Courts as co-designers of public policy in India

The Supreme Court of India has delivered two highly consequential judgments in the first two months of the year. 

This is in the long list of judgments in the last decade-and-half, some of which have clarified and stabilised the law, and others have introduced deep uncertainties. These judgments have made courts virtually co-designers of policies on critical aspects of the economy, like resource management and taxation, and co-regulators of important sectors. 

In the first judgment, on January 15, 2026, the Supreme Court ruled that the US private equity firm Tiger Global must pay tax in India on its 2018 sale of its 17% stake in e-commerce giant Flipkart to Walmart for $1.6 billion. It overturns a 2024 Delhi High Court decision that allowed Tiger Global to claim tax relief under the old India-Mauritius double-taxation avoidance treaty. The High Court had agreed with Tiger Global’s claim that its gains were shielded from Indian tax because the investment was held through entities that had tax residency status in Mauritius. The government had changed the Indo-Mauritius double-taxation treaty in 2016 through the General Anti-Avoidance Rules (GAAR) which made gains from the sale of Indian shares taxable even under treaties if they were “impermissible avoidance arrangements”. However, it exempted investments made before April 1, 2017. Tiger Global’s investments predate the change. 

Indian tax authorities rejected the claim and argued that the Mauritian firms served as conduits and were used only to avoid taxes, with no real business purpose. The Supreme Court… ruling that tax certificates alone do not guarantee treaty benefits and that the investment structure lacked real commercial substance. It held that foreign investors cannot rely on complex offshore set-ups when those entities don’t carry out genuine business activities of their own. JB Pardiwala, one of the two judges, wrote: “Taxing an income arising out of its own country is an inherent sovereign right. Any dilution of this is a threat to a nation’s long-term interest.”… 

India and Mauritius signed a protocol in 2024 amending their tax treaty to benefit only companies with legetimate businesses and not shell companies set up to avoid tax… India had long tried to attract foreign capital by encouraging investments from companies with structures in countries such as Mauritius, Singapore and the Netherlands, signing treaties to help investors avoid paying taxes twice… Between 2000 and March 2025, Mauritius alone accounted for about $180bn (£133.9bn), nearly a quarter of all foreign direct investment into India, according to official figures.

This effectively means that GAAR’s look-through of treaty structures overrides any treaty claims in the cases of transactions lacking any commercial substance or made solely to avoid taxes. In this backdrop, how does India compare with other jurisdictions in the taxation of gains from share sales?

After the Vodafone case, the government had, in 2012, retrospectively legislated for taxation of offshore share transfers in a foreign company where the underlying shares derive “substantial value” from India. While this is the legal foundation underlying the Tiger Global ruling, it overrides the grandfathering provision in the legislation for prior deals. See below the indirect transfer taxation regimes across countries, which show that indirect transfer taxation is confined to real estate in most developed economies. 

In conclusion, the ruling, which could reshape how foreign investors exit their Indian investments, sets out a tougher interpretation of tax treaties. It allows authorities to deny treaty benefits if offshore investment structures are deemed sham entities with little commercial substance, even when investors hold valid documentation. The judgement gives India wide powers to scrutinise any offshore corporate deal. It also operationalises the Vodafone legislation. 

In the second judgment, on February 13, 2026, in the State Bank of India Vs Union of India, it ruled that telecom spectrum is a natural resource held in public trust and the right to use it does not form part of the insolvency estate of a telecom service provider (TSP). Given that the spectrum (and associated license) is the bedrock for TSP’s business, it forms the basis of TSP’s bankability. MS Sahoo and Raghav Pandey write,

This ruling effectively places the most valuable asset of a TSP beyond the reach of a resolution plan. The likely consequence is the liquidation of stressed TSPs and the fragmentation of the insolvency framework, contrary to legislative design… the ruling rests on a conceptual overextension. The Public Trust Doctrine (PTD) is applied without sufficient regard to the evolution of the modern regulatory state and market economy… The PTD emerged to protect communal access to resources such as air and water, as a check against the privatisation of the commons… In telecommunications, the state has translated the PTD into a detailed statutory and contractual framework of auctions, licences, and contracts. That framework explicitly permits the allocation, trading, and transfer of spectrum-usage rights. 

