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Economic Times
3 days ago
- Business
- Economic Times
Make the bright spot brighter: India is Asia's top investment bet, but jobs & reforms remain key hurdles
We are living in a time of heightened uncertainty, and expect that uncertainty to weigh on economic activity. But against this backdrop, India presents the best growth opportunity in investors seem to be taking comfort - first, in the pause of Trump's 'reciprocal' tariffs, then in lowering of US tariffs on China - this is more reprieve than relief. Getting to a trade deal with the US will be difficult particularly for China, and potentially for Europe, as the multitude of issues will mean that negotiations will be complex and will likely take time. A deal with the two major trading blocs will be critical to lower uncertainty. As long as uncertainty persists, it will keep weighing on corporate confidence, capex and trade. As it relates to this week's ruling of the US Court of International Trade blocking imposition of 'reciprocal' tariffs, the Trump administration has already indicated that it will appeal, and may yet consider other avenues through which it may still impose tariffs. For India, starting point of the lowest ratio of goods exports to GDP means it's the least exposed to trade tensions within Asia. Moreover, work has already proceeded well on negotiating a trade deal. India seems well-positioned within the region to secure such a domestic demand is recovering after a period of slowing last year. Both fiscal and monetary policies are supportive and can do more to support growth as needed. On the fiscal side of things, rebound in capex is supporting monetary policy, RBI has cut rates, injected liquidity into the banking system, and lightened up on regulations that were constraining non-bank credit. There should be more rate cuts, given that macro stability, especially inflation, is very much in control and will stay within the central bank's target range. The weak dollar environment, which should persist, and lower oil prices, are also factors that will support India. At the same time, India will be one of the economies which can benefit from supply chain diversification. It has already been making concerted efforts since 2019 to lift its participation in global value chains and raise its manufacturing exports. These efforts are bearing fruit, as supply chains, especially those in electronics manufacturing, are shifting to India, with more domestically produced content. GoI has laid the foundation, principally through increased investment in infrastructure and in providing a PLI scheme. This has also helped to catalyse an increase in overall investment, which will be beneficial for employment creation. In the next stage of attracting more investment in manufacturing capabilities, state and local governments will have to play a crucial role in systematically improving the ease of doing business at the state worry about drag from goods trade lingers, a strong engine of growth has been quietly emerging. Investors should not underestimate the strength in services exports and their role in helping to secure strong growth for of India's services exports has risen significantly over the last four years. They have doubled since December 2020, and value addition in them is much higher than in goods exports. Services exports have now reached $410 bn on a 3-month trailing sum annualised basis in April, close in size to the $445 bn of goods exports. This rising structural trend is a result of two important trends: India has continued to gain services export market share. There is added momentum from a rise in market share in an environment where digitalisation is expanding the addressable these factors should ensure that the rise in this sector will be more defensive, even in an environment where global growth is strength in India's economy, buttressed by domestic demand and uptrend in services exports, means that India will be one of the fastest-growing economies in a world that is currently starved of growth. Medium-term growth averaging 6.5% is still expected. By 2028, India should contribute about one-fifth of global real GDP growth (vs 16% in 2024) and to overtake Germany as the third-largest economy in nominal dollar GDP 6.5% growth over the medium term may offer a compelling growth opportunity for investors, this pace will, however, not be able to generate enough jobs to fully absorb the labour force growth. Policymakers are already making efforts to target stronger growth, and shifting the growth mix towards the industrial sector, which will considering the magnitude of the jobs problem, there is an urgent need to accelerate the pace, and do more. A comprehensive reform package will be needed, including accelerated build-out of public infrastructure, especially for last-mile connectivity, as well as a systematic approach that incentivises state governments to improve the business environment and ensure the labour force is adequately this is not achieved, it could lead to a vicious loop in which a rise in social stability pressures can lead policymakers to take up redistribution efforts again. This would bring back macro stability risks. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. 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Fibre2Fashion
