Arvind's Newsletter-Weekend edition

1.Coming soon, India-assembled flagship Range Rover model by JLR

For the first time in over half a century, Jaguar Land Rover Automotive Plc (JLR), the British arm of Tata Motors, will assemble its flagship luxury sports utility vehicles Range Rover and Range Rover Sport outside the UK, choosing India. 

This shift underscores JLR’s commitment to local manufacturing and tapping into India’s growing luxury car market, a top company executive told Mint in an interview, on the sidelines of the inauguration of the Range Rover House in Alibuag, Maharashtra, the first experiential centre of the brand in India.

A new assembly line for the Range Rover and Range Rover Sport will be set up in Tata Motors' manufacturing facility in Pune, Maharashtra, with a production capacity of 10,000 units annually in two shifts. 

The move is expected to reduce prices by a significant 18%-22%, while still keeping them in the ₹1.5 crore and above category, said Rajan Amba, managing director and CEO of Jaguar Land Rover India.

2.Business activity expands in May as exports surge, PMI rises to 61.7

Business activity in India saw significant growth in May, primarily driven by the growth in the services sector, according to HSBC's flash India Composite Purchasing Managers’ Index (PMI). 

The survey showed India had record-breaking exports and the highest job addition rate in nearly 18 years. India’s PMI slightly increased to 61.7 in May from 61.5 in  April, the 34th consecutive month of PMI remaining above the 50. Less than 50 indicates contraction. 

Export growth has reached a new peak for the second time this year.

3.7,000 IIT students still jobless as placement season ends; Institute sends SOS to alumni for help

As the placement season for the academic year 2023-24 concludes, over 7,000 students from the Indian Institutes of Technology (IITs) remain unplaced.

IIT Delhi has reached out to its alumni network, seeking help to place the current batch of graduates. Approximately 400 students at IIT Delhi are still jobless. The institute has requested alumni to offer jobs, provide referrals, or extend internship opportunities to assist these students.

4.ET Prime Unicorn 100: The surprising fact about profits and Indian startups ; Economic Times Analysis

Amidst a long funding winter, Indian unicorns have improved their financials. That too by a significant margin. 

The numbers for FY23, the latest year for which financials are available, show that a substantially large number of unicorns have turned profitable while almost all have shown growth in their top lines.

 A quarter of Indian unicorns are profitable. As many as 20 out of 83 have reported profits. This is a significant jump as the number of profitable unicorns in the previous financial year was just 13. Another 10 have shown strong signs of becoming profitable or reported profits during FY24. Of the US-registered 11 unicorns, six to eight are estimated to be profitable given they are successful SaaS/enterprise IT companies with steady cash flow and strong business in the advanced markets. This would essentially mean nearly 40% of Indian unicorns are financially sustainable.

The aggregate of unicorn revenues and profit/loss shows they collectively increased their revenue by 35% to INR307,980 crore. They managed to bring down their combined losses by 25% to INR55,488 crore during FY23.

It turns out that the profitability push in the past two years among the various stakeholders, including founders, top executives, and venture capital (VC) investors of large startups wasn’t a hogwash. With a sour funding climate, they had to make it work.

A key takeaway from ET analysis is that unicorns, most of whom didn’t see any fresh capital in the past two years, have substantially increased their revenue while managing to reduce losses. In other words, FY23 signals improving financial health of the Indian unicorns.

5.The right to disconnect (with Thanks to Founding Fuel Publishing)

In Insead Knowledge, Mark Mortensen, who teaches Organisational Behaviour at the B-School, offers some practical tips to counter an excess of digital communication at workplaces. There is a growing movement that pushes for employees' right to disengage from work-related digital communications outside of working hours. The movement aims to promote a healthier work-life balance, reduce stress and burnout, and improve overall well-being. Some countries have passed legislation to push the idea. But, organisations need not wait for such laws.

Mortensen writes: “Organisations have a duty to reduce the constant pressure to be connected, yet often fall short due to ignorance or inability. As a result, employees may have to take matters into their own hands to achieve a healthier work-life balance.” Read on “How to combat the always on work culture.”

6.When the Chips Are Up

Nvidia, the primary avatar of the AI revolution, has solidly ensconced itself not only as one of the most valuable companies in the world but also as one of the most profitable.

Nvidia’s share price passed $1,000 for the first time Thursday in a 10% jump, after the tech giant reported better-than-expected revenue fuelled by intense demand for its AI chips. 

Nvidia also announced plans to make new chips every year instead of every two years, with analysts saying the company will likely keep up its momentum; one said Nvidia is “likely nowhere near its peak.” But other AI companies could eventually threaten its dominance, The Wall Street Journal wrote, by making smaller models that don’t require as much computational power, and therefore don’t need Nvidia’s chips.

7.Conglomerates continue to slim down in USA

DuPont de Nemours, the American multinational chemical company that traces its history back to 1802, announced plans to split into three publicly traded companies.

The company plans to spin off its electronics and water businesses into their own yet-to-be-named companies in a transaction that is tax-free to shareholders. DuPont said it expects to complete the breakup transactions within the next 18 to 24 months, and it is subject to final approval by DuPont’s board of directors.