When the state auctions spectrum, it does not abandon the public trust; it operationalises the use through market mechanisms. A sovereign resource is converted into a regulated, tradeable economic entitlement, juridically embodied in the licence. For the Insolvency and Bankruptcy Code (IBC), 2016, it is this statutory-contractual construct that matters, not the doctrine in abstraction. The judgment does not fully distinguish between sovereign ownership of spectrum and the contractual licence conferring the right to use it. These operate at distinct juridical levels. Spectrum remains vested in the state at all times, while the licence is a statutorily recognised intangible right, acquired for valuable consideration… In accounting and economic terms, the money paid to acquire the licence exits the balance sheet and is replaced by an intangible asset of corresponding value… Banks and financial institutions lend money to TSPs secured against these licences; that security ought not to be diluted by invoking the PTD.

This decision makes India an outlier in the treatment of spectrum in insolvency proceedings. The US, UK, EU, Japan, Brazil, and Mexico treat telecom like other sectors in bankruptcy proceedings. 

Not only does this ruling make India an outlier in telecom spectrum treatment in insolvency proceedings, but it also makes telecom an outlier among other sectors, even in India.

While mining leases, airport, port, and road concessions, and electricity PPAs can be transferred with regulatory approval, the same is now prohibited for telecom spectrum. This is despite telecom having similar features - time-bound lease, competitive allocation, revenue sharing, and regulated transfer - as the others. 

While all countries recognise public ownership of resources, with this ruling, India now diverges from others in the legal test to decide whether a government-granted license or concession is part of the insolvency estate and therefore transferable or usable in resolution. 

The ruling effectively reduces regulated asset values, raises the cost of telecom finance, weakens restructuring scope, and makes telecom concessions riskier than other infrastructure concessions, all this due to an avoidable regulatory interpretation. 

ChatGPT has this compilation of the Court decisions in India that have reshaped economic regimes in their respective sectors. The estimates are unverified and can be significantly off. 

Of these, the cancellations of the coal blocks and 2G licenses, and the spectrum insolvency are major deviations from global norms. Also, on a global comparison, India has a relatively large number of Supreme Court decisions that rewrote regulatory frameworks, applied law retrospectively, and changed business models. 

In countries like the US, UK and EU, courts rarely cancel licenses or concessions, retrospective orders are uncommon, and regulatory regimes are usually shaped by legislatures and agencies. Courts in these countries leave policy design and regulation largely to administrators, legislatures, and independent regulators, and prefer to only interpret statutory frameworks. 

In contrast, Indian courts have taken an absolute view on public trust doctrine (without regard for its economic dimensions), favoured substance-over-form in taxation, and assumed the powers of broad and unconstrained scope in the judicial review of allocation processes. India remains distinctive in the scale and frequency of judicially driven economic restructuring, with courts almost acting as co-designers of policies on public resource management and taxation.

The concern here is not so much with the nature of the decisions per se. After all, some of these decisions are clearly progressive - substance-over-form in taxation, stricter ever-greening standards on patents, homebuyers as financial creditors - and should be adopted more widely globally.

Instead, there are two important concerns. One, at a fundamental level, should courts be making such definitive policy decisions? The argument that courts have stepped in where governments have abdicated cannot be taken as an answer. This is a slippery slope that risks destabilising the constitutional checks and balances. 

The second concern is about the economic uncertainty induced by rulings that upend economic regimes (or rules of the game) based on which business decisions were taken. If investment decisions were taken based on a prevailing interpretation of the regime and the same was widely accepted (governments gave permissions, financial institutions gave loans, rating agencies did not consider them risks, auditors audited statements, tax authorities generally overlooked them, etc.), then a subsequent substantive (logical, ethical, etc.) interpretation should not form the basis for reversing it with retrospective effect. The only exception to this should be if it is established that there was a malafide intent in the decision made by the government entity. 

The economic damages are exacerbated by the consequential decisions forced upon government entities. For example, the cancellation of one license immediately leads to the cancellation of all similarly placed ones. The rejection of a tax avoidance claim immediately triggers tax officials across the country to scout for similarly placed cases and issue notices to them. 