3 days ago
- Business
- Fibre2Fashion
India's GDP growth expected to moderate in FY26: EY Economy Watch
India's gross domestic product (GDP) growth is expected to slow down in this fiscal due to both global and domestic factors, according to EY's latest Economy Watch report, which said the country is likely to remain one of the fastest-growing large economies despite the expected moderation. The factors leading to a cautious outlook include problems in supply chains, recent US tariffs and general uncertainty in global trade and geopolitics. India's GDP growth may slow down in this fiscal due to both global and domestic factors, including supply chain problems, US tariffs and general uncertainty in global trade and geopolitics, an EY report said. The country is likely to be one of the fastest-growing large economies despite the likely moderation due to strong domestic demand, lower inflation and supportive monetary policies, it noted. The country's growth will be due to strong domestic demand, lower inflation and supportive monetary policies that may encourage private investment, it noted. The country's government may have to carefully mix monetary and fiscal policies to maintain growth in the near future, EY cautioned. "On the monetary front, a continuation of the ongoing rate cut cycle could provide support to consumption and investment. On the fiscal side, reviving the momentum in public investment, especially GoI's [government of India] capital expenditure, which witnessed a moderation in growth in FY25, will be important to sustain economic activity," EY added. The country's consumer price index-based inflation eased to a 69-month low of 3.2 per cent in April this year, while manufacturing purchasing managers' index increased to a ten-month high of 58.2 in the month. Merchandise trade deficit increased to a six-month high of $26.4 billion in April, owing to a sharp increase in growth in imports. Fibre2Fashion News Desk (DS)
Economic Times
4 days ago
- Business
- Economic Times
A lesson from China's defence tech
Buy 'n' Build, not just Plug 'n' Play: Assembling an F-35, Lockheed Martin factory, Fort Worth, Texas If there's one lesson to learn from the latest conflict with Pakistan, it's the need to be ready to confront China's defence technology. Beijing is set to offer more advanced weapons and 40 J-35 fighter jets to Pakistan, regardless of whether Rawalpindi can pay for them or not. GoI was quick to absorb the lesson, announcing a project to develop a 5thgen AMCA earlier this week. This realisation is also evident in Isro's announcement that it plans to launch 52 satellites to enhance space-based surveillance capabilities. A lot more needs to be done. For instance, Pakistan's use of Turkish-made drones should spur New Delhi to ramp up production of AI-embedded drones in collaboration with US, Poland, Russia and/or Germany. The success of homemade BrahMos missiles, produced with Russia, has underscoredthe importance of joint production. Today's redefined battlefield is more about technological superiority and export profits than about emotional rhetoric and sabre-rattling. Some analysts have even suggested that advanced deftech might influence geopolitics, not the other way around. Understanding China's defence machinery is key to preparing for India's future challenges. China's main goal is to be able to challenge the US, which might try to block its plans to conquer Taiwan, or take over islands in the South China Sea or Sea of Japan. The high bar is forcing Chinese scientists and engineers to find new ways to acquire knowledge and take up ambitious projects. This explains the frenzied use of AI to supercharge defence systems, development of frigates and difficult-to-detect submarines, PL-15 air-to-air missiles (300 km range), hypersonic and long-range precision missiles capable of neutralising US forward bases in Guam and Japan in the Western Pacific, and integrated satellite networks (267 satellites, including 115 for intelligence) for real-time targeting. Military experts are reassessing China's weapons capabilities to see if they've been overstated. India successfully conducted strikes on at least nine Pakistani airbases during Operation Sindoor, exposing vulnerabilities in Chinese air defence systems. Chinese satellite reconnaissance was also exposed. Pakistan has provided no evidence