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India Emerges the Biggest Winner of the Ukraine War and Growing US-China Tensions
"It may be dangerous to be America's enemy, but to be America's friend is fatal" Henry Kissinger
India is emerging as the biggest beneficiary of the Ukraine War and the US efforts to check China's rise. Indian businesses are busting US sanctions to take advantage of the vacuum left in Russia by the exit of western businesses since the start of the Ukraine War. At the same time, the US is rewarding India by promoting it as an alternative to China in the global supply chain. Meanwhile, Beijing is warning New Delhi that India "will be the biggest victim" of America's "proxy war" against China.
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| L to R: Modi, Putin, Xi and Biden |
Soaring Russia-India Trade:
Since the start of Russia's invasion of Ukraine, India has ramped up its imports of Russian oil by a whopping 33 times, according to the Christian Science Monitor. Dr. Nivedita Kapoor, an Indian expert at the Higher School of Economics in Moscow, told the Monitor: “Right now the focus is on pharmaceuticals, electronics, machinery, chemical products, medical instruments, and agricultural products,” says Dr. Kapoor. “We have already been exporting these goods to Russia, and there is potential for major increases. ... It may be harder to expand the list due to the threat of secondary sanctions. In this environment, the Indian private sector looks at Russia as a risky market. But the immediate potential is very big.”
“The best solution would be for Russia to make an early end to this war,” Kapoor said. “We can envisage a situation where Western companies have already exited the Russian market, and burned their bridges, while the Indian private sector no longer regards business with Russia as a risky proposition, carrying the threat of secondary sanctions. All that would go away for us, but we need to see an end to this war”, she added.
India in Global Supply Chain:
With growing Washington-Beijing tensions, the United States is trying to decouple its economy from China's. The Wall Street Journal has reported that the Biden administration is turning to India for help as the U.S. works to shift critical technology supply chains away from China and other countries that it says use that technology to destabilize global security.
The US Commerce Department is actively promoting India Inc to become an alternative to China in the West's global supply chain. US Commerce Secretary Gina Raimondo recently told Jim Cramer on CNBC’s “Mad Money” that she will visit India in March with a handful of U.S. CEOs to discuss an alliance between the two nations on manufacturing semiconductor chips. “It’s a large population. (A) lot of workers, skilled workers, English speakers, a democratic country, rule of law,” she said.
China-India Border Conflict:
India's unsettled land border with China will most likely continue to be a source of growing tension that could easily escalate into a broader, more intense war, as New Delhi is seen by Beijing as aligning itself with Washington.
In a recent Op Ed in Global Times, considered a mouthpiece of the Beijing government, Professor Guo Bingyun has warned New Delhi that India "will be the biggest victim" of the US proxy war against China. Below is a quote from it:
"Inducing some countries to become US' proxies has been Washington's tactic to maintain its world hegemony since the end of WWII. It does not care about the gains and losses of these proxies. The Russia-Ukraine conflict is a proxy war instigated by the US. The US ignores Ukraine's ultimate fate, but by doing so, the US can realize the expansion of NATO, further control the EU, erode the strategic advantages of Western European countries in climate politics and safeguard the interests of US energy groups. It is killing four birds with one stone......If another armed conflict between China and India over the border issue breaks out, the US and its allies will be the biggest beneficiaries, while India will be the biggest victim. Since the Cold War, proxies have always been the biggest victims in the end".
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Comment by Riaz Haq on April 12, 2023 at 7:54am
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From Red Carpet to Doghouse: Macron Returns From China to Allied Dismay
https://www.nytimes.com/2023/04/11/world/europe/macron-china-allies...
Criticism of the French president’s performance in Beijing has been scathing among some allies, who saw him as cozying up to Beijing.
In short order in China, Mr. Macron managed to alienate or worry allies from Warsaw to Washington, with his embrace of what a Sino-French declaration called a “global strategic partnership with China.” He adopted the Chinese lexicon of a “multipolar” world, freed of “blocs,” liberated from the “Cold War mentality,” and less reliant on the “extraterritoriality of the U.S. dollar.”
