1. It's reported that India has disbursed Rs 8700 Cr ($ 1 billion) to 19 companies under its production-linked incentive (PLI) scheme for smartphone manufacturing in the first three years of the scheme from 2022-23 to 2024-25. Foxconn, Tata Electronics, and Pegatron, the three contract manufacturers of Apple, have received over 75% of the amount, and the top five beneficiaries received over 98% of total disbursals. So far 32 companies have been approved in two rounds under the scheme.
2. As the world figures out trade arrangements at a time when President Trump is waving the tariff stick, it may be useful to use the opportunity to push for certain reforms in WTO. One pointed out in this article is to revise the External Reference Price (ERP), an average price in the Agreement on Agriculture (AoA) established based on the base years of 1986-88 against which subsidies like India's MSP is compared to determine trade distorting subsidies.
3. Donald Trump's reciprocal tariffs are a reversion back to the pre-WTO era. Reciprocal tariffs would mean the US matching imports tariffs on its exports - "an eye for an eye, a tariff for a tariff, same exact amount". While Japan, EU, and India have been identified as the main targets, the biggest relative costs will be faced by Indian exporters. India has the highest trade-weighted tariffs among all major economies at 17% (compared to 2.2% for the US), thereby making the US retaliate with similar rates on Indian exports.
On the basis of tariffs, analysts at Morgan Stanley found India, Thailand and South Korea would be most exposed to retaliation, calculating they would be at risk of an increase of four to six percentage points in weighted average tariffs. Morgan Stanley also found that Japan, Malaysia and the Philippines could be targeted, based on their higher average tariffs. Analysts at Barclays added Indonesia and Vietnam to that list. The EU could also suffer. It levies 10 per cent on car imports, while the US only charges 2.5 per cent. Cars account for 8 per cent of EU exports to the US. The US trade-weighted average tariff is 2.2 per cent, according to the WTO. By contrast, India’s average rate is 12 per cent and reaches 177 per cent for oilseeds, fats and oils.
4. China's auto industry may be the latest example of its guided markets at work.
China’s auto industry, home to more than 100 carmakers, is vast yet deeply fragmented. Oversupply and a flood of unprofitable start-ups have created an unsustainably crowded market. As a result, investors have largely shunned the sector’s legacy carmakers, instead betting on newer, more innovative EV makers such as BYD and Xpeng... History provides a clear precedent: Beijing has regularly stepped in with policies to consolidate fragmented industries, from steel to telecom. That could be particularly helpful, too, to China’s most profitable EV makers, state-owned groups, such as SAIC Motor Corporation and Guangzhou Automobile Group, and private-sector giants such as Geely Auto Group and Great Wall Motors.
5. China's demographic problem in a graphic.
China’s 1.4bn population declined for a third consecutive year in 2024, despite government efforts to encourage family formation as part of a “birth-friendly society”. Marriages also plummeted. Births did increase last year, their first rise since 2016 and a rebound from a record low in 2023. The birth rate, at 6.77 per 1,000 people, compares with 11.17 births per 1,000 people in the UK in the same year. China’s retirement age is also among the earliest in the world, though policymakers last year outlined plans to raise it gradually, as the economy faces the prospect of a smaller working-age population. The retirement threshold will rise from 60 to 63 for men and from 55 to 58 for women in white-collar jobs. The retirement age for women in blue-collar work will climb from 50 to 55.
6. Tokyo Metro, which debuted last October in the stock market through Japan's largest IPO in six years, had its first fare increase in 28 years in March 2023. It has now signalled the possibility of further increases as inflation starts to bite across the Japanese economy. The Metro, with 6.5 million daily passengers (yet to recover from pandemic), is the most efficient and cheapest in the world and is still half-owned by government bodies and railway operators.