I’m not sure whether the legislative or executive can do anything to address these concerns. Its answer lies in the judicial realm itself, in the form of restraint while courts take such decisions. The Supreme Court could use the opportunity presented by something like a Public Interest Litigation (PIL) or a case to lay down certain judicial principles that should guide judicial rulings on cases with sectoral policy impacts.

Weekend reading links

1. Europe too has its chokepoints over China and the US.

A group of experts called the Geostrategic Europe Taskforce last week published a report which “identifies 41 critical chokepoints where China depends on the EU for more than 80 per cent of its imports, and 67 such dependencies for the United States. These span essential inputs including insulin, pharmaceutical intermediates, medical technologies, and specialised machinery for agriculture, paper production, and industrial processing.” And the German economic think-tank Dezernat Zukunft has also just released a study highlighting that “Europe has more cards than it thinks. We control 80 per cent of US uranium imports. Siemens dominates the turbines US data centres desperately need.”

2. US and Western VCs are struggling to exit their China investments.

Ten of the biggest buyout firms with investments in China including KKR, Blackstone and CVC had zero publicly disclosed complete divestments from mainland Chinese portfolio companies in 2025, according to data from providers PitchBook and Dealogic.

3. Declining attention spans.

A 2022 survey by King’s College London found that 49 per cent of UK adults feel their attention span is shorter than it used to be. Forty-seven per cent feel “deep thinking” has become a thing of the past. Studies that monitor people’s attention in their real-world environment show that since 2004, the average time people stay focused on a single task has dropped from about 2.5 minutes to roughly 47 seconds, according to data tracked in Attention Span, a book by Gloria Mark, professor of informatics at the University of California, Irvine.

4. South Korean stock markets rose 76% last year to become the best-performing major market. 

Retail investors have bought a net Won6.3tn ($4.3bn) of locally listed stocks since the start of 2026, according to Korea Exchange, the country’s securities market operator. In addition, they have pumped Won13tn into Korean ETFs, helping boost the benchmark Kospi by 35 per cent this year and making it one of the world’s best-performing stock market indices for the second year running... The number of individual active stock trading accounts in Korea topped 100mn for the first time last month — the equivalent of roughly two accounts for every member of the population. Deposits held at retail brokerages, reserved for stock purchases, hit a record Won103tn this month, up from Won87tn at the end of last year. Margin balances (the funds investors have borrowed from brokerages to buy stocks) have also surged to a record at Won31.5tn.

5. The MAGA right and progressive left converge in their opposition to emerging AI trends.

AI opposition spans the political spectrum. Democrat Senators Bernie Sanders and Elizabeth Warren warn against corporate power concentration and job displacement, while Maga strategist Steve Bannon and Republican Senator Josh Hawley spread warnings about the dangers of empowering tech billionaires... The list of grievances being raised against AI is varied. At the local level, communities are fighting the construction of data centres that they worry will disrupt resources such as water, land and electricity... Meanwhile, in Hollywood, celebrities have launched the “Stealing Isn’t Innovation” campaign against the use of creative work for AI training, and parents, along with 37 state attorneys-general, are pressing for accountability after Grok, xAI’s chatbot, facilitated the generation of non-consensual nude images of women and children.

6. China announces restrictions on exports of rare earth magnets and other critical minerals, in the guide of "dual-use materials", to dozens of Japanese companies, especially vehicle makers.

7. Contrary to Elon Musk's claims that space-based data centres are three years away, they may be decades away.

Google’s satellite-based data centre initiative, Project Suncatcher, estimates that launch costs would need to fall below $200 per kilogramme (a sevenfold reduction from current levels) before this becomes economically viable. That threshold isn’t expected until the mid-2030s. Even if costs do fall, the components required — including radiation-hardened servers, on-orbit communications infrastructure and in-space servicing capabilities — do not yet exist at commercial scale. Adding to the conundrum, orbital data centres turn routine IT management into a complex space systems problem. On Earth, a failed server can be replaced in minutes. In orbit, that task requires either sophisticated in-space servicing or acceptance of degrading performance and stranded capital that becomes orbital debris as components age and fail. Burning satellites up when they become obsolete is not environmentally neutral: the process injects metal particles into the upper atmosphere where they can affect winds, temperatures and ozone chemistry.