Most worrisome, particularly for the United States, he suggested in an interview with Politico and French journalists on the way home that the security of Taiwan is not the problem of a Europe that must resist becoming America’s “vassals.”
How Taiwanese democracy and freedom differ from Ukrainian democracy and freedom, and how the threat of Russian autocracy differs from the threat of a Chinese autocracy that backs Moscow, were two questions left unanswered by Mr. Macron.
Speaking of Taiwan, he said: “The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction.”
By Tuesday the Élysée Palace, home to the president, felt it necessary to clarify France’s allegiances, so muddied had the optics become. France, it said, “is not equidistant between the United States and China. The United States is our ally, with shared values.”
The fact that this clarification was necessary suggested how much Mr. Macron had unsettled his allies.
“The alliance with the United States is the absolute foundation of our security,” Mateusz Morawiecki, the prime minister of Poland, said on Tuesday in an evident riposte to Mr. Macron, noting that some Western leaders “dream of cooperation with everyone, with Russia and with some powers in the Far East.”
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Ms. von der Leyen received none of the lavish attention showered on Mr. Macron. China prefers nation states to transnational entities, and had bristled at a speech she made this month in which she criticized China as “more repressive at home and more assertive abroad.”
On the face of it, Taiwan does matter to Europe for economic and political reasons. The world runs on Taiwanese chips. The island democracy produces over 60 percent of the world’s semiconductors and about 90 percent of the most elaborate ones.
After China’s crushing of democratic aspirations in Hong Kong, the implications of a Chinese invasion of Taiwan and the suppression there of liberal democracy would be devastating for the very causes Europe and Mr. Macron have committed to defend in Ukraine.
The French presidential statement said: “Our position on Taiwan is constant. We support the status quo and maintain our exchanges and cooperation with Taiwan, which is a recognized democratic system.”
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iPhone Exports from India Double to Surpass $2.5 Billion
https://www.bloomberg.com/news/articles/2023-01-09/iphone-exports-f...
Foxconn Technology Group and Wistron Corp. have each shipped more than $1 billion of Apple’s marquee devices abroad in the first nine months of the fiscal year ending March 2023, people familiar with the matter said. Pegatron Corp., another major contract manufacturer for Apple, is on track to move about $500 million of the gadgets overseas by the end of January, the people said, asking not to be identified revealing private information.
Apple’s rapidly growing export numbers illustrate how it is ramping up operations outside of China, where chaos at Foxconn’s main plant in Zhengzhou exposed vulnerabilities in the Cupertino-headquartered company’s supply chain and forced it to trim output estimates. That compounded a broader problem with evaporating demand for electronics as consumers weigh the risks of a global recession.
Apple, the world’s most valuable company, began assembling its latest iPhone models in India only last year, a significant break from its practice of reserving much of that for giant Chinese factories run by its main Taiwanese assemblers including Foxconn.
While India makes up just a fraction of iPhone output, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as factory to the world.
China’s Covid Zero policies and an episode of violence at the Zhengzhou plant — nicknamed iPhone City as the world’s biggest production center for the device — laid bare the dangers of relying on the country. While Beijing has since dropped that approach to containing the virus, Apple and other global names are exploring alternative locations more than ever before.
India’s vast workforce, Modi’s support and a thriving local market make it a prime candidate to take on more electronics manufacturing. Foxconn, Apple’s largest supplier, began building facilities in the country more than five years ago in anticipation of a need to extend its geographic range.
One recent selling point is a raft of new government incentives, a cornerstone of Modi’s drive to make India an electronics manufacturing hub. Foxconn has won 3.6 billion rupees ($44 million) of benefits in the first year of the so-called production-linked incentives scheme, while Wistron’s claims are currently being processed, the people said.
Representatives for Apple, Foxconn and Wistron didn’t respond to emails seeking comment. A Pegatron spokesperson declined to comment.
Apple’s contract manufacturers currently make iPhones at plants in southern India. But production in the country is just beginning. About 3 million of the devices were made in India in 2021, compared with 230 million in China, according to Bloomberg Intelligence estimates.
