment of around ₹9,000 crore over the next five years and would help create up to 5,000 direct and indirect jobs.

The teams from Tata Motors and Guidance, Tamil Nadu's nodal agency for investment promotion and facilitation, will work together to take this plan forward after the signing of the MoU.

Meanwhile, Tata Group aims to begin commercial production from India’s first semiconductor fabrication unit by 2026.

Tata Electronics Pvt. Ltd’s plant in Assam will begin with producing semiconductor chips starting at 28 nanometres, said N. Chandrasekaran, chairman of Tata Sons, the group’s holding company. 

The plant will start production by late 2025 or early 2026, serving a variety of sectors including automotive, power, electronics, consumer, and medical, he said.

2.India was the world’s top arms importer.

Its arms imports increased by 4.7 per cent between 2014–18 and 2019–23. Although Russia remained India’s main arms supplier (accounting for 36 per cent of its arms imports), this was the first five-year period since 1960–64 when deliveries from Russia (or the Soviet Union prior to 1991) made up less than half of India’s arms imports. Meanwhile, European arms imports nearly double, US and French exports rise, and Russian exports fall sharply show data published by the Stockholm International Peace Research Institute (SIPRI), which tracks the global weapons trade.

3.Chinese smartphone maker Transsion, which sells Tecno, Infinix, and Itel smartphones, is eyeing the sub- ₹10,000 (~$121) market—which accounts for 30% of smartphone sales in India. Transsion is the fifth largest player globally.

 It’s a segment ripe for the taking since Jio has failed to crack it, and the likes of BBK Electronics (Oppo, Vivo, OnePlus) prioritise premiumisation.

To this end, it’s offering higher margins to retailers in non-metros, Rest Of World reports. It also understands regional preferences. Transsion launched four-sim phones in Africa—a continent where it has 40% market share. Earlier Indian models had sensors that functioned with oily fingers.

Last year, the company also gained 8.6% of the Indian smartphone market, according to market research firm Counterpoint Research.

4.Malaysia: the surprise winner from US-China chip wars

As companies around the world look for a back-up to China to protect themselves from geopolitical disruptions — a strategy known as China plus one — Malaysia is becoming a surprise investment destination.

It has a 50-year history in the “back end” of the semiconductor manufacturing supply chain: packaging, assembling and testing chips. But it has ambitions to move up to the front end of a $520bn global industry that powers everything from televisions to smartphones and electric vehicles. That includes higher value activities such as wafer fabrication and integrated circuit design.

The broadening US curbs on Chinese technology, especially for chipmaking, are a key reason for neutral Malaysia’s appeal, say industry groups. America is jostling with China for global technology supremacy and has enlisted support from allies in Europe and Asia as it restricts sales of the most advanced chips and manufacturing equipment to its geopolitical rival.

The major western semiconductor equipment manufacturers cannot sell their most advanced equipment to China because of US restrictions. “But the other part of the story is all of these manufacturers source parts from Chinese companies,” “So they tell their suppliers: if you don’t move out [of China], we have to find new ones. Chinese companies are then forced to move or expand to places like south-east Asia so they don’t lose business. That is where Penang (in Malaysia) comes in.”

Investment is booming. The state attracted RM60.1bn ($12.8bn) in foreign direct investment in 2023, more than the total it received from 2013 to 2020 combined.

But the narrative has distinct vulnerabilities. These include a severe talent shortage and a failure to create a domestic semiconductor champion that can draw in others.

Another is politics. Washington has already put pressure on Kuala Lumpur for “tilting” towards Beijing under Anwar, who took office in 2022. The US, the biggest contributor to Malaysia’s FDI, may clamp down further on Chinese technology; some analysts and industry groups fear it may restrict products and equipment built in Malaysia by the flood of new Chinese companies.

Intel, the world’s largest chipmaker by revenue, is spending $7bn on new facilities in Malaysia, including a “3D” advanced packaging site due to be finished later this year. The cutting-edge technology stacks chips on top of each other to improve performance.

