Arvind's Newsletter-Weekend edition

1.Foxconn-HCL Chip JV may Assemble in UP

The joint venture between Taiwan’s Foxconn and IT services major HCL Group has been allotted around thirty acres of land, near the upcoming Jewar airport in Uttar Pradesh’s Noida, to set up a semiconductor outsourced assembly and testing (OSAT) unit, said people aware of the matter.

If the proposed unit, located in the Yamuna Expressway Industrial Development Authority (YEIDA) region, gains central government approval, it will be the first such project to come up in UP, they added. Foxconn, which is likely to invest $37.2 million, holds a 40% equity stake in the venture. It has allowed the majority partner—HCL Group—to decide the location of the unit, sources said.

2.Millennials in India top spenders on travel, beat Gen Z, Gen X and Boomers’

 US$ 6031 is how much an Indian millennials spends on travel annually on average, according to a report by Collinson International. The report found that Indians have a taste for expensive vacations, with millennials spending the highest. Travel was the second highest expense for Indian respondents, making up a third of their annual expenditure. Apart from millennials, Gen Z spent an annual $2,622 on travel, according to the report.

3.Modi's Jobs Push Needs a More Tailored Approach'; Menaka Doshi in Bloomberg

India needs to build a world-class garment manufacturing industry. Making clothes is a sector of manufacturing that’s still very labor-intensive, and so can provide a lot of jobs.

Some excerpts from her article:

“India's apparel export industry…has missed the China+1 opportunity [so far], with Vietnam, Bangladesh, Indonesia and even some Eastern European countries grabbing market share, while India stagnates at around 5%…And yet, a neighbourhood crisis, a billionaire deal and the Modi government's latest jobs push offer some hope…

The $14.5 billion apparel export industry needs access to cheaper raw material, scale, skills and labor reforms…[A]ny structural shift needs to first address the industry's persistent problem of size…The industry has very few large, vertically integrated players that can invest capital, technology and professional management…

Archaic and complex import procedures curtail India's access to cheaper synthetic fabric, the key raw material for almost 70% of the apparel trade…India's exporters have to meticulously account for every square centimeter of fabric, buttons and zippers imported and used to avoid high import duties…Since 2017, India's tariffs have risen by approximately 13 percentage points in the textile and apparel sector…These are all challenges China overcame decades ago.

The most important thing India’s garment industry needs, though, is probably just female employees.

4.SIAM August Data: Indian Carmakers Produce More, Sell Less As Demand Slumps

Indian carmakers produced more, dispatched less, and sold even fewer cars in August 2024, as demand continued to dwindle in the world's third largest automotive market.

Production of passenger vehicles in India rose 0.7% over the year earlier to nearly 3.77 lakh units last month, even as dispatches from the factory floor to the dealership fell 1.78% year-on-year to about 3.53 lakh units, according to data released by Society of Automobile Manufacturers.

5.SpaceX completes first private spacewalk

SpaceX's Polaris Dawn mission made history yesterday as billionaire Jared Isaacman and SpaceX engineer Sarah Gillis completed the first private spacewalk. The pair exited their Crew Dragon capsule roughly 450 miles above Earth in new SpaceX-designed spacesuits.

Before the walk, the crew underwent a two-day pre-breathe process—breathing pure oxygen to purge nitrogen from the bloodstream—while decreasing cabin pressure to reduce the risk of decompression sickness. All four crew members wore spacesuits, which operate at a lower pressure than the spacecraft's interior, and the entire capsule needed to be depressurised as it lacks an airlock. The mission is also conducting 36 scientific experiments from 31 institutions, including studies on radiation exposure, motion sickness, and eye health. Many aim to contribute to NASA's Human Research Program and provide insights into deeper space travel. 

6.Oil prices fell below $70 a barrel for the first time in three years, and are expected to keep dropping. 

Weak demand in China, thanks to the country’s slowing economy, and expanding production in non-OPEC countries, notably the US, will continue “downward pressure on price,” the head of the International Energy Agency said, offsetting production shutdowns in the Middle East and geopolitical tensions, both of which usually prop up prices.

The issue has political implications ahead of November’s US presidential election. Both candidates want to reduce gasoline prices, but the low cost of oil reduces the incentives for companies to make the investments necessary to boost supply.

7.US regulators approved the use of Apple AirPods as hearing aids

Apple announced on Monday that its AirPods Pro 2 headphones will become an FDA-cleared hearing aid in the coming weeks through a software update. That means that adults with mild or moderate hearing loss — about 30 million Americans, according to the Food and Drug Administration — will be able to use Apple earphones to amplify specific sounds they want to hear better.

The announcement is the latest example of Apple’s strategy to break into the health industry, a potential $15 trillion market by the year 2030, according to RBC Capital Markets.

8.South Korea, the Nation With Lowest Birthrate Is Rocked by Soaring Sales of Dog Strollers

South Koreans bought more dog strollers than baby strollers last year, as the country declared a “demographic national emergency” over its plummeting birth rate. Sales of dog buggies, which retail for as much as $1,100, have quadrupled since 2019, The Wall Street Journal reported, and the registered canine population is at a record high.

Politicians worry that young people are choosing to pamper pets instead of children, with tough working conditions and high financial costs pushing the fertility rate to 0.72, a third of that needed to maintain the population.

President Yoon Suk-yeol in June announced a new ministry to tackle the “existential crisis” — despite himself having no children, but a menagerie of at least 10 dogs and cats, the Journal wrote.

9.How China has ‘throttled’ its private sector; Financial Times

“China used to be the best VC destination in the world after the US,” says one Beijing-based executive, referring to the business of private investment in high-risk start-up companies.

Founders and investors harbour few hopes of a return to the glory years before the Covid-19 pandemic, when the likes of Alibaba and Tencent took advantage of rapid economic growth and the rise of the mobile internet to become globally significant technology companies.

“The whole industry has just died before our eyes,” the executive continues. “The entrepreneurial spirit is dead. It is very sad to see.”

The downbeat mood is reflected in the statistics. In 2018, at the height of VC investment, 51,302 start-ups were founded in China, according to data provider IT Juzi. By 2023, that figure had collapsed to 1,202 and is on track to be even lower this year.

The crisis in the sector partly reflects the slowdown in the Chinese economy, which has been buffeted by the protracted Covid-19 lockdowns, the bursting of its property bubble and the stagnation of its equity markets. As bilateral tensions have risen, US-based investors have also largely pulled out.

But it is also the direct result of political decisions taken by President Xi Jinping that have dramatically changed the environment for private business in China — including a crackdown on technology companies regarded as monopolistic or not attuned to Communist party values, and an anti-corruption crusade that continues to ripple through the business community.