Foxconn began making the iPhone 14 in India a few months ago — sooner than anticipated — after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks. Apple’s three Taiwanese partners currently assemble iPhones 11 to 14 in India.
But moving out of China, where Apple has built a deep supply chain for close to two decades, isn’t easy. A Bloomberg Intelligence analysis estimated it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones are being made.
India tracks production and exports of all smartphone makers who enjoy financial incentives as part of Modi’s push.
Beyond smartphones, the country is drawing up plans to boost financial incentives for tablet and laptop makers, hoping to woo Apple to make everything from earphones to MacBooks locally as well as attract other brands. The iPhone maker is also expected to open its first retail store in India in 2023, after meeting certain criteria imposed on foreign retailers.
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#America’s Bad Bet on #Modi.
#Delhi Won’t Side With #Washington Against #Beijing. #India’s significant weaknesses versus #China, & its inescapable proximity to it, guarantee that Delhi will never involve itself in any #US confrontation with Beijing. #BJP https://www.foreignaffairs.com/india/americas-bad-bet-india-modi
by Ashley Tellis
For the past two decades, Washington has made an enormous bet in the Indo-Pacific—that treating India as a key partner will help the United States in its geopolitical rivalry with China. From George W. Bush onward, successive U.S. presidents have bolstered India’s capabilities on the assumption that doing so automatically strengthens the forces that favor freedom in Asia.
The administration of President Joe Biden has enthusiastically embraced this playbook. In fact, it has taken it one step further: the administration has launched an ambitious new initiative to expand India’s access to cutting-edge technologies, further deepened defense cooperation, and made the Quad (Quadrilateral Security Dialogue), which includes Australia, India, Japan, and the United States, a pillar of its regional strategy. It has also overlooked India’s democratic erosion and its unhelpful foreign policy choices, such as its refusal to condemn Moscow’s ongoing aggression in Ukraine. It has done all of this on the presumption that New Delhi will respond favorably when Washington calls in a favor during a regional crisis involving China.
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India’s priority has been to receive American assistance in building up its own national capabilities so it can deal with threats independently. The two sides have come a long way on this by, for example, bolstering India’s intelligence capabilities about Chinese military activities along the Himalayan border and in the Indian Ocean region. The existing arrangements for intelligence sharing are formally structured for reciprocity, and New Delhi does share whatever it believes to be useful. But because U.S. collection capabilities are so superior, the flow of usable information often ends up being one way.
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The fundamental problem is that the United States and India have divergent ambitions for their security partnership. As it has done with allies across the globe, Washington has sought to strengthen India’s standing within the liberal international order and, when necessary, solicit its contributions toward coalition defense. Yet New Delhi sees things differently. It does not harbor any innate allegiance toward preserving the liberal international order and retains an enduring aversion toward participating in mutual defense. It seeks to acquire advanced technologies from the United States to bolster its own economic and military capabilities and thus facilitate its rise as a great power capable of balancing China independently, but it does not presume that American assistance imposes any further obligations on itself.
As the Biden administration proceeds to expand its investment in India, it should base its policies on a realistic assessment of Indian strategy and not on any delusions of New Delhi becoming a comrade-in-arms during some future crisis with Beijing.
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#India's ties with #Russia remain steady. But #Moscow's tighter embrace of #China makes it wary. It appears “this (#Delhi-Moscow) relationship is going down from being a very high-value strategic partnership to a transactional one" #Modi #US #Ukraine https://cnb.cx/3NxQLX7
India’s relationship with Russia remains steadfast as both sides seek to deepen their economic engagements.
But Moscow has also grown close to Beijing since invading Ukraine, and that raises critical national security concerns for New Delhi, say observers.
India’s leaders are “carefully watching” as Russia becomes more isolated and moves closer to “China’s corner,” said Harsh V. Pant, vice president for studies and foreign policy at Observer Research Foundation, a New Delhi-based think tank.
