Arvind's Newsletter - Weekend edition

1.Mahindra to build $3 billion car plant with a Chinese co?: Reuters report

Indian automaker Mahindra & Mahindra and China's Shaanxi Automobile Group have agreed to set up a $3 billion joint venture to build a car manufacturing plant in India and are awaiting New Delhi's approval, sources told Reuters. However, the company said this report was “unfounded” and there was “no truth in the matter”.

The plant is proposed to be set up in Prime Minister Narendra Modi's home state of Gujarat, two sources with direct knowledge of the matter told Reuters.

The proposal includes building an export-oriented, integrated manufacture hub for assembled cars - known as completely built-up units - as well as engines and car batteries, the sources said. Mahindra has sought a government nod for the Chinese investment, reported Reuters.

If it is true (though as mentioned denied by the company) and it gets government approval it will imply a change in government’s views on Chinese investments in sensitive areas. As readers may recollect only last year BYD was “denied” approval to make EVs in India in partnership with Hyderabad based Megha Engineering & Infrastructure Ltd. On the other hand MG Motors was permitted to get an Indian partner JSW for in its automobile business by allowing them to invest in expansion and diluting their stake.

2.Over 40% of women face bias at work, says Aon study

A recent survey of 24,000 professional women by professional services firm Aon revealed that several factors like post-maternity setbacks, bias and mental exhaustion hold women back in the workplace.

One in 3 women surveyed experienced micro-aggressions at work, including bias and judgement, while 75% of the respondents said that taking a maternity leave led to a career setback of 1-2 years. Among the respondents, 40%  said that going on maternity leave had a negative impact on their pay. 

3.Ambani family's wealth 10% of India GDP: Barclays-Hurun India report

The Ambani family has topped the inaugural Barclays-Hurun India most valuable family businesses list, with a valuation of Rs 25.75 trillion, which is almost equivalent to one-tenth of India’s Gross Domestic Product (GDP), stated the 2024 Barclays-Hurun India report on the most valuable family businesses in the country.

The Ambani family is followed by the Bajaj family in the second position with a valuation of Rs 7.13 trillion. The Pune-based automobile business is headed by Niraj Bajaj, a third-generation leader, as per the report. The Birla family ranks third at Rs 5.39 trillion, led by fourth-generation Kumar Mangalam Birla. The business primarily focuses on metals, mining, cement, and financial services.

The 2024 Barclays Private Clients Hurun India Most Valuable Family Businesses list does not include first-generation families. However, the Adani family, set up by current chairman Gautam Adani, has emerged as the most valued first-generation family business with a value of Rs 15.44 trillion. The list further includes the Poonawalla family, the owners of Serum Institute of India, valued at Rs 2.37 trillion in the second position. Third on the list is the Divi family, another pharma major, with a valuation of Rs 91,200 crore.

Roshni Nadar Malhotra, CEO of HCL Technologies is India's most influential woman leading a family-owned business, according to the 2024 Barclays Private Clients Hurun India Most Valuable Family Businesses report.The Nadar family's business is valued at a staggering Rs 430,600 crore.

Nisaba Godrej, from the renowned Godrej family, is another prominent figure. Her leadership has contributed to the family business's valuation of Rs 172,500 crore. Other notable women leaders include Manju D. Gupta of Lupin, Sushila Devi Singhania of JK Cement, Meher Pudumjee of Thermax, Amita Birla of Birlasoft, Leena Gandhi Tewari of USV, Mahima Datla of Biological E, Bina Modi of Godfrey Phillips India, and Jyothy Ramachandran of Jyothy Laboratories.

4.China’s auto industry is changing faster than the rest of the world’s
New electric and plug-in hybrid vehicles outsold gas-powered ones in July for the first time — 50.7% of all car sales had “new energy” drive trains, up from just 7% three years ago. Autonomous vehicles are also on the rise too: Beijing has rapidly greenlit trials, with 19 cities running some sort of robotaxi service, in contrast to the US which “is quick to launch investigations and suspend approvals after accidents,” Reuters reported.