that China's PL-15E, delivered by J-10C, hit Indian targets. The post-Pahalgam India-Pakistan conflict was quite a godsend for Chinese arms manufacturers, who had, prior to the escalation, no opportunty to test their products and get necessary feedback. Beijing is desperate to push ahead in the arms export field, where it ranks 4th in the world after the US, France and Russia. On the other hand, vulnerabilities in the Chinese defence system should be reassuring for Indian arms manufacturers, including new private sector entrants. A lot of China's weapons development, particularly its use of AI, can be replicated in the Indian scenario if GoI involves major IT companies and dictatorial political system is advantageous for forging collaboration across different industries. For example, Tencent and Baidu are engaged in defence production, though their main business is IT software and satellites. In India and the US, IT and AI companies independently seek profits, instead of getting involved in weapons commercial companies, including Tencent, ByteDance (parent of TikTok), and drone-maker DJI, are participating in China's 'civil-military fusion' strategy that emphasises dual-use technologies. Add Huawei, ZTE and SenseTime — blacklisted by the US for supporting PLA — to this list. Chinese arms-makers benefit from a robust manufacturing ecosystem that also supplies a wide range of civilian engineering and electronic goods to global market. It is heartening that several Indian companies have not only entered the defence sector but are also collaborating with DRDO. They include Adani Defence & Aerospace in short-range missile systems, and L&T and Tata Industries in main artillery guns. PLA uses Meta's Llama (Large Language Model Meta AI) to process battlefield data, simulate strategies and support command decisions. Observers have noted that PLA used AI to analyse flight data, weather conditions and pilot behaviour during drills in the Taiwan Strait. Chinese scientists and engineers collaborated with American universities, jointly publishing 9,000 research papers without anyone realising that most of the work focused on dualuse technologies, according to a US Congress investigation. The repeated visits by China's 'research vessels' in the Indian Ocean, sometimes with Sri Lanka's assistance, are also an attempt to spy on India's military facilities and radio waves. Modern defence tech calls for an amalgamation of different technologies, including engineering, electronics, high-energy physics, high-performance explosives, satellite systems, robotics, drones, IT and AI. Thus, a wide range of public and private companies need to collaborate to produce complex weapons like missiles and drones. It is not enough for single-point production facilities like HAL to be asked to carry the entire weight. Enthusiasm to invest in R&D is still lacking in India's public and private sectors, though many top companies — including Reliance, Infosys, Mahindra, ITC, LIC and Coal India — are sitting on massive reserves. Aside from the defence sector, a call from GoI to develop India's own LLM did not elicit much enthusiasm from major IT companies. GoI must find a way to rope in major companies in defence research and adaptation in armed forces, if getting ready for a Chinese challenge is something it considers needs to be taken up seriously. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Anil Ambani is back. Is it for real? Can inclusive growth dividend transform economic security in India? He termed IndiGo a 'paan ki dukaan'. Still made INR30k crore by selling its shares Will revised economic capital framework lead to higher RBI dividend to govt? What pizzas are Indians eating? The clue lies with India's largest QSR. Stock Radar: KEC International stock reclaims 200-EMA; stock showing signs of bottoming out after 30% fall from highs Multibagger or IBC - Part 8: This Indian auto ancillary is expanding beyond 2Ws, with a foray into 4Ws Should you sell or hold Voltas, Blue Star and other 'summer stocks' because the monsoon is early? Answer is not in black & white Buy, sell or hold: UBS upgrades Aarti Industries to buy; Antique maintains buy on Shilpa Medicare
Economic Times
4 days ago
- Business
- Economic Times
TRUST but verify: India, US reboot AI chip talks