It appears “this relationship is going down from being a very high-value strategic partnership to a transactional one,” said Sreeram Chaulia, dean of the Jindal School of International Affairs, adding Moscow’s “tighter embrace of China” doesn’t bode well for India’s national security needs.
India’s relationship with Russia remains steadfast as both sides seek to deepen their economic ties. But Moscow has also grown close to Beijing since invading Ukraine, and that raises critical national security concerns for New Delhi.
Indian external affairs minister S. Jaishankar recently said the country was ready to restart free trade negotiations with Russia.
“Our partnership today is a subject of attention and comment, not because it has changed, but because it has not,” he said, describing the relationship as “among the steadiest” in the world.
Russia also wants to “intensify” free trade discussions with India, Deputy Prime Minister Denis Manturov said during a visit to Delhi. Manturov is also Moscow’s trade minister.
Despite the display of economic cooperation, India’s leaders are “carefully watching” as Russia becomes more isolated and moves closer to “China’s corner,” said Harsh V. Pant, vice president for studies and foreign policy at Observer Research Foundation, a New Delhi-based think tank.
Russia’s “weak and vulnerable position” and growing reliance on China for economic and strategic reasons, will definitely be worrying for India, he told CNBC.
It’s becoming “more difficult with every passing day because of the closeness that we are witnessing between Beijing and Moscow,” Pant noted. “The pressure on India is increasing, it certainly would not like to see that happen.”
New Delhi will try as much as possible to avoid a potential “Russia-China alliance or axis,” Pant added. “As that will have far reaching consequences and will fundamentally alter India’s foreign policy and strategic calculation.”
There are national interest reasons “why India continues to buy cheap Russian oil and trade with them, this FTA is part of that,” said Sreeram Chaulia, dean of the Jindal School of International Affairs in New Delhi.
But it appears “this relationship is going down from being a very high-value strategic partnership to a transactional one,” he noted, adding Moscow’s “tighter embrace of China” doesn’t bode well for India’s national security needs.
India, which holds the current G-20 presidency, still hasn’t condemned Russia over its invasion of Ukraine.
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#India-#Russia Ties ‘Nose Dive’; After S-400 Shipments, Russia Could Now Suspend #Oil #Exports To India. @vkthakur. In Goa at #SCO2023 , Lavrov bluntly implied that in its dealings with Russia, India wants to eat the cake and have it too. #China #US https://eurasiantimes.com/india-russia-ties-nose-dive-after-suspend...
India, which has been lapping up cheap Russian oil for domestic consumption as well as export as refined commodities, hasn’t been compensating Russia for its oil imports.
Lavrov pointed out that Russia has accumulated billions of rupees in Indian banks that Russia cannot use.
“This is a problem. We need to use this money. But for this, Rupees must be converted to another currency, and this is now being discussed.”
India and Russia have been exploring options for settling their trade in rupees or rubles since the start of the Russian Special Operation (SMO) in Ukraine in February 2022, but they have made little headway even after more than a year.
Trade Imbalance Between India & Russia
The problem is – India’s imports from Russia far exceed its exports. As a result, Indian rupee payments to Russian bank Vostro accounts in Indian banks are of no use to Russia.
The obvious solution is for India to step up its exports to Russia. Unfortunately, Indian exports are severely constrained by the lackluster quality of Indian goods. Also, Russia is a resource-rich country, so India doesn’t have the option to export commodities to Russia.
India could pay the accumulated billions of rupees to Russia by converting them to a currency like the Chinese Yuan, however, that would entail bearing the cost of conversion. China’s massive trade surplus with India makes the rupee particularly weak against the Yuan.
Suspension of Rupee-Rouble Trade
According to Reuters, rupee-rouble trade between India and Russia has now been suspended. The suspension will likely restrict, if not end, the import of cheap Russian oil since the start of the Ukraine war.
The Imperative To Increase Exports
Nations become economic powerhouses by increasing their exports. To do so, they need to manufacture quality goods in demand across the world.
For example, Russia has the ability to make for itself just about everything that it needs, but that doesn’t make Russia an economic powerhouse. Russian exports are also constrained by quality when compared to goods manufactured by China, Japan, and many European countries.
