Arvind's Newsletter- Weekend edition

1.Modi’s Vision for India Rests On Six Giant Companies, opines a report in Wall Street Journal in a long but interesting read.

Prime Minister Narendra Modi says this is India’s decade. That claim rests heavily on a handful of dominant conglomerates.

Increasingly aligned with Modi’s priorities, the roughly half-dozen mega-firms—which include Reliance Industries and Adani Group, helmed by two of Asia’s richest tycoons—have the ability to raise vast sums of capital, and the experience and political connections to navigate India’s byzantine bureaucracy. Capitalising on government subsidies and privatisation plans, they are executing projects with a scale and speed that have eluded India in the past.

Among their ventures: A new airport for Mumbai, designed by the firm founded by the late Iraqi-British architect Zaha Hadid to look like a lotus flower, which is scheduled to start opening next year after the Adani Group took it over. When completed, it’s expected to connect to high-speed rail and handle 90 million passengers annually—only slightly fewer than Atlanta’s main airport, the world’s busiest, last year.

After spending more than $45 billion to build out telecommunications networks, Reliance Industries—a petrochemicals, textiles and retail juggernaut—is constructing factories to make solar panels and batteries for energy storage to position India as a credible alternative to China. It has pledged $75 billion in green-energy spending over the next 15 years.

The 155-year-old Tata Group, which took control of the formerly state-owned Air India last year, recently placed one of the largest orders in aviation history for 470 new aircraft. The salt-to-steel-to-software behemoth, which owns British automaker Jaguar Land Rover, is forging ahead with producing electric vehicles, military transport aircraft, smartphones and telecom hardware, with plans to invest $90 billion in India over five years.

Half a dozen conglomerates now control or have major stakes in 25% of India’s port capacity, 45% of cement production, a third of steel making, nearly 60% of all telecom subscriptions, and more than 45% of coal imports. An analysis by the Center for Monitoring Indian Economy, a research firm, shows that a quarter of all new investment proposals by private companies since 2014 have come from the companies.

“This is the period where it’s not the mad rush of entrepreneurs going out to build new capacities, to become great entrepreneurs—this is the era of great concentration," said Mahesh Vyas, CMIE’s managing director.

Is this good for India, especially as it seeks to compete with China? The evidence is mixed.

The mammoth firms can lead large breakthrough projects, but rising industrial concentration can also stifle competition and leave India’s plans vulnerable without broader private investment.
“It’s no longer that they’re taking the place of large public-sector firms, they’re now actually expanding at the expense of other private-sector firms," said Viral Acharya, a former deputy governor of India’s central bank.

Recent research by Acharya, in a Brookings Institution paper, shows the largest conglomerates have since 2015 rapidly grown their market share, giving them greater power over prices for goods and services they sell. Prices have been rising faster than costs in some industries they dominate, such as cement, his research shows.

“People don’t see a point in entering any space where these big corporations are already," said Rohit Chandra, an assistant professor at the Indian Institute of Technology—Delhi’s School of Public Policy. “You don’t want just a small group of companies winning everything over and over again."

Together, the firms’ market capitalisations increased an average of 386% in the decade ending in December, more than double the broader market’s growth. Mukesh Ambani, who runs Reliance, is Asia’s wealthiest man. Read on.

2. If you came late and missed most of the news on Prime Minister’s visit to USA and all the IndiaAmerica alliance announcements, Economist Noah Smith has done a good recap in his recent blog post. He writes a new quasi-alliance was born but there are still some challenges to overcome.

3.The chip patterning machines that will shape computing’s next act, opines Chris Miller, author of the Chip War (Winner of the FT-McKinsey business book of the Year 2022).

When we talk about computing these days, we tend to talk about software and the engineers who write it. But without the hardware and the physical sciences that enabled their creation—disciplines like optics, materials science, and mechanical engineering—modern computing would have been impossible.

Semiconductor lithography, the manufacturing process responsible for producing computer chips, stands at the center of a geopolitical competition to control the future of computing power. And the speed at which new lithography systems and components are developed will shape not only the speed of computing progress but also the balance of power and profits within the tech industry. Read on for rest of story.

4.NPCI to Meesho: Indian firms in Time's 100 most influential companies 2023

Global companies that found mention in the list were Nvidia, SpaceX, OpenAI, Crocs, Taco Bell, BYD, LVMH, and Lockheed Martin.

Two Indian companies, the National Payments Corporation of India (NPCI) and Meesho, were featured on Time's list of 100 most influential companies 2023 list released on Thursday. Additionally, Polygon Labs, originally founded as Matic Network by four Indians, also found its mention in the list.

Launched in 2008 by the Reserve Bank of India (RBI) and the Indian Bank's Association (IBA), NPCI has played a big role in adopting digital payments in the country. According to a recent RBI Bulletin, UPI will account for 90% of retail digital transactions in the next 5 years.

The shopping app Meesho was launched in 2015 by Vidit Aatrey and Sanjeev Barnwal and is headquartered in Bangalore, Karnataka. The platform doesn't charge sellers a commission, which it says enables it to sell 60 per cent of its products for less than $4.

The list also featured Polygon Labs, formerly known as Matic Network. It was founded in 2017 by four Mumbai-based software engineers: Jaynti Kanani, Sandeep Nailwal, Anurag Arjun, and Mihailo Bjelic. It was rebranded into Polygon in February 2021.

The company aims to create a multi-chain blockchain system compatible with Ethereum. As with Ethereum, it uses a proof-of-stake consensus mechanism for processing transactions on-chain.

5.Amritsar: The Indian city where no one goes hungry

Amritsar, a north Indian city of two million people, is famous for many things: delectable cuisine, its historical old town and the spectacular Golden Temple – the most significant shrine of the Sikh religion. Yet, what stands out everywhere, from the temple to the people in the streets, is a feeling of generosity that is linked to the very founding of the city.

In Amritsar, the beating heart of the Sikh religion, the fulfilment of seva is taken to another level. It is known throughout India that no person ever has to go to bed hungry in Amritsar. That's because there is always a hot meal ready for anyone who should want it at the Golden Temple, the most significant shrine of the Sikh religion.

The Golden Temple's langar, a free, communal kitchen, is the largest in the world, serving 100,000 people per day, seven days a week. Everybody is welcome to eat here, without discrimination, for as long as they need shelter and food, and meals are available 24 hours a day.