A high-level Indian delegation, including foreign secretary Vikram Misri and deputy NSA Pavan Kapoor, met their US counterparts in Washington this week. Among other issues, they discussed implementing TRUST (Transforming the Relationship Utilising Strategic Technology) initiative, and US-India COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology) partnership. At the centre of Misri's discussions with US deputy secretary of state Christopher Landau was how tech-trade-talent will shape the India-US May, the Trump administration had repealed the AI Diffusion Rule introduced towards the end of Joe Biden's tenure. The rule classified countries across three tiers, laying down specific criteria for exporting - or not - AI infrastructure to them. India, placed in tier 2, with about 120 other countries, faced a cap of 50,000 advanced GPUs to be imported from the US through 2027. Also, no US company could deploy over 7% of its overall compute power in India. That rule is slated to be replaced, with recent reports suggesting that new rules on exporting US AI infra could be driven by country-specific negotiations, and may feature in their ongoing bilateral trade negotiations. For India, there are no clear indications yet on what the new rules could mean for it. As of now, repeal of AI Diffusion Rule is widely seen as a 'big breather'. However, importing an uncapped number of GPUs, or other advanced AI chips, from the US may not necessarily translate to sufficient compute capacity for India. AI Diffusion Rule's repeal should be an opportunity to understand other roadblocks to building compute capacity for computing power is necessary to fuel any AI ambitions, GoI recently provisioned about 14,000 GPUs on subsidy for its AI ecosystem. It's expected to procure 15,000 more from 7 shortlisted bidders in the coming of volume, any GPUs or advanced AI chips imported need to be housed in data centres. This assumes significance as a May 2025 Deloitte report, 'Attracting AI Data Centre Infrastructure Investment in India', highlights that India may need 45-50 mn sq ft real estate, coupled with 40-45 terawatt hours (TWh) incremental power for data centres by 2030 for its AI demand. So, challenges to building data centres must remain in India's policymaking focus. The rule repeal remains positive news, though limited in its impact and contingent on other factors relating to India's overall compute capabilities. But it serves as an opportunity to clear the mist on capabilities of India's data centres that will ultimately house high-end AI chips from the US. Both governments must now double down on identifying roadblocks to bringing AI infra to India, particularly under the timely TRUST initiative. Further, the Quad leaders' summit, to be hosted by India later this year, can be opportune platform for presenting Washington's and New Delhi's findings on TRUST. This could lead to reformative policymaking relating to power, finance and regulatory capacity is only one of the building blocks for India's AI ambitions. Launched last year, the IndiaAI Mission, with a ₹10,300 cr-plus budget outlay, has made significant strides on its seven pillars. In addition to its massive and ongoing compute procurement, its AIKosh platform, unveiled in March, now boasts 350+ datasets and will only month, GoI selected the Bengaluru-based startup Sarvam AI to build India's first sovereign LLM model. It also awarded several projects for safety-enhancing technologies, and has called for partnerships for its AI Safety Institute. But more needs to be done, especially to address AI-induced structural unemployment, and the need to increase public-private spending on the R&D ecosystem. The writer is associate director,US-India Strategic Partnership Forum (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Anil Ambani is back. Is it for real? Can inclusive growth dividend transform economic security in India? He termed IndiGo a 'paan ki dukaan'. Still made INR30k crore by selling its shares Will revised economic capital framework lead to higher RBI dividend to govt? What pizzas are Indians eating? The clue lies with India's largest QSR. Stock Radar: KEC International stock reclaims 200-EMA; stock showing signs of bottoming out after 30% fall from highs Multibagger or IBC - Part 8: This Indian auto ancillary is expanding beyond 2Ws, with a foray into 4Ws Should you sell or hold Voltas, Blue Star and other 'summer stocks' because the monsoon is early? Answer is not in black & white Buy, sell or hold: UBS upgrades Aarti Industries to buy; Antique maintains buy on Shilpa Medicare
Economic Times
5 days ago
- Health
- Economic Times
Not stars, warning labels on food products have real-world impact