Russia’s pivot towards Asia is a historic opportunity for the Indian private sector to increase exports to Russia. Our response to the crisis in Ukraine so far has been akin to a trader’s response, not the response of an entrepreneur. India can easily carve a niche for itself with the export of consumer goods to Russia.
Impact On Defence Relationship
India’s deep-rooted defense relationship with Russia, which has stood India in good stead for decades, has been threatened for some years now by US CAATSA sanctions. The suspension of Rupee trade with Russia will seriously impact India’s defense capability, possibly at a time when India can least afford enfeeblement.
It’s likely that Russia held back the supply of an additional two S-400 regiments to India earlier because of India’s inability to compensate Moscow. Russia could continue to supply oil to India because Russia has surplus oil, but it couldn’t continue supplying S-400 because it doesn’t have surplus S-400 regiments. Not now, at least, when it’s fighting a war.
Willing Make-In-India Partner
Russia has expressed its enthusiasm for participating in Make-in-India defense projects through industry-to-industry collaboration.
India’s defense minister Rajnath Singh held a bilateral meeting with the Minister of Defence of Russia, Army General Sergei K Shoigu, on the sidelines of the Shanghai Cooperation Organisation (SCO) Defence Ministers’ meeting in New Delhi on April 28, 2023.
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#India-#Russia Ties ‘Nose Dive’; After S-400 Shipments, Russia Could Now Suspend #Oil #Exports To India. @vkthakur. In Goa at #SCO2023 , Lavrov bluntly implied that in its dealings with Russia, India wants to eat the cake and have it too. #China #US https://eurasiantimes.com/india-russia-ties-nose-dive-after-suspend...
The two Ministers discussed wide-ranging issues of bilateral defense cooperation, including military-to-military ties as well as industrial partnership. They expressed satisfaction over the continued trust and mutual respect between the two countries, particularly in defense, and reiterated their commitment to strengthening the partnership.
Wary of US CAATSA sanctions, India is seeking joint venture development and local manufacture of weapon systems from Russia, and Russia has been forthcoming.
India and Russia have discussed technical collaboration for local production of S-400 systems in India. In September 2019, Russia’s state corporation Rostec CEO, Sergey Chemezov, said that both India and Russia are currently in talks to launch a local S-400 production line in India.
“Yes, we are discussing the localization [of S-400 production] with India as well”, Chemezov reportedly told Russia’s RBK TV.
Russia is participating in the competitive bid for the local manufacture of P-75I submarines in India. Russia is ready to transfer its Amur 1650 submarine technology to India, and it’s ready to collaborate with the DRDO in fitting the submarine with an AIP system
Russia is ready to provide technology for India’s new tanks. The Russian Federal Service of Military-Technical Cooperation (FSVTS) said that Moscow can share its advanced Armata modular tracked platform with India. Vladimir Drozhzhov, the deputy director of FSVTS, told Russian media that Moscow is keen on jointly developing India’s main battle tank with modern Russian technology.
Other JV development offers from Russia include the Su-75 Checkmate stealth fighter.
Disconcerting Lack Of Urgency On The Part Of India
The lack of urgency on the part of our negotiators to work out a trade mechanism is disconcerting. As Lavrov said, Russia, which is fighting a war, needs to use the money that India owes to Russia. As a strategic partner with special privileges, you would expect India to be sensitive to Russia’s concerns.
It will indeed be deeply ironic if Indian tardiness (Or perhaps Western pressures?) derail a deep-rooted mutually beneficial relationship that has stood the test of time.
The indirect impact of the derailing – Russia would likely be forced to lean more heavily on China – could have a more ominous negative impact on India’s long-term security.
Cost Competitiveness of Russian Weapons
There is a good reason why India continues to seek Russian defense technology despite its access to Western arms manufacturers in Israel, France, the UK, and the US; Russian defense technology is more cost-effective than Western technology in certain areas, such as submarines, hypersonics, and armor.