8. On the importance of manufacturing for national economic development.

Most successful development stories — from Britain’s Industrial Revolution to South Korea’s transformation to China’s ascent — have run through the factory floor. Manufacturing drives productivity through economies of scale that services struggle to replicate. It generates innovation spillovers that ripple through entire economies. It enables countries to access global markets at a scale services cannot match. And contrary to fears about automation eliminating manufacturing jobs, countries like China demonstrate that manufacturing can absorb hundreds of millions of workers even as robots proliferate... Digital platforms, financial services, and business process outsourcing... cannot replace manufacturing’s role as the engine of sustained productivity growth and structural transformation...

Between 1750 and 1950, the West’s establishment as the world’s economic hegemon was fundamentally a process of becoming the world’s manufacturing hegemon. Since 1950, this pattern has persisted with remarkable consistency. A World Bank study published in 2008 identified 13 countries that sustained annual growth rates of 7% or higher for a period of 25 years or longer. Among these growth miracles, only two — Botswana and Oman, both small countries with highly idiosyncratic economic structures — achieved this without manufacturing-led development... recent data by the UN Industrial Development Organisation (UNIDO) arrive at similar conclusions. In their Industrial Development Report 2026, they highlight that 64% of growth episodes over the last 50 years can be directly attributed to manufacturing... Manufacturing firms spend heavily on research and development (R&D), generating strong innovation spillovers throughout the economy. In fact, manufacturing is attributed to 53% of global R&D activity. Manufacturing provides the material foundation for innovation, creates demand for new technologies, and enables the accumulation of productive capabilities that underpin further innovation.

9. Britain has a peculiar worsening trend in graduate fortunes. 

10. Good illustration of how regulations may be stifling European business environment. From Pieter Garciano

The whole point of the AI Act, is to create an extremely consistent and level playing field across all of Europe to allow like companies to face a much larger market straight away. The problem is that because of directives, the actual enforcement of a given law is left to the member state and the member states are ordered to create their own regulatory bodies. So for example, in the case of the AI Act, every single member state is ordered to have a notifying authority and an enforcement authority... these different regulators, they talk to each other, but they’re not necessarily forced to agree with each other... And so you have cases where the Irish regulations happened with GDPR, the Irish Data Protection Authority said to Meta, this is excellent. You can do X or Y. And then the Austrian and German data protection authorities disagreed and then fine Meta billions of euros. And so, this is a case where the law, even if you agree with the intent of the law, the way it’s currently being executed, which is through directives, makes it so that you’re going to always get an extremely high friction and fragmented regulatory system... They currently have, I think the count is between these four laws, they’ve created 270 different tech regulators... And that of course has really distortionary effects as well for what kind of basically very large fixed cost. And so if you’re a large company, if you’re a Google or a Meta, you have a thousand guys in your Brussels compliance office and they’re really good at this. But if you’re a smaller company, then you actually really struggle with figuring out what the 270 different bodies want you to do.

European regulators have been influenced by beliefs against big corporations and their market power, which explains both their anti-trust actions against Big Tech and refusal to approve European mergers like those between Siemens and Alstom.  

11. China is leading the race for humanoid robots, including those which resemble human beings and mimic their facial expressions while talking. This is a real advance.

Galbot’s silvery humanoid folds T-shirts, retrieves a bottle of water from a shelf and rolls walnuts about in its hands. Developing multifunctional hands has been a major challenge for robot makers, requiring advanced sensitivity and a high density of mechanical components. The Beijing-based company says its robots can be used for household tasks or in retail contexts such as shops and pharmacies... Galbot, backed by Chinese battery giant CATL, also showed its humanoid picking up irregular shards of broken glass, suggesting “integration of perception, grasp planning, and controlled force and precision, differentiating the performance from purely staged movement”, according to analysts at Morgan Stanley.

12. Is the National Green Tribunal (NGT), the primary appellate authority against orders of the Ministries of Environment of state and central governments, becoming a captive of ease of doing business?