7. Remarkable story of how South Korea's second largest city, Busan, faces the real likelihood of extinction.
For most of the 20th century, Busan was a thriving hub of trade and industry. But the city is now in the throes of an exodus of the young that has left it ageing faster than any other metropolitan area in a country that already has the lowest fertility rate in the world. Located on the south-east tip of the Korean peninsula just across from Japan, Busan’s fortunes have worsened since the 1990s as local industries suffer from South Korea’s transition into a high-tech industrial economy... The city of 3.3mn shed 600,000 people between 1995 and 2023. Demographers warn this trend is accelerating as the city’s population ages and Seoul tightens its grip over the country’s economy... Busan retains both charms and assets — mountains and beaches, temples and nightlife, famous film and art festivals and proximity both to Japan and to industrial centres clustered along South Korea’s east coast. While it was the birthplace of leading conglomerates Samsung and LG, not one of South Korea’s 100 largest companies is headquartered in the city.
Busan's ebbs and flows are fascinating
Busan boomed in the second half of the 19th century because of its proximity to Japan — a bridgehead first for Japanese trade and investment and later for colonisation. Japanese industrialists set up factories in Busan producing cheap goods ranging from rubber and shoes to wood. After Tokyo’s defeat in the second world war, the factories were taken over by Koreans and Busan received a surge of returnees from Japan. North Korea’s 1950 invasion prompted a second wave of arrivals after the South Korean government temporarily retreated from Seoul to Busan. Between 1945 and 1951, the city’s population grew from 280,000 to 840,000...
Busan benefited from a “national development strategy” in the 1960s and 70s that built an industrial corridor between it and Seoul, with Busan’s port serving as the main trading hub for a booming export-oriented economy. But the city’s fortunes turned as South Korea moved beyond the production of cheap consumer goods in which Busan’s factories specialised. A Korean economy increasingly powered by the production and export of more sophisticated goods was exemplified by Samsung Electronics’ semiconductor fabrication plants on the outskirts of Seoul. Universities and research institutes migrated to meet the demand for skilled workers. The port of Incheon on the west coast — closer to Seoul, and more convenient for trading with China — supplanted Busan as the country’s leading export hub.
South Korea is at the same time facing a major demographic challenge.
At 0.72, South Korea’s fertility rate — the average number of children a woman is expected to give birth to in her lifetime — was in 2023 the lowest in the world. But despite attracting young people from all over the country, Seoul’s fertility rate in 2023 was even lower — at 0.55. The OECD considers a fertility rate of 2.1 to be necessary to ensure a broadly stable population.
8. Corporate India continues its slow down in Q3 of FY25.
The combined net sales (gross interest earnings for lenders) of listed companies grew in single digits for the seventh consecutive quarter, while their combined net profit rose by a single digit for the third straight quarter. Total net earnings of 3,618 listed companies increased 6.2 per cent year-on-year (Y-o-Y) to approximately ₹3.47 trillion, while net revenue rose 7 per cent Y-o-Y to about ₹37.73 trillion in Q3FY25. With this, listed companies’ combined net profit rose 4.9 per cent Y-o-Y in the first nine months of FY25 (April-December 2024), against 27.4 per cent earnings growth in FY24 (full year). Their net sales climbed 7.2 per cent Y-o-Y in 9MFY25, a slight improvement from the 6.8 per cent Y-o-Y growth in the entire FY24. Overall earnings growth was primarily driven by improved margins, as manufacturing firms benefited from lower raw material, energy, and interest costs. However, banks and non-banking financial companies (NBFCs) saw margin compression due to rising interest expenses outpacing gross interest income.
This is an important set of statistics that point to the reality of rich companies in a poor economy.
The profit before interest, depreciation, and taxes margin (PBIDTM), or operating margin, for the entire Business Standard sample expanded 155 basis points Y-o-Y to 28.7 per cent of total income in Q3FY25 -- the highest level in at least 21 quarters. Similarly, the profit before tax margin (PBTM) rose 76 basis points to 12.7 per cent, the second-highest in 21 quarters, while the net profit margin (PATM) increased by about 10 basis points to 8.9 per cent of total revenue from 8.8 per cent a year earlier... companies managed to sustain margins despite weak revenue growth through cost optimisation and reductions in discretionary spending. Other operating expenses — including promotions, advertising, and overheads — declined 1.4 per cent Y-o-Y in Q3FY25, compared with a 9.6 per cent Y-o-Y rise a year earlier and an 11.4 per cent Y-o-Y increase in Q2FY25. The numbers also suggest efforts to optimise labour costs, as total salary and wages expenses for listed firms grew just 6.2 per cent YoY in Q3FY25 — the slowest in at least 17 quarters.
