On Episode 915 of The Core Report, financial journalist Govindraj Ethiraj talks to Rajiv Mitra, Food and Dairy industry Expert as well as Puneet Gupta, Director, India & ASEAN Automotive Market at S&P Global Mobility.

SHOW NOTES

(00:00) Stories of the Day

(01:09) Gold Prices Are Falling Even As Stock Markets Are Muted

(01:54) India Records Driest June In 10 Years Even As June Monsoons Are At 39% Of LPA

(05:20) Deutsche Bank Exits India Retail And Wealth Business

(06:35) Can Delhi’s EV Policy Be Taken To Other Cities And States?

(13:39) Global Air Traffic Was Down 2.2% In May With Middle East Falling Nearly 25%

(14:35) The World Is Talking About Proteins, What Are The India Opportunities?

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Wednesday, the 1st of July, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. Another quarter is over, half the year is also done, and we've got six months ahead.

On that note, the top stories and themes…

Gold prices are falling even as stock markets are muted

Global air traffic was down 2.2% in May, but Middle East traffic fell nearly 25%.

Deutsche Bank exits India's retail and wealth business.

Can Delhi's EV policy be taken to other cities and states?

The world is talking about proteins. What are the India opportunities?

India records its driest June in 10 years, even as June monsoons are at 39% of long period average.

Markets, Gold, Deutsche Bank and the Monsoon

The markets are expectedly muted, slipping again on Tuesday. But the asset class to watch, though not for the right reasons if you were a bull all this time or at least in recent months, is gold.

On Tuesday, gold prices fell further and were set for their biggest monthly decline since October 2008 as the uncertainty over the war in West Asia and the peace process gave way to expectations of U.S. interest rate hikes to tame higher inflation, according to Reuters, which added that spot gold was down 1.5% to $3,956 per ounce and has now fallen about 13% this month in what could be its fourth straight monthly fall, that is, the month of June. Of course, if gold prices stay at these levels or fall further, it is good news for India's upcoming festival season, which will start in a few months. Meanwhile, the news on monsoons, which delivers 70% of annual rains, is not so good, with India recording its driest June in more than a decade and its fifth driest since record-keeping started in 1901, with monsoon rainfall 39.8%, or about 40% below the long-term average, according to India Meteorological Department data quoted by Reuters on Tuesday.

The rainfall deficits caused by the delayed advance of the monsoons have slowed the planting of summer-sown crops like rice, corn, cotton, and soya beans. On the other hand, it has been raining heavily in Mumbai city, but that's not doing much as yet to the lake levels, which supply the city's drinking and other water, which are now below 7%. It will take several days of concentrated rainfall to lift lake levels to more comfortable levels.

Back in the markets, the nifty 50 and cent 6 were down again on Tuesday as markets stood by for lack of any other trigger to see what would happen in the next round of technical talks between the United States and Iran in Doha. So far, it's been the usual two steps forward and one step back that we are quite accustomed to but still don't like it. The nifty 50 was down 80 points to 23,865 and the cent 6 was down 249 points to 76,478.

In the broader markets, the nifty mid-cap and small-cap were higher at 0.37 and 1% each. The rupee slipped on Tuesday but saw its first quarter-on-quarter gain since March 2025 thanks to that fall in oil prices and of course, all those measures to attract particularly NRI dollar flows and foreign portfolio investments in bonds. The rupee ended the day at Rs.

94.66 per dollar, slightly down from its previous close of Rs. 94.54. The rupee is up about 0.3% for the month and about 0.2% over the course of the quarter ending June 30, according to Reuters. Elsewhere, the government has extended the nil customs duty on imports of critical petrochemical products by 15 days until 15th of July to help maintain supply stability amidst the crisis.

According to news reports, the customs duty and exemption on about 40 critical petrochemical products was started on the 2nd of April and was supposed to end on the 30th of June, that is yesterday. Several downstream products, I can give you paints as one example, have seen their input prices go up sharply and then there is plastic products including plastic chairs and many consumer facing products as we had found in one of our conversations with representatives from that industry. We'll have much more on the paint industry by the way, with a major global player over the weekend.