Between 2020 and 2025, of the 329 appeals filed by citizens and activists against the grant of clearances by the Government, only in 20% (65 cases), did the NGT rule in favour of the appeal. Conversely, when the project’s proponents appealed against the denial of clearances by the government, in nearly 80% (126 of 160) of the cases, they secured relief. This is not a historical norm. Data from 2016-2019 shows a more balanced era where relief for both sides hovered between 18% and 31%. This pro-project trend has accelerated sharply in the last 24 months. Between 2024 and 2025, only 7% of appeals challenging clearances were successful. In contrast, 88% of industry-led appeals against clearance rejections got relief... of the 264 unsuccessful citizen appeals during 2020–2025, a significant portion was dismissed on technical grounds, labelled “time-barred” for more than 90 days delay in filing. The rest were dismissed as “not tenable,” or lacking “any merit.”

13. Excellent article by Richard Hurowitz on how gum arabic, a sap that comes from the acacia tree, is fuelling the civil war in Sudan, joining Sierra Leone's blood diamonds and DRC's cobalt in fuelling their respective civil wars. 

Found in everything from soft drinks and candy to cosmetics and pharmaceuticals, gum arabic is a critical ingredient for Coke and Pepsi and gives an M&M its distinctive shell. Commonly listed as E414 on labels, it’s an ingredient in pet food, chewing gum, lipstick, pill capsules and throat lozenges... the groves of Sudan’s subsistence farmers produce 70-80 per cent of the global supply. And no one has yet found an effective synthetic substitute. Sudan exported some 60,000 tonnes of its “white gold” in the year prior to the conflict. It is no surprise, then, that multinationals have been stockpiling gum arabic since the civil war started... 

It is also, tragically, being used to finance what the UN has declared the world’s worst humanitarian disaster. Since April 2023, Sudan has been engulfed in a civil war between the government in Khartoum’s Sudanese Armed Forces and the rebel Rapid Support Forces. The war has drawn in foreign powers including Saudi Arabia, the UAE, Turkey, Russia and Egypt... The crisis in Sudan dwarfs any other current conflict on every measure... According to a former US envoy, over 400,000 people have died. More than 15mn have been displaced. Tens of thousands of Sudanese have been massacred, there is widespread sexual violence and a man-made famine has sent millions into starvation... Both sides have used the commodity to finance their efforts... and the SAF continues to export what it can while the RSF smuggles its supplies abroad... The RSF controls large portions of the main gum-producing regions in Darfur and Kordofan where they have looted warehouses, seized shipments and imposed fees on harvesters and traders. Tens of millions of dollars’ worth of gum arabic has been stolen, smuggled and sold to finance their military operations. At the same time, the SAF controls Port Sudan, where taxes on gum arabic exports fill its coffers with revenue.

14. The killing of Nemesio Oseguera, the leader of Mexico's Jalisco New Generation Cartel (CJNG) has once again drawn attention to Mexico’s pervasive drug gang problem.

Derisking the public funding of innovation

 The Government of India have recently concluded the first round of applications for accessing innovation funding through the $10.5 bn Research Development and Innovation Fund (RDIF) scheme. It has chosen the wholesale funding approach of financing alternative investment funds, development finance institutions, non-banking finance companies, and focused research organisations (FROs), which in turn give loans to or take equity in private firms and startups engaged in innovation. 

What model of innovation funding generates the greatest bang for the buck in terms of achieving the primary objective of catalysing innovation? 

The additionality from public funding of innovation is that it is risk-tolerant, concessional, and patient compared to commercial capital. It can be blended with commercial capital to derisk and thereby expand the envelope of investible startups. This can be done through two approaches. 

One approach would be to fund startups by investing in a fund of funds (i.e., to be an LP in a startup fund). This approach would require only diligencing the fund and leaving it to diligence the individual investments. It would leave the portfolio building responsibility to the fund, albeit within the broad sectoral scope defined by the public fund. A flip side is that the fund could play it safe and avoid the riskier bets, and use the public funding to merely juice up its returns. 

The other approach would be to co-invest with commercial investors. This would require significant in-house expertise in the due diligence of startups. In theory, it would ensure tight alignment with the specific policy objectives of the government and target investments to the riskier startups. But in practice, public decision-making processes are likely to detract from the objectives. 

There are two possible objectives associated with public funding of innovation startups. One, to de-risk and expand the envelope of investible startups. Two, fund specific products or solutions that are considered strategically important. 

In terms of these two objectives, the policy question is which one of the two approaches generates the greatest bang for the buck. An analysis of the experience of deployment of public funds through the two approaches reveals that the fund of funds approach is generally superior, except where it is required to target strategically important technologies or firms. 