Important pointers about where growth is good and where not so.
Among key sectors, telecom, capital goods & construction, pharmaceuticals, power, and IT services delivered double-digit earnings growth in Q3FY25. Meanwhile, oil & gas, cement, FMCG, mining & metals, and automobiles lagged, posting little to no earnings growth.
9. As foreign manufacturers seek to shift out of China, the country is raising obstacles.
Chinese officials had made it difficult for the Taiwanese-owned contract manufacturer (Foxconn) to send machinery and technical Chinese managers to India, where Apple is keen to build up its supply chain. A manager at another Taiwanese electronics company said that they too were facing challenges sending some equipment out of China to plants in India, though he noted shipments to south-east Asia remained normal. An Indian official alleged China was using customs delays to impede the flow of components and equipment heading south. “Electronic industry supply players have been told not to establish manufacturing and assembly operations in India,” the official said, asking not to be named. Media site Rest of World earlier reported on some of Foxconn’s issues. Analysts say Beijing’s emerging playbook resembles the western tech transfer restrictions it has loudly criticised as unfair. The informal controls appear in particular to target China’s geopolitical rival India, with some Chinese groups saying that projects in south-east Asia and the Middle East remain unaffected.
This on Apple's quest to make India rival China as its major manufacturing hub.
10. Impressive success story of Nashik's grape farmers.
Sahyadri Farmer Producer Company Ltd (SFPCL) is one such company operating in Nashik district of Maharashtra, which provides a blueprint for success. Founded in 2004 under the leadership of Vilas Shinde, SFPCL started with just 10 farmers. It has grown into a network spanning 252 villages, 31,000 acres, and over 26,500 registered farmers in 2023-24. SFPCL’s annual turnover skyrocketed from Rs 13 crore in 2011-12 to Rs 1,549 crore in 2023-24. Of SFPCL’s total revenue, 64.6 per cent comes from the domestic market, while exports contribute 35.4 per cent, reaching 41 countries worldwide. Grapes and tomatoes lead the total revenue mix, together accounting for 51.7 per cent of the revenue, followed by citrus, dry fruits, and mangoes... At the core of Sahyadri’s success is its ability to bridge the gap between small farmers and global markets by integrating aggregation, value addition, processing, and direct market linkages. SFPCL has built strong relationships with international buyers, ensuring that Indian farmers get access to premium markets by adhering to stringent quality and traceability standards following Good Agriculture Practices (GAP). SFPCL is the largest grape exporter of the country... farmers receive, on an average, about 55 per cent of the FOB price.
11. Kyoto-based Murata Corporation, world's leading manufacturer of multi-layer ceramic capacitors, a major component of iPhones and electronics in general, plans to move some production to India, starting with packaging.
Murata’s components are found in almost all electronics, from Apple Inc. and Samsung Electronics Co. smartphones to Nvidia Corp. servers and Sony Group Corp. game consoles. The company has also helped put a NASA helicopter on Mars. Right now, it makes almost 60 per cent of its MLCCs in Japan... Murata is the world’s leading supplier of capacitors, which regulate the delivery of power to electric components... Murata to rent a plant in OneHub Chennai Industrial Park in India’s southernmost state of Tamil Nadu, where it plans to package and ship ceramic capacitors in the fiscal year starting April 2026. Murata is using the ¥1 billion ($6.6 million) five-year lease to test long-term demand in the country, before it commits to building a factory to span more production processes, Nakajima said. “It’s too early for us to build an integrated production facility in India, because the infrastructure for inputs such as power hasn’t reached the level we need, but we wanted to move early to build some capacity there as our customers shift production,” Nakajima said. “There’s growing consumer demand for electronics in the country, and we also should be ready to respond quickly when India introduces new incentives to encourage domestic manufacturing.”
11. Shyam Saran has a very good oped that looks at the ideological underpinning for the Trump administration, the so-called Dark Enlightenment.