India has been a good market for Russian defense OEMs. However, if Russian defense OEMs are unable to operate in India, the loss will be India’s more than Russia’s. Russian OEMs will easily find alternative markets – in the Middle East, South America, and Africa – as this world inexorably moves towards multipolarity.
India, on the other hand, would slip from being a regional power to being a regional US vassal.
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Geopolitics is shrinking India’s risk premium | Reuters
https://www.reuters.com/breakingviews/geopolitics-is-shrinking-indi...
India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
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MUMBAI, May 9 (Reuters Breakingviews) - Indian tycoons and financiers are sitting back as global business comes to them for a change. Apple (AAPL.O) CEO Tim Cook, Microsoft (MSFT.O) boss Satya Nadella and Blackstone (BX.N) President Jon Gray have all visited India this year. They are lured by a country whose potential as an alternative investment destination to China increasingly outweighs the local challenges of doing business.
Visitors see many attractions. India’s $3 trillion economy is forecast to grow by 6.5% this fiscal year, continuing to outpace the rest of the world. Plentiful imports of cheap Russian oil are keeping inflation in check. Meanwhile, the workforce of the world’s most populous country offers low costs, high numbers of technology engineers, and hundreds of millions of people who speak English.
Executives and investors also see a business-friendly government that is likely to remain in power for the next half-decade. Opinion polls suggest Prime Minister Narendra Modi will win a third term next year: the biannual Mood of the Nation survey, published in January, found 72% of respondents rated Modi’s performance as good, up from 66% in August. If he wins re-election with an outright majority, businesses would not have to worry about unpredictable coalition politics.
Yet India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
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Geopolitics is shrinking India’s risk premium | Reuters
https://www.reuters.com/breakingviews/geopolitics-is-shrinking-indi...
India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
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MUMBAI, May 9 (Reuters Breakingviews) - Indian tycoons and financiers are sitting back as global business comes to them for a change. Apple (AAPL.O) CEO Tim Cook, Microsoft (MSFT.O) boss Satya Nadella and Blackstone (BX.N) President Jon Gray have all visited India this year. They are lured by a country whose potential as an alternative investment destination to China increasingly outweighs the local challenges of doing business.
Visitors see many attractions. India’s $3 trillion economy is forecast to grow by 6.5% this fiscal year, continuing to outpace the rest of the world. Plentiful imports of cheap Russian oil are keeping inflation in check. Meanwhile, the workforce of the world’s most populous country offers low costs, high numbers of technology engineers, and hundreds of millions of people who speak English.
Executives and investors also see a business-friendly government that is likely to remain in power for the next half-decade. Opinion polls suggest Prime Minister Narendra Modi will win a third term next year: the biannual Mood of the Nation survey, published in January, found 72% of respondents rated Modi’s performance as good, up from 66% in August. If he wins re-election with an outright majority, businesses would not have to worry about unpredictable coalition politics.
Yet India is also benefiting from worsening relations between Washington and Beijing. Companies are looking to shift supply chains out of the People’s Republic, while money managers need a place to deploy long-term funds with fewer risks of financial sanctions.
In some cases, the pivot is stark: Apple suppliers Foxconn (2317.TW) and Pegatron (4938.TW), for example, are building factories in Karnataka and Tamil Nadu. JPMorgan analysts reckon India will make one in four iPhones within two years, even though manufacturing costs are higher than in China. Ontario Teachers’ Pension Plan, Canada’s third-largest retirement fund, closed part of its China equity investment team based in Hong Kong in April, seven months after opening an office in Mumbai.
India appeals as more than a manufacturing base, though. Its economy also dangles the promise of Chinese-style growth. GDP per capita was $2,379 in 2022, less than one fifth of its eastern neighbour. Over 1.2 billion people have mobile phone connections; half of which are smartphones. Morgan Stanley analysts and strategists expect India to become the world’s third-largest economy and stock market before the end of the decade.
India remains a tricky destination for international companies and investors. New Delhi has a long-standing fondness for import tariffs and is infamous for wrangling over tax with multinationals including Vodafone (VOD.L) and energy group Cairn.
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Its (Apple's)iPhone price far exceeds the $269 Indian smartphone average.
