Arvind's Newsletter

1.India’s true manufacturing rival is Vietnam, not China

Vietnam’s aggressive policy of urging Chinese and global companies to shift capacity to its shores and hedge their bets has been a key factor in why it has done better under its China Plus one strategy than India. The success of the Vietnam story has been noted by US ambassador to India Eric Garcetti who in a recent speech to the Indo- American Chambers of Commerce pointed out that FDI to India was not flowing at the pace it should. Instead, it was going to Vietnam as India had numerous regulatory and taxation hurdles.   

In the first eleven months of CY23, investment from China and Hong Kong combined (Greater China) to Vietnam reached $8.29 billion, according to government data. That is double the figure for last year for the same period, making them the largest investor in Vietnam and accounting for over 30 per cent of total foreign investment.  

In terms of new projects that attracted foreign investors, China was at the top with a 21 per cent share of the new projects between January-September 2023, according to Vietnamese government data.   

Owing to the persistent strain in US-China relations, Chinese supply chains have been looking at moving out of their country to locations which the US considers to be ‘friendly’. Vietnam is leveraging this opportunity. After India’s own clash with China on the border, it has done the opposite and shut the doors to Chinese investment in India. Chinese foreign direct inflows to India have become a trickle due to stringent FDI rules.  

In FY23, Chinese FDI inflow to India fell to a mere $10.5 million - a ten year low. Inflows from Hong Kong also came down to $78.4 million in FY23 from $344 million in FY22.

Though India is getting a lot of overseas investment, Foxconn Technology Group’s announcement last month that it will spend $100 million on a new plant in Vietnam is a reminder that it doesn’t hold a monopoly over business migration away from China. India stands out among peers in implementing higher import duties, which motivate companies to set up in the country to supply local consumers but makes them less competitive in the export market.

2.India must secure its nuclear energy supply chain

Like big countries globally, India, too, is quite heavily dependent upon Russia for much of its technologies, and enriched uranium. India must build local nuclear supply chains and wean away from imports.

India is building 19 new reactors, tripling its nuclear power capacity by 2031-32 from 7,480 MW to 22,480 MW. According to the Nuclear Power Corporation of India Limited (NPCIL), India has 19 reactors under implementation, with 10 at various pre-project stages.

Russia supplies the US with 12 percent of its uranium and the EU with around 16 percent. Nearly 20 percent of the world’s nuclear power plants have been either built by Russia or use Russian technology.

India, too, is quite heavily dependent upon Russia for much of its technologies, and enriched uranium. India’s Kudankulam nuclear power plant, which does not fall into the smaller size categories, remains dependent on reactors from Rosatom. Kudankulam, which operates on an 18-month fuel cycle, has two units of 1,000 MW already in operation and four units of another 1,000 each are under construction and the plant is expected to reach full capacity and be operationalised around the year 2027.

But India has considerable domestically developed technologies that should prove very useful in the long run. India’s largest indigenously developed reactor is 700-Megawatt electric (Mwe) or one million watts of electric capacity while its technology for 200 MWe reactors is also proven.

3.India to become the largest developer community on GitHub by 2027: Nadella

India is expected to overtake the US as the largest developer community on GitHub by 2027, Microsoft Chairman and Chief Executive Officer Satya Nadella said during his address to 1,100 developers and technology leaders at the Microsoft AI Tour in Bengaluru on Thursday.

India is the fastest-growing market on GitHub, a Microsoft-owned software development platform, with 13.2 million developers using it.

After the US, India has the highest number of generative AI (artificial intelligence) projects (GenAI) on GitHub, Nadella said as he highlighted the pivotal role of India’s developer community in building cutting-edge products and solutions.

“This next generation of AI is changing how and what developers build everywhere, including in India,” said Nadella. “It’s fantastic to see how India’s developer community is applying our technology and tools to build the future for India and the world.”

On Wednesday, Nadella announced Microsoft’s new skilling investment in India to empower people and organisations to thrive in the AI era. The investment will see Microsoft provide 2 million people in India with AI skilling opportunities by 2025 through its ADVANTA(I)GE INDIA initiative.

4.Google rebrands Bard AI to Gemini and launches a new app and subscription

Here’s how you can try it out.

In the biggest mass-market AI launch yet, Google is rolling out Gemini, its family of large language models, across almost all its products, from Android to the iOS Google app to Gmail to Docs and more. A new subscription plan will also give users access to Gemini Ultra, the most powerful version of the model, for the first time.  

ChatGPT, released by Microsoft-backed OpenAI just 14 months ago, changed people’s expectations of what computers could do. Google has been racing to catch up ever since and unveiled its Gemini family of models in December. By baking Gemini into its ubiquitous tools, it will be hoping to make up any lost ground, and even overtake its rival

5.Pakistan Elections

Pakistanis will cast ballots today in a twice-delayed parliamentary election, the first since former cricketer Imran Khan and his Pakistan Tehreek-e-Insaf party ascended in 2018. The popular Khan, who has been jailed since last year and recently received three more jail sentences, was ousted in 2022 after losing support from the country's military.

Analysts expect the military-backed Pakistan Muslim League Nawaz party will receive the most votes, paving the way for three-time former Prime Minister Nawaz Sharif to be elected to a fourth term. Sharif returned to Pakistan in October after spending four years abroad waiting for corruption charges against him to be dropped. No prime minister has held office for the entirety of a five-year term in the country's 76-year history. 

The election comes a day after 30 people were killed in twin bomb attacks in the country's southwest and as the nuclear power faces worsening economic conditions and escalating tensions with neighbors Iran, India, and Afghanistan.

 Some 70% of Pakistanis — a record high — say their economic conditions are getting worse, according to a new Gallup poll. Voters in the world’s fifth-most populous country are also increasingly concerned about whether the election will be fair. Some 70% of respondents in the Gallup poll said they believe Pakistan’s elections are not honest.

6.The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted.

7.Demand for luxury goods has soared in Bengaluru, India’s Silicon Valley, highlighting the city’s transformation over the past three decades. Since becoming a tech hub in the 1990s, it has gone from employing around 2,000 IT workers to close to 1.5 million, creating huge wealth for its residents.

The city’s GDP per capita is now more than three times India’s average.

“I’ve lived here all my life, and the change is mind-boggling,” a clothing designer based in Bengaluru told Business of Fashion. “Louis Vuitton bags are more common (here) than grocery bags. Everyone has them.”

8,British amateur photographer Nima Sarikhani captured the scene off the Norwegian archipelago of Svalbard, which sits deep inside the Arctic Circle, around 500 miles (800 kilometers) from the North Pole. The image was crowned the winner of this year's Wildlife Photographer of the Year People's Choice Award.