Micron and Germany’s Infineon are also in expansion mode. US-based Micron last year launched its second facility for assembly and testing in Penang, while Infineon, a former subsidiary of German engineering conglomerate Siemens, said it would spend up to $5.4bn to expand over the next five years. It is building the world’s largest production site for the silicon carbide chips widely used by makers of electric vehicles.

5.Apple's Vision Pro was used in surgery to help perform spinal operations

As Business Insider reports, the expensive "spatial computing" device was used to execute two micro-spinal procedures at London's Cromwell Hospital. 

To be clear, it wasn't the surgeons themselves who were wearing bulky AR headsets. The device was instead donned by an assisting surgical scrub nurse, who according to the press release used headset-integrated software called eXeX to access things like "surgical setup and the procedural guides from within the sterile field of the operating theatre," in addition to any needed data or surgical visualisations.

So, in short: coupled with the eXeX software, the headset offered the folks in the operating room hands-free access to documents and other information related to the procedure and its workflow. 

6.Agriculture has been driving growth of Brazil’s economy, but looming climate change has a precarious future opines Bryan Harris in Financial Times

Fuelled by surging global demand for food, particularly from China, the sector has in recent years emerged as a key engine of Latin America’s largest economy, today accounting for about 25 per cent of gross domestic product. This is up from 18 per cent a decade ago. Indirectly or directly, it employs 27 per cent of the population, according to the Center for Applied Studies on Advanced Economics, at the University of São Paulo.

Agriculture is now almost single-handedly propping up the nation’s economic fortunes. In the first quarter of 2023, the sector grew by an extraordinary 21 per cent and by more than 15 per cent across the year. This growth — the strongest since 1996, according to available data — helped bolster overall national growth, which surpassed expectations at 2.9 per cent.

Looming on the horizon, however, is a potential threat to the success of Boa Esperança, Mato Grosso and Brazil’s agro boom: the changing climate. Last year, Brazil had its hottest year on record and Mato Grosso and its central agricultural belt were the hottest locations, with temperatures 2C above average. The extreme temperatures, combined with a lack of rain, sharply hit production, with yields of soyabeans, the key cash crop, forecast to have fallen more than 20 per cent. In some parts of the state the drop is expected to be even worse.

7.Inside the world of crazy rich Indians, reports the Economist

All of india was transfixed, as February turned to March, by the spectacle of Anant Ambani’s pre-wedding celebrations in Jamnagar, an unlovely industrial town in western India. Mr Ambani is the son of Mukesh Ambani, India’s richest man and boss of Reliance, a giant conglomerate. Bill Gates, Mark Zuckerberg and Rihanna turned up, as did hordes of Indian business tycoons, cricket legends and Bollywood a-listers. The government temporarily converted the local domestic airport into an international one. For hundreds of millions of Indians following the lavish proceedings on tv, social media and in the papers, the festivities stood as shorthand for the tastes and power of India’s rich.

The Ambanis and their fellow plutocrats are household names in India. But they are not representative of India’s wealthy. Billionaires, almost by definition, are a select few. According to Forbes, a compiler of lists, there are just 186 of them in India. Far more consequential to—and representative of—India’s economic story are the legions of dollar millionaires, whose ranks are expanding year by year. They have an outsize influence, relative to their numbers, on patterns of consumption, investment and growth. They tend not to make headlines or advertise their wealth.

There is no fixed definition of “rich” used by the businesses that cater to them. But a commonly accepted threshold for being a “high net-worth individual” is possession of net assets of $1m or more. This measure includes the value of primary homes, which could inflate numbers by counting someone who works for a modest wage but inherits a large seafront flat in Mumbai—$1m buys 1,100 square feet (100 square metres) of prime property in the city. It does not account for those who hold illicit cash, depressing the real figure. Experts assume that these things cancel each other out to provide a decent picture of a country’s wealthy.

By that definition India had around 850,000 dollar millionaires in 2022, a net addition of 473,000 from a decade earlier, according to research by Credit Suisse, a Swiss bank. Between 2012 and 2022 the number of dollar millionaires grew at an annual rate of 8.5%, outpacing average gdp growth of 5.6%. The economy is rebounding even more strongly now. As a result, wealth managers expect the number of dollar millionaires to expand by 15-20% per year. These are the new rich. No datasets exist delineating the demographics of this cohort. But it is possible to draw broad trends from the people who manage their money. One unifying theme emerges: India’s new rich are nothing like the old.