By Peter Cohen
https://www.forbes.com/sites/petercohan/2023/04/25/apples-46-revenu...
Apple’s iPhone prices in India remain between 1.2 and six times higher than the average smartphone price in the country. For example, on April 25 its high end iPhone 14 Pro Max lists for $1,562 while one of its lowest-priced versions — the iPhone 5S 16GB goes for $308, according to Mysmartprice.
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How much is India slowing down? With 650 million smartphone users it is the second largest market behind China. Yet mobile Internet growth has stalled. As of last October, India had 790 million wireless broadband subscribers — a mere 1 million more than in 2021, according to the BBC. The number of new smartphones sold fell 10% to 151 million units after “scorching double digit growth” between 2016 and 2020.
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Price is the primary factor Indian consumers use to choose a smartphone. With rising prices, demand has fallen.
In 2022, the average smartphone price rose a whopping 47% to $269 — while 80% of smartphones in India sell for under $245, according to market researcher IDC. Until 2020, Indian consumers bought a new smartphone every 14 to 16 months. By 2023, that figure had risen to about 22 months, noted IDC.
With so many Indian citizens living in poverty and vendors failing to adapt to the requirements of the Indian market — e.g., most apps and services are in English which inhibits Internet adoption in rural India — smartphone makers must rethink their products, BBC reported.
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Apple’s revenue is declining. CEO Tim Cook hopes that after 25 years in the enormous Indian market, the tech giant can win enough of its revenues to accelerate its top line.
Apple’s market share has remained in the low single digits (now 3.7%) because its competitors deliver Indian customers a superior value proposition — better apps, longer battery life, and superior after-sales service at a much lower price.
Apple’s fortunes in India have taken a turn for the better. The company’s revenue in India soared nearly 50% to $6 billion, according to Bloomberg.
Yet Apple still faces considerable challenges in gaining a significant share of the Indian market. That’s because it has been trying to force-fit its U.S. iPhone business strategy to India, according to Apple in China and India, a case I co-authored in July 2019.
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Last week’s stellar revival in Adani Group stocks has helped India reclaim its position among the world’s five largest stock markets.
https://qz.com/adani-put-india-back-in-top-five-stock-markets-list-1850484425
India lost its fifth position to France after the US-based Hindenburg Research in January, accused the country’s ports-to-power conglomerate Adani Group of “brazen stock manipulation” and “accounting fraud,” Bloomberg reported today (May 29). The allegations triggered a sell-off in Adani stocks, dragging the indices sharply lower.
However, as of May 26, stock market capitalization stood at $3.3 trillion in India, driven by foreign fund inflows into Indian shares—and a sharp recovery in Adani stocks.
Foreign investors bought shares worth $4.5 billion in May so far, a little more than a two-fold increase from last month, according to India’s National Securities Depository. Adani’s listed entities added around $15 billion to their market value last week, recovering some of their post-Hindenburg losses.
Now France has been pushed out of the top-five list again after the country’s stock indices lost more than $100 billion in market value last week. This was caused by a sell-off in shares of luxury goods companies such as LVMH Moet Hennessy Louis Vuitton and Vivendi, due to fears of a slowdown in China and the US.
Investors are choosing India over China
India’s prospect as one of the world’s fastest-growing economies is alluring.
Rival China, on the other hand, seems to have taken a backseat due to a stuttering economy. Beijing’s isolationist Covid-19 policies, turmoil in its real estate industry, and a harsh anti-trust campaign against the country’s valuable tech firms have crushed sentiments for Chinese assets, economists say.
Mark Mobius, founder of Mobius Capital Partners and a market expert, also sees India as a viable alternative. “You’ve got a billion people (Indians), they can do the same thing that the Chinese do. They can do the same kind of manufacturing and so forth,” Mobius told Fox Business in March.
Last week, Christopher Wood, strategist at Jefferies Financial Group, increased the weight of Indian stocks in his Asia Pacific portfolio, excluding Japan, Bloomberg reported. This reflects the dismay among investors when it comes to the Chinese stock market.
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