Here’s the list of a few such public funds from Europe and elsewhere, assessed in terms of their mobilisation ratios (or private capital raised per unit of public fund). 

Here is a comparison of the two approaches in terms of various considerations. 

Clearly, if the priority is to maximise the volume of private capital mobilisation and to catalyse the VC market, the fund-of-funds approach is superior. However, if the priority is to catalyse a few strategically important firms or technologies where private capital is reluctant, then co-investment is useful.

In emerging markets like India, where the domestic VC funding for genuine technology innovation (as opposed to imitating technologies already mainstreamed elsewhere) is negligible, there’s a risk that a fund-of-funds approach, at least for some years, could end up catalysing and unlocking the supply of venture capital finance, rather than the supply of innovative technologies. This risk will persist even with tightly prescribing the segments where the funds can invest, given the practical difficulties in monitoring, let alone policing, them. And commercial funds will have the incentive to prioritise the use of public funding to maximise the derisking of their capital instead of expanding the envelope of investible startups. This would be the long-route to catalysing innovation (or catalysing innovation primarily by catalysing risk capital funds). 

In the circumstances, it is important to consider the option of government co-investing directly in startups with private investors to provide sufficient de-risking of their investments. Such derisking can be done by public funds taking the first-loss equity buffer, offering higher liquidation preferences for private capital, capping public returns, anti-dilution warrants, offering buyout options at modest returns, equity conversion as subordinate capital or at a discount, etc. The graphic below captures the comparative de-risking effect of public capital. 

The challenge with co-investment, of course, is the administration of such funds by a public entity and getting its governance right. While there are good examples of co-investment like the Israeli Yozma fund, European Innovation Council, and the British Enterprise Capital Fund, they have been exceptions to the generally adopted fund-of-funds approach. 

In the circumstances, DFIs are a good platform. While DFIs have traditionally focused on infrastructure financing and industrial growth, they are well placed to directly support co-investments by governments by deploying the full suite of instruments mentioned above, based on the specific nature of the investment proposal. 

I am not sure how many of the above really invest in risky startup-driven innovations as opposed to investing in promising established SMEs in emerging industries. 

As a note of caution, and this applies to the RDIF’s DFI window too, the experience of India’s infrastructure DFIs in actually derisking and catalysing infrastructure market segments has not been encouraging. Instead, they have most often been found chasing the market. See this and this.

Weekend reading links

1. On the origins of infrastructure financing in the UK.

In the summer of 1858, Britain’s parliamentarians soaked the curtains in the Palace of Westminster with lime chloride in an attempt to counter the “Great Stink” emanating from the river Thames. It failed. The prime minister demanded the Metropolitan Board of Works construct a sewerage system, legislating to allow the board to raise £3mn. This was to be repaid by a three-penny levy on all London households for 40 years. By 1900, the municipal bond market in England was about 50 per cent of the market for UK government debt. Today it is just 4.7 per cent. Back then, most infrastructure projects were not only financed by the private sector but also backed by hypothecated cash flows from money raised locally. For example, the debt for the 1892 Elan Valley Aqueduct to pipe water into Birmingham was funded by an increase in water rates on businesses and households there. So the residents of, say, Manchester were not funding infrastructure elsewhere.

2. India is marching ahead on adoption of electrotech.  

3. Germany is the poster child for central bank independence.

4. Spurred by surging data centre loads, electricity demand is rising sharply in the US.

Data centre power demand will surge from 34.7 gigawatts in 2024 to 106GW by 2035, according to BloombergNEF, a research group, equivalent to more than 80mn homes. Overall US electricity demand is forecast to jump by a quarter by 2030 and by 78 per cent by 2050, compared with 2023, according to consulting firm ICF... Between January and November, the latest month for which data is available, the cost of electricity for residential customers in the US increased by 11.5 per cent.

5. Most Indian state boards focus on memory and conceptual understanding, as opposed to analysis and application. 

6. At 16%, US after tax corporate profit margins are at historic highs.

7. Nick Bloom, Paul Mizen, Gregory Thwaites et al have an estimate of the costs of Brexit (HT: Adam Tooze)

These estimates suggest that by 2025, Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating gradually over time. We estimate that investment was reduced by between 12% and 18%, employment by 3% to 4% and productivity by 3% to 4%. These large negative impacts reflect a combination of elevated uncertainty, reduced demand, diverted management time, and increased misallocation of resources from a protracted Brexit process.