First, they are more spread out. No longer do Indians need to live in top-tier cities like Mumbai, Delhi or Bangalore to get loaded. Jaideep Hansraj, who ran wealth management at Kotak Mahindra, a big bank, for 15 years and now heads the securities business, says the surge in investors from small cities is phenomenal. They come from “Indore or Bhopal or Lucknow or Kanpur. I mean… Bareilly. It completely bamboozles me,” he says, referring to the sorts of cities an earlier generation of bankers would have sneered at. Rakesh Singh of hdfc, India’s biggest bank by market capitalisation, says he has seen half-million-dollar investments coming from places like Jorhat in Assam, which most Indians would struggle to locate on a map.

Driving this geographic diversification of wealth is India’s improving physical infrastructure. This has lowered transport costs and sped up industrial shipments. It includes a big expansion in air connectivity, the spread of high-speed internet and investment incentives from state governments keen to grab a piece of India’s growing economy. Wealth managers, too, are expanding their operations to serve customers where they are.

A second change is in the average age of the loaded. Where India’s rich might once have had a median age above 50, 40- and 30-something millionaires are now common. Some have benefited from government land acquisition for infrastructure projects, reaping big sums from previously unproductive holdings. Many are first-generation businessmen making consumer staples such as wafers (potatoes, not silicon), clothes or poppadoms, or unsexy but essential goods necessary for a growing economy, such as rebar or ball bearings. A huge chunk are salaried professionals with company stock options or prudent personal investments. These are first-generation millionaires with “strong middle-class values” says Chethan Shenoy of Anand Rathi Wealth, which manages $6.6bn for nearly 10,000 clients.

The third major shift is in what the new rich do with their riches, in terms of both investment and consumption. They are much more comfortable with capital markets than their parents. “Earlier I could go and have one standard conversation with 90% of my clients,” says Nitin Chengappa, who heads private banking at Standard Chartered, an international bank. Today “diversification is the key. It’s not just mutual funds. It’s private equity, social causes, venture capital, what can I do in listed [companies], what can I do in non-listed?” To be sure, the rich still buy plenty of gold and second homes, in India and abroad. But their interest in markets and their appetite for risk has increased, too.

That does not mean they shy away from consumption. Foreign holidays are a common indulgence, as are lavish weddings and fancy cars. (Mercedes expects India to become its third-biggest market outside Germany in three years, up from fifth.) European luxury brands and hotels are an increasingly common sight in India’s cities, and new entrants are rushing in. Last year Dior held a show in Mumbai and in 2022 the Swiss watch industry enjoyed a record year for exports to India. Tata, a big Indian conglomerate, has seen robust growth in its luxury goods and five-star hotel businesses, especially from smaller cities. It is due to open 25 hotels this year, many of them high-end. An international airport due to open in Mumbai next year will have a fifth of its parking spots reserved for private jets.

Two risks could stall the growth of India’s new class of wealthy. The first is political, regulatory or tax changes. Risk-taking in investment and free-spending consumption are driven by confidence among the rich that they will only get richer. Political instability could prompt a retreat to safer investments and lower spending. And although they are mostly immune to domestic inflation they are particularly sensitive to changes in taxation.

The other risk is that the rich might flee. Henley and Partners, a high-end immigration firm, reckons that 7,500 Indian millionaires moved abroad in 2022. Many more have quietly acquired second homes in Dubai, London or Singapore, as well as the right to move there as a way of keeping their options open. Most hope to send their children to foreign universities. Professionals with international firms are also highly mobile, tempted by higher quality of life, better schooling for their children and a cleaner environment.

India’s new rich, like the previous elite, are a patriotic group. Many are keen to give back and help improve the lives of other Indians—while also having a good time. But even as they change, they would like India to change too. As one banker puts it, “As rich as you get you cannot do anything about the pollution.”