Speaking of energy linked input prices, India's Russian oil imports hit a record high in June according to ship tracking data from LACG and Kepler quoted by Reuters. The United Arab Emirates or UAE meanwhile has boosted its crude oil and condensate exports to a record high in June. Once again, data from Kepler and Vortex are ship tracking data and this is after the UAE left the Organisation of Petroleum Exporting Countries after the war started according to Reuters which reported this, adding that oil prices on Tuesday were heading for their biggest quarterly loss since the COVID-19 pandemic in early 2020.

Brent crude futures were up slightly or about 15 cents to $73.30 on Tuesday afternoon. In global markets, the yen fell to its weakest level against the dollar since 1986, a milestone that will generate unease in Japan and put traders on high alert for authorities wading into the market according to a Bloomberg report. Elsewhere, in a sign of global focus as well as the highly competitive nature of the Indian retail banking as well as wealth management business, Germany's Deutsche Bank is getting out of both its retail banking and wealth management business in India and selling it to Kotak Mahindra Bank.

The business has about a thousand employees, comprises loans worth about 2.7 billion euros or about $3 billion and serves about 150,000 customers, Reuters quoted Deutsche Bank saying. Deutsche Bank paid about $30 million for this business to Kotak Mahindra Bank and had been looking for buyers for some time. A Deutsche Bank board member was quoted saying that this exit represented a further step in simplifying their business and focussing on their strengths as they further enhanced their profitability.

And after departing MNCs, there are arriving MNCs with Adani Ports and Special Economic Zone saying on Tuesday that Switzerland's MSC Group would take a 49% stake in its Visinjem port for $1.4 billion in what it said is the largest foreign private investment in domestic port infrastructure. MSC is the world's largest container shipping company and will make the investment through its unit terminal investment. This is Adani Port's third partnership with MSC after joint ventures at the Mundra and Ennore ports, according to Reuters.

How can we read the Latest Delhi EV policy?

The Delhi government has officially rolled out its Delhi EV policy 2026 and it does appear to be one of the most aggressive pushes towards electrification in mobility. The larger objective is to of course phase out internal combustion engines and there is a fairly large outlay of about 7,000 crore rupees in the case of Delhi backing all of this. This is split up into many components, including offering a waiver on road tax and registration fees for electric cars under 30 lakh rupees and purchase subsidies up to 30,000 rupees for electric two wheelers and 100,000 rupees for N1 electric trucks or under three and a half tonnes.

More significantly, the policy says that from 1st January 2027, which is six months from now, no more petrol, diesel or CNG registrations for L5 category auto rickshaws, that's passenger and cargo as well as N1 commercial goods carriers. And by April 1, 2028, that's two years from now, all new two wheeler registrations must be electric. There are also incentives for scrapping vehicles, but the larger question is how much further can it go and where else, which is the entire initiative to electrify or go for alternative fuels for mobility, something we've obviously got a rude shock on following the energy crisis in the last few months.

I spoke with Puneet Gupta, Director, India and ASEAN Automotive Market for S&P Global Mobility, and I began by asking him how he was reading these latest moves.

INTERVIEW TRANSCRIPT

Puneet Gupta: So, I think this policy, you know, really set India on the forefront, you know, and typically Delhi being a mega city, as you know, in the world, and with challenges like, you know, Delhi is among the top polluted cities in the world, and, you know, India has 40 of them in top 100 polluted cities of the world. So, clearly, I think Delhi is set, being a mega city, sets a kind of a template, maybe what other cities need to follow. Clearly, you know, it's on one side, you know, obviously, it is required, you know, because it is not just about transportation, it is also about the people who are living in those cities, and the cities have become unlivable because of the high pollution level.

So, I think the time has come, maybe the government has been talking about it for last seven, eight years, you know, but now, maybe some kind of district mandate has come. There is an incentive behind it, but then there is also a clear mandate, you know, to implement, for example, you know, from 1st April 2028, only EV two-wheeler. So, I think very ambitious, but at the time, you know, we also need such mandates, you know, which can really redefine the new mobility architecture for our mega cities in India.

Govindraj Ethiraj: Right. And so, Delhi sells roughly around 45,000 two-wheelers a month, give or take. Bangalore is quite close, which is about 41,000.