Autonomous-vehicle firms expect to be operating in over a hundred cities by 2030, and China’s 7 million ride-hailing drivers are increasingly concerned about the impact on their work.

5.Perplexity’s popularity surges as AI search start-up takes on Google
Perplexity AI, an artificial intelligence search start-up, has increased its monthly revenues and usage seven-fold since the start of the year, after closing a new $250mn round of funding.

The AI-powered search engine answered roughly 250 mn questions in the last month, compared with 500 mn queries for the whole of 2023, Dmitry Shevelenko, Perplexity’s chief business officer told the Financial Times.

The new figures underscore Perplexity’s position as one of the fastest-growing generative AI applications to emerge since OpenAI’s ChatGPT launched to huge acclaim in November 2022, despite controversy over the start-up’s data-gathering techniques.

San Francisco-based Perplexity, which was founded by former Google intern Aravind Srinivas just three months before ChatGPT launched, uses AI software to answer questions, using information pulled in “real time” from the web, including news websites.

Perplexity started the year with $5mn in annualised revenues — a projection of full-year revenues based on extrapolating the most recent month’s sales — and is now making more than $35mn on the same basis, according to a company insider.

Now, the start-up is pivoting its business model from subscriptions to advertising, bringing it into closer competition with Google, which dominates the $300bn search ads industry.

6.DeepMind unveiled a ping-pong-playing robot capable of competing with human amateurs. 

Researchers said it was the first robot agent to play a sport with humans at human level, representing “a milestone in robot learning and control.” The robot achieved a 100% win rate against beginners and 55% against intermediates.

It consists of a robot arm powered by a two-part artificial intelligence system that is trained both to execute specific skills, such as backhand returns, and to assess the game and adapt to opponents’ play style, although it struggles against high balls and spin.

The research has implications for robotics in areas that require “quick reactions and adaptation to unpredictable human behavior,” such as manufacturing and health care, Ars Technica reported.

7.Three powerful mind states: Flow state, good anxiety, and Zen Buddhism

It’s not easy being stressed or anxious. Our moods can weigh us down and saturate the world in blackened hues. But the problem with anxiety is not only the feeling itself but also the negativity we associate with it. It’s the self-loathing: We’re weak if we’re stressed, and we’re broken if we’re anxious.

In this video, Steven Kotler, Wendy Suzuki, and Robert Waldinger offer us a way to “flip the script on our whole mindset around anxiety.” Suzuki is especially keen to reframe anxiety as not some cruel evolutionary accident but a thing of existential importance. Anxiety is a teacher — an irrepressible, drum-banging git of a teacher, but a teacher nonetheless. And given the incredible plasticity of our minds, it won’t be long until most of us take the hint and become wiser for it.

8.Bangladesh has ousted an autocrat. Now for the hard part

As exits GO, it was dramatic. On August 5th Sheikh Hasina, the prime minister of Bangladesh, fled the country she has ruled with an increasingly harsh grip since 2009. She was driven out by a vast display of people power on the streets of Dhaka, the capital, and will be replaced by a caretaker government, backed by the army and led by Muhammad Yunus, a Nobel peace laureate. Like him, many Bangladeshis are calling it a “second liberation”, half a century after independence.

Yet to meet the promise of the moment, Bangladesh must do more than oust an ageing autocrat: it must also clean up a rotten political system. The good news is that the economy is resilient and civil society is robust. The problems are venal political dynasties and the enfeebled institutions that have failed to stand up to them. Mr Yunus has a short time to set the country on a democratic path. His success or failure will shape the lives of 173m Bangladeshis, and influence the rivalry between China, India, Russia and the West.

Bangladesh has been in turmoil for some time. A rigged election in January confirmed the country had descended into thuggish one-party rule. In July mass student protests erupted against the reimposition of reservations of 30% of government jobs for descendants of veterans of the war of liberation in the 1970s, which protesters saw as patronage for supporters of Sheikh Hasina’s party, the Awami League (AL). The unrest became a broader uprising and the government responded with a shoot-to-kill curfew. Over 450 people have died.