China controls approximately two-thirds of the energy sector in Chile and virtually all of the power generation in Lima, Peru. In November, President Xi Jinping inaugurated a $3.5bn megaport north of the Peruvian capital, a state of the art logistics hub which serves as a critical link in the Belt and Road Initiative. China has now replaced the US as the predominant trading partner of many of the larger economies in the region, with the exception of Mexico and Colombia. As one observer put it, “the Chinese bring their cheque books and the Americans bring their notebooks”. As a result, the US is losing not just market share and influence, but also the ideological battle between free market, rule-of-law capitalism and state-owned-enterprise autocracy. Pleading with host governments not to strike deals with the Chinese is not an effective strategy. Instead, what the US must do is construct a viable American-led alternative to Chinese investment.
13. Very good summary of the progress made in India's space industry thanks to progressive government policies
Government policies have been instrumental in nurturing India’s space startup ecosystem. A major boost came with the launch of 75 space-related iDEX challenges during DefExpo 2022. The establishment of IN-SPACe, a regulatory body for private sector involvement, and Isro granting access to its launch facilities, ground stations, and testing infrastructure have further accelerated progress. The government’s commitment is evident in the creation of a Rs 1,000 crore venture capital fund and the allocation of 31 out of 52 SBS-3 program satellites to startups, empowering this burgeoning sector. While Isro pioneered cost-effective space innovations, startups are taking efficiency to the next level. By focusing on smaller, application-specific LEO satellites, they leverage modular designs, commercial supply chains, and off-the-shelf components to build satellites faster and more affordably. Additionally, by utilising ride-share launch options, these startups significantly reduce overall costs.
14. Impressive trajectory of highway and rural roads formation in India.
The national-highway network nearly tripled in length from 52,000km in 2000 to over 146,000km last year, adding an average of around 3,900km a year. Less well-known is the infrastructure revolution in the countryside. In 2000 India had just 545,000km of surfaced rural roads, usually of dubious quality. By last year, the country had added an additional 773,000km, at an annual average of 33,500km, under one programme alone.
15. Important point for Europeans to consider when engaging with India.
Without the kind of outside security guarantor that has underpinned European security for decades, India has developed some measure of the “strategic autonomy” Europeans now crave. It has form when it comes to playing off potential partners against each other. Europeans winced when Mr Modi last year hugged Russia’s Vladimir Putin in Moscow (perhaps unsurprisingly given Russia is still its biggest supplier of arms) while also getting closer to America. That is the type of diplomatic contortion even a yogi would struggle to pull off. Europeans may not like it, but they should at least try to understand it.
16. The Economist has an article on the importance of shoes in running speeds. It talks about the transformation brought about by Nike when it introduced a new type of super shoes with its Zoom Vaporfly 4% model in 2016.
They typically have curved soles made of a stiff carbon plate sandwiched between layers of specially engineered springy foam. The result is often very thick—up to 40mm tall at the heel, the maximum allowed for competitive racing (regular trainers are usually around 25-35mm tall). These features make running easier. Lab tests have shown that recreational runners use less oxygen and report feeling less tired while jogging in premium trainers compared with regular ones. Platformed soles encourage a slightly longer stride, which means fewer steps per kilometre. And a squishy base, which absorbs impact before bouncing back up, eases the strain on leg muscles. By reducing the energy needed to maintain normal pace, super shoes allow runners to put more effort into going faster.Of the 50 fastest men’s marathon times only nine predate 2017; the figure for women is just three. In the eight years since the launch of the Nike Vaporfly, more than three times as many men’s marathons were completed in under two hours five minutes than in the eight preceding years. Before super shoes, only 26 women’s races had been run in less than 2:20. In 2024 alone there were 35. Studies estimate that the high-tech trainers have shaved between one and four minutes off elite marathon times... runners wearing super shoes completed races 4-5% faster than those in average trainers, even after controlling for ability and training... wearing the premium shoes gave runners a 73% chance of setting a personal best...Adidas’s top model, the Pro Evo 1... cost $500 and are marketed as a single-race shoe. As the miles add up, most super shoes quickly lose grip and the foam in the sole deteriorates, dampening their signature springiness.
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