In the last several years, major American companies like J&J, Kellogg and General Electric announced company break-ups and spin-offs, signaling a preference for smaller, more nimble companies over the conglomerates that gained prominence in previous decades.

This is the second DuPont breakup in half a decade. In 2019, DowDuPont, which was created in a DuPont merger with Dow Chemical, broke apart into three separate entities: DuPont, Dow Chemical and Corteva, the company’s agriculture business.

8.Cash for kids:Why paying women to have more babies won’t work; The Economist

As birth rates plunge, many politicians want to pour money into policies that might lead women to have more babies. Donald Trump has vowed to dish out bonuses if he returns to the White House. In France, where the state already spends 3.5-4% of gdp on family policies each year, Emmanuel Macron wants to “demographically rearm” his country. South Korea is contemplating handouts worth a staggering $70,000 for each baby. Yet all these attempts are likely to fail, because they are built on a misapprehension.

Governments’ concern is understandable. Fertility rates are falling nearly everywhere and the rich world faces a severe shortage of babies. At prevailing birth rates, the average woman in a high-income country today will have just 1.6 children over her lifetime. Every rich country except Israel has a fertility rate beneath the replacement level of 2.1, at which a population is stable without immigration. The decline over the past decade has been faster than demographers expected.

Doomsayers such as Elon Musk warn that these shifts threaten civilisation itself. That is ridiculous, but they will bring profound social and economic changes. A fertility rate of 1.6 means that, without immigration, each generation will be a quarter smaller than the one before it. In 2000 rich countries had 26 over-65-year-olds for every 100 people aged 25-64. By 2050 that is likely to have doubled. The worst-affected places will see even more dramatic change. In South Korea, where the fertility rate is 0.7, the population is projected to fall by 60% by the end of the century.

The decision to have children is a personal one and should stay that way. But governments need to pay heed to rapid demographic shifts. Ageing and shrinking societies will probably lose dynamism and military might. They will certainly face a budgetary nightmare, as taxpayers struggle to finance the pensions and health care of legions of oldies.

Many pro-natalist policies come with effects that are valuable in themselves. Handouts for poor parents reduce child poverty, for instance, and mothers who can afford child care are more likely to work. However, governments are wrong to think it is within their power to boost fertility rates. For one thing, such policies are founded on a false diagnosis of what has so far caused demographic decline. For another, they could cost more than the problems they are designed to solve.

One common assumption is that falling fertility rates stem from professional women putting off having children. The notion that they run out of time to have as many babies as they wish before their childbearing years draw to a close explains why policies tend to focus on offering tax breaks and subsidised child care. That way, it is argued, women do not have to choose between their family and their career.

That is not the main story. University-educated women are indeed having children later in life, but only a little. In America their average age at the birth of their first child has risen from 28 in 2000 to 30 now. These women are having roughly the same number of children as their peers did a generation ago. This is a little below what they say is their ideal family size, but the gap is no different from what it used to be.

Instead, the bulk of the decline in the fertility rate in rich countries is among younger, poorer women who are delaying when they start to have children, and who therefore have fewer overall. More than half the drop in America’s total fertility rate since 1990 is caused by a collapse in births among women under 19. That is partly because more of them are going to college. But even those who leave education after high school are having children later. In 1994 the average age of a first-time mother without a university degree was 20. Today, about two-thirds of women without degrees in their 20s are yet to have their first child.

Some politicians may seize on this to aim baby-boosting policies at very young women. They may be tempted, too, by evidence that poorer women respond more to financial incentives. But focusing on young and poor women as a group would be bad for them and for society. Teenage pregnancies are linked to poverty and ill health for both mother and child. Targeted incentives would roll back decades of efforts to curb unwanted teenage pregnancy and encourage women into study and work. Those efforts, along with programmes to enhance gender equality, rank among the greatest public-policy triumphs of the postwar era.

Some illiberal governments, such as those of Hungary and Russia, may choose to ignore this progress. Yet they face a practical problem, because government incentives do not seem to bring lots of extra babies even as spending mounts. Sweden offers an extraordinarily generous child-care programme, but its total fertility rate is still only 1.7. Vast amounts of money are needed to encourage each extra baby. And handouts tend to go to all babies, including those who would have been born anyway. As a result, schemes in Poland and France cost $1m-2m per extra birth. Only a tiny number of citizens are productive enough to generate fiscal benefits to offset that kind of money. Due to low social mobility only 8% of American children born to parents without bachelor’s degrees end up getting such a degree themselves.

What, then, can governments do? High-skilled immigration can plug fiscal gaps, but not indefinitely, given that fertility is falling globally. Most economies will therefore have to adapt to social change, and it falls to governments to smooth the way. Welfare states will need rethinking: older people will have to work later in life, for instance, to cut the burden on the public purse. The invention and adoption of new technologies will need to be encouraged. These could make the demographic transition easier by unleashing economy-wide productivity growth or helping care for the old. New household technologies may help parents, rather as dishwashers and washing machines did in the mid-20th century. Baby-boosting policies, by comparison, are a costly and socially retrograde mistake.