8. Some data on students and migrants from Asia in the US. Even as enrolment of Chinese students has declined, that of Indian students has taken off since 2014. While Chinese students were mainly for the UG programs, Indian students have been mostly for PG studies. (HT: Adam Tooze)

Indian students dominate the workforce of computer science workers. 

Similarly, Indians dominate physicians and Filipinos dominate nursing. 

9. India has one of the lowest free floats in its equity markets.

10. Japan's public debt at 237% of GDP is way off the charts, and considerably constrains Sanae Takaichi's room to manoeuvre. 

11. Tej Parikh writes that UK's biggest economic challenge is its political instability.

The UK doesn’t have a productivity puzzle. The causes of Britain’s weak underlying growth are well known and discussed ad nauseam. Why policymakers aren’t delivering is the bigger conundrum. Instability undermines business investment, hiring and planning decisions, and absorbs the political bandwidth that could be used to address lacklustre growth... Uncertainty and slow growth weaken the appeal of UK assets too. Pound sterling and British stocks have underperformed relative to peers over the past decade. Long-term UK government borrowing costs have remained elevated compared with other G7 nations, having come under frequent selling pressure thanks to fiscal mishaps... For all the turbulence, Britain remains attractive. London remains the leading European destination for foreign direct investment. The country’s strengths in finance, university research, tech and life sciences are draws. Cheap assets add to the allure.

12. Fascinating account of China's largest hotel chain, H World, with 12,700 hotels, adding 1700 hotels in 2025, aiming for 20,000 hotels by 2030, and took in 8.3 m guests during last year's Lunar New Year holiday. As a reference, Marriot has 10,000 hotels worldwide. 

H World was launched in 2005 by Ji Qi, co-founder of online travel booking site Ctrip, after he took inspiration from the multi-brand French group Accor... Its Hanting Inn brand, a fixture of the streets of major Chinese cities, often charges well below Rmb300 ($43) a night, while mid-range Ji Hotels typically cost slightly more. H World has several other brands, while internationally it also operates German brand Steigenberger. Its franchise model mirrors an approach that other Chinese businesses have used to expand in consumer sectors from bubble tea to fast food. For the “vast majority” of its franchised hotels, H World retains a degree of control, sending in hotel managers on its own payroll under what it calls a “manachise” approach. In the US, “typically the franchisees decide almost everything . . . we think in China this would not work,” said He. “A lot of people would not abide by your rules.”

13. VC funding for India's tech startups has fallen 73% since 2021, which also coincided with the rise of Byjus.

14. Fascinating account of the Jeffrey Epstein world. 

15. Shruti Rajagopalan has a good essay on India's AI ambitions, and more. This on regulation.

The EU went first and went heavy, a binding cross-sector AI Act with tiered risk categories, compliance obligations, and a governance apparatus that could employ a small city. China took the authoritarian-efficiency route. Regulate fast, regulate specifically, and make sure the state retains control over what models can say and do. The US, characteristically, has been light touch at the federal level, leaving governance to a patchwork of executive orders, state laws, and vibes. India, with these guidelines, has landed somewhere interesting, closer to the US in its instinct to avoid a standalone AI law, but far more deliberate in articulating why it is choosing not to regulate horizontally yet. The framework’s core bet is that India’s existing legal infrastructure (the IT Act, the Digital Personal Data Protection Act, sectoral regulators like the RBI and SEBI) can handle most AI risks if enforced properly and updated where needed...

Do not regulate the technology itself, govern its applications through the regulators who already understand those domains. Build incident databases so you learn from failures instead of pretending to prevent them through preemptive compliance theater. Use “techno-legal” mechanisms (standards, system-architecture-level controls, provenance tools) so that compliance scales without armies of auditors. Create sandboxes so regulators can see what actually goes wrong before writing rules. The explicit preference for “innovation over restraint,” listed as a core principle, rejecting the EU’s precautionary posture. Both committees looked at Brussels and decided that regulating AI the way you regulate pharmaceuticals, before you know what the side effects actually are, is a bad trade for a country where AI adoption is still nascent and unevenly distributed... The liability framework it recommended is graded. The regulated entity remains liable to consumers for any losses, but first-time failures where the entity followed prescribed safeguards and reported promptly would not automatically trigger full supervisory penalties. A rigid liability regime that punishes every probabilistic error will cause institutions to constrain AI capabilities to the point of uselessness.