It's not the Michelin guide, dear If a pre-packaged food product is high in sugar, salt or fat, should its front label display a 'star rating'? Or should it have clear labelling to enable the consumer to quickly know the product's nutrient contents?On April 9, while hearing a PIL, the Supreme Court instructed GoI to make a final judgement on revising the Food Safety and Standards (Labelling and Display) Regulations 2020 'within three months'. The PIL had sought directions to make front-of-pack warning labels (FoPWL) mandatory for packaged foods high in sugar, salt and saturated fat - substances linked to lifestyle diseases like diabetes and heart problems. In response, GoI had stated that Food Safety and Standards Authority of India (FSSAI) had started the amendment process, receiving 'over 14,000 public comments' on the proposed labelling norms. This, after FSSAI had approved draft rules in June 2024 requiring FMCG companies to display key nutritional information - total sugar, salt, saturated fat, percentage of recommended dietary allowance (RDA), etc - prominently on the front of packets. On FoPWL/front-of-pack nutrition labelling (FoPNL), scientific consensus is crystal clear: interpretive warning labels - which go beyond simple textual warnings and provide consumers with a more in-depth explanation of risks associated with a product - outperform all other formats. Yet, a prevalent 'star-rating' system threatens to derail public health major studies - one by Indian Council of Medical Research (ICMR)-National Institute of Nutrition (NIN), another by International Institute for Population Sciences, Mumbai - found that warning labels consistently outperform 'health stars' and other formats in helping consumers identify unhealthy food products. University of North Carolina's Global Food Research Program confirms that only warning labels have real-world impact in curbing consumption of HFSS (high fat, salt, sugar) products. According to ICMR-NIN dietary guidelines, 54% of all deaths are related to unhealthy diets. Despite rising obesity rates in India driven by HFSS food consumption, FoPNL regulation has languished for more than a decade. GoI had set targets to halt obesity by 2025, a goal that seems increasingly out of reach. Reducing consumption of unhealthy diets is critical. FoPNL is one such intervention to reduce HFSS consumption. Yet, despite the PMO's directive to FSSAI in 2021 to expedite FoPNL, the 2022 draft notification proposed 'star ratings' - not warnings - ignoring a unique public health consensus. Under the 'star system', food packets may earn between half a star (least healthy) to 5 stars (healthiest). But, crucially, there is no provision to explicitly label any food as 'unhealthy'. The health star rating system (HSRS) was introduced by the Australian and New Zealand governments in 2014 to assign health ratings to packaged foods and beverages. Originally developed by individuals working closely with the food industry, possible conflict of interest was obvious from the start. A decade of use in Australia and New Zealand shows it hasn't significantly improved public health outcomes there. Stars rate hotels and air conditioners, not the nutritional quality of food we ingest. Take a baby cereal high in sugar. It could earn 3 stars. A pack of biscuits, high in sugar, salt and fat, could earn 2.5 or 3 stars. A soft drink loaded with sugar may still show 2 stars. Consumers must turn to the fine print on the packaging to know the truth. FoPNL in stars is have the right to have access to information needed to understand whether a food product is high in sugar, salt or fat - three nutrients linked to non-communicable diseases (NCDs) like obesity and diabetes. Stars don't reveal these. Without clear warnings upfront, choices are triggered by aggressive marketing, mislabelling and misuse of fruit and vegetables are sometimes falsely portrayed on packages, misleading consumers into thinking industrially processed food products to be healthy. Recognising this manipulation, Economic Survey 2024-25 recommended mandatory warning labels. But industry has resisted such intervention, ironically highlighting the efficacy of such intervention. Which is why GoI should: Finalise a clear definition of HFSS products - which is already included in the 2022 draft. Require warning labels on any food exceeding HFSS thresholds. Align labelling reforms with advertising codes, and Consumer Protection Act 2019. Launch a national communication campaign to educate consumers on identifying HFSS foods from front of packs and risks of overconsumption of such products. FoPNL must not be allowed to become a marketing gimmick. It's a public health intervention. When implemented properly, it will save lives. The matter is now in GoI's 'food court' - and for the people of India to demand what is good for them. One hopes the July decision brings good cheer. (The writer is former member, PM's Council on India's Nutrition Challenges) (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Nestlé India's outgoing CEO Narayanan weathered the Maggi storm; Tiwary must tackle slowing growth Will revised economic capital framework lead to higher RBI dividend to govt? He termed IndiGo a 'paan ki dukaan'. Still made INR30k crore by selling its shares ONGC squandered its future once. Can it be different this time? Uncle Sam vs. Microsoft: Which is a safer bet to park money? Mid-cap companies have posted robust results. But experts don't want you to invest in them. 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