After the army withdrew its support for Sheikh Hasina rather than spill more blood, mobs ransacked her palace. They vandalised statues of her father, who led Bangladesh to independence, and around whom Sheikh Hasina had built a personality cult. Mr Yunus, 84, a revered micro-finance pioneer, finds himself in charge. It is not yet clear who will be in his administration, how it will work or for how long.

For much of the time since Bangladesh broke off from Pakistan in 1971, it has endured either military rule or a messy form of democracy, in which power has alternated between two dynasties, the al and its rival, the Bangladesh Nationalist Party (BNP). Things looked up in 2008, when Sheikh Hasina won a free election. Economic growth, already robust, approached 7% a year for the next decade, fuelled by garment manufacturing. Rising incomes and feisty ngos helped cut poverty, boost literacy and get more women into jobs. Bangladesh was a star among emerging markets. Diplomatically, Sheikh Hasina had close ties to India but also forged military and commercial links with China and sought cordial relations with the West.

However, at home she grew ever more oppressive. Many opposition politicians were locked up before January’s farcical election; the BNP boycotted it. Bangladesh’s economic model began to show strain. Two-fifths of young people lack regular employment. The al exercises control over the allocation of everything from teachers’ jobs to graduate openings in business. Since 2020 inflation and capital flight have undermined stability. The country’s foreign reserves have fallen by more than half since 2021, to $19 bn. In 2023 it took out a $4.7 bn loan from the IMF to stabilise its balance of payments. From the street corner to the boardroom, disillusion has spread.

Mr Yunus faces an immensely difficult task. His priority should be to restore order and prevent waves of retributive violence, which have blighted Bangladeshi politics in the past. This means ensuring that the caretaker government, while run by technocrats, also includes representatives of the protesting students and of all political parties, including the AL.

Even harder will be to avoid some pressing dangers. The country could fall prey to Islamist extremism, as Pakistan has. If the financial squeeze worsens, Bangladesh could become dependent on China for cheap loans and arms. That would destabilise relations with neighbouring India and could erode democracy even further. And a fresh election might restore an unreformed bnP to power. Having suffered persecution under Sheikh Hasina, its leaders are eager to take charge again. Yet their party also has a record of thuggery and cronyism.

Mr Yunus needs to work fast. The unelected caretaker government must not remain in office for too long lest it lose legitimacy or, worse, its military backers are tempted to cling to power indefinitely. Mr Yunus should therefore aim to hold proper elections on a reasonable timescale, but first he will have to clean up institutions that Sheikh Hasina captured, such as the electoral authority and the courts. When it comes to the economy, the government should raise more external funding to lower the risk of a balance-of-payments panic, and press for a crucial new trade deal with the European Union. The existing generous terms under which Bangladesh exports its garments will expire in 2029. In the coming years, the country will lose its broader status as one of the least developed countries, which grants it various trade and financing privileges.

Most important, Mr Yunus must urge the political system to open itself to new ideas and leaders, reflecting the aspirations of the country’s young, growing and increasingly urban population. This requires it to ensure that new parties can form and campaign without harassment. It also means asking the al and bnp to install new leaders who are not part of the founding dynasties. Sclerosis at the top has poisoned politics.

Despite its daunting problems, which also include a severe vulnerability to climate change, Bangladesh has advantages. Unlike most troubled countries, it has an economy capable of rapid growth. And in Mr Yunus it now has a leader with moral authority. Western powers should help him, especially if his military backers try to meddle. America, Europe and Japan are Bangladesh’s biggest markets and big sources of finance, so they have influence. India, which has often backed strongman rule, needs to do its bit: if it wants a stable neighbourhood it should urge democratic renewal and offer financial support. Bangladesh matters; it must not be allowed to fail. ■