16. Shyam Saran writes about Marco Rubio's speech at the Munich Security Conference, describing it as an "unabashed white, racist manifesto". 

His remarks celebrated the history of conquest, exploitation, barbarity, and even ethnic cleansing, which has marked the history of Western imperialism and colonial empire-building across Asia, Africa, and Latin America. He wants this to be a source of pride and inspiration, not something to “atone for purported sins of past generations”. What is perplexing is that the history of the world after the Second World War, which is often described as an American era, is instead seen as a period of Western decline: 

“But in 1945, for the first time since the age of Columbus, it [i.e. the West] was contracting. The great western empires had entered into terminal decline accelerated by godless communist revolutions and by anti-colonial uprisings that would transform the world and drape the hammer and sickle across vast swaths of the map in the years to come.” Anti-colonial uprisings, which would include our own against British colonialism, are not celebrated as struggles for freedom and human dignity but as evidence of the abdication of the Western will to rule. Strange that this should come from a representative of a country that is celebrating 250 years of its own successful war of independence against British colonialism.

17. AI is leading to changes in software industry business models, resulting in less predictability and more uncertainty.

Software companies have, for decades, sold their wares on a “per seat” basis, where an employee gets unlimited use of a package of tools. Think of the traditional Microsoft 365 licence... In a world of AI “agents” carrying out duties autonomously, that model makes less sense. The unit of account will no longer be users but tasks completed, queries undertaken, and data “tokens” used. Sticky, predictable, year-round software-as-a-service revenue — the kind of thing that private equity firms love because it makes companies easier to load up with debt — may become an endangered species. Some are already embracing the post-seat era. Snowflake, a data management software maker, charges based on consumption, as does Databricks, an unlisted hotshot valued at $134bn, according to Crunchbase. ServiceNow is one of many working on hybrid models, where monthly fees meet pay-as-you-use add-ons... consumption-based pricing... Software companies’ predictability was an asset that contributed to high valuations.

18. Europe telecom industry facts of the day

Europe has more than 44 mobile operators that each have more than 500,000 subscribers compared with eight in the US and just four in China, according to industry group Connect Europe’s State of Digital Communications 2026 report.

19. China high-speed railway facts.

China’s railways have in recent days been ferrying about 20mn passengers a day, with half a billion train trips expected over the 40-day lunar new year period... Nearly three-quarters of passengers will travel at speeds of greater than 200kph, streaking across the country in the white and silver high-speed trains that have become a defining symbol of China’s industrial might. In December, China reached 50,000km of high-speed rail, enough track to circle the globe, compared with 8,500km in the whole of the EU as of 2023. Just over two decades after it was launched, the network now links 97 per cent of cities with populations of more than half a million... China opened its first high-speed passenger line in 2003 between Qinhuangdao and Shenyang in the north-east, with speeds of 200kph. The World Bank estimated in 2019 that China spent about $17mn to $21mn per kilometre on high-speed rail... Another 20,000km of track is planned by 2035... 

China has benefited from a combination of relatively cheap land, enormous scale, standardised designs and a permissive regulatory environment, experts say. The country’s rail project is now overseen by China State Railway Group, a huge state-owned enterprise that operates the network and helps fund new line development. The group plans to invest Rmb520bn ($75bn) this year... The group’s total liabilities have mounted to Rmb6.4tn. China State Railway reported a modest profit of Rmb11.7bn in the first three quarters of 2025, following several years of losses during the Covid-19 pandemic. Analysts said profits from the freight network helped offset losses from passenger high-speed rail. Local governments typically share the burden of building and operating the tracks. But many are struggling with their own shaky finances following the pandemic and the collapse of the property market.

20. Finally, the US Supreme Court has struck down the tariffs imposed by Donald Trump under the International Economic Emergency Powers Act. Also this.