Pune, Chennai are all in the between 28 to 35,000 vehicles or two-wheelers a month. So, what is the possibility that some of these other cities could also have similar policies, or for that matter, states? And the next attendant question is, how is the infrastructure to support all of this looking like, including in Delhi?

Puneet Gupta: So, I think, you know, today, you know, it's very good that, you know, Delhi is starting this initiative, you know, and step by step, you know, as I said that, you know, India has 40 polluted cities in the world, topmost polluted cities in the world. So, clearly, you know, other cities may follow the suit. Obviously, there may be a few changes, you know, here and there.

But overall, I think, maybe the time has come for other cities to follow. But I think everything should not happen at one go, because otherwise the industry will collapse, primarily because of there are supply chain constraints, you know, there are charging infrastructure constraints, right. So, I think then there is a lot of global volatility today and our dependency on China, primarily for EVs is a lot.

So, I think all the cities coming together, you know, obviously will make the task almost very, very difficult. But I think if it goes step by step, you know, today Delhi is implementing, maybe tomorrow other big cities are implementing. So, then I think the suppliers would also be able to manage the supply chains and deliver the vehicles.

Govindraj Ethiraj: Right. And the EV policy also looks at three wheelers and an approach towards hybrids and passenger vehicles. What's your sense on that front?

Puneet Gupta: Obviously, we are talking about implementing 100% three wheelers by 1st Jan 2027, right. But all red wheeler is electrified, which is more than 50%. So, clearly, I think on a three wheelers, it is relatively easy.

Maybe it is also implementable. So, I think that is why Delhi has taken a good step there. But I think in case of passenger vehicles, obviously, there is a challenge.

Even if you see our market leader, Maruti Suzuki, they only have one electric vehicle. If you see Hyundai, you know, in the mass vehicles, they don't have anything except Creta. And Creta also is a different segment.

So, I think Kia has nothing, right. Toyota has nothing. So, clearly, I think in terms of passenger vehicles, we need to give car manufacturers a little bit more time before such drastic mandate can come for PVs.

But nevertheless, we have players like Tata Motors and Mahindra, who are, you know, clearly very, very aggressive. And then few new players coming, you know, for example, JSW, coming along with Jetul brand. So, I think they can really drive the PV EV market.

But I think somewhere, you know, I think for passenger vehicles, there is some time before such a mandate can come.

Govindraj Ethiraj: Right. So, when you look at the whole area of mobility in a more composite way, so, we are doing a bunch of things. There's a big move towards alternate fuels, blended fuels, flex fuels, and of course, electrification or electric vehicles.

How is this all adding up when, you know, you take a few steps back and look at it?

Puneet Gupta: So, definitely, you know, complexity will go up, you know, but at the end of the day, India is a market, which is the third largest market in the world. So, there is a space for, you know, every segment to exist. So, I think definitely government has taken up fuel agnostic approach.

And today, most of the OEMs, when we see next three to five years plans, you know, they clearly are focussing on all the technology. So, I think maybe because, you know, India has a customer, which has different pocket size, different needs. And I think clearly there are customers who are very aspirational, wants the best, you know, what's going in the world.

So, I think maybe, you know, this fuel agnostic approach works for India, but only because, you know, our overall volumes are huge and we are the third largest market in the world in passenger vehicles and the largest market in two wheelers. So, clearly, I think all the technologies can coexist seeing the size of the market, but obviously, you know, I think the complexities will go up. And the biggest part would not just be vehicles or parts, you know, it will be the entire ecosystem, you know, because the charging infra players have to come in place.

You really need to see how electricity is being managed in terms of peak loads and etc. So, I think the entire ecosystem needs to come in place, you know, it may be financial institutions, it may be the resale companies, you know. So, I think the entire mindset, you know, needs to be changed and things needs to be in place.

Govindraj Ethiraj: Right. Puneet, thank you so much for joining me.

Puneet Gupta: Thank you.

How has Passenger Demand Been Impacted by the West Asia War?

Speaking about mobility, air passenger demand was down 2.2% year on year in May on the impact of the war in the Middle East. According to the International Air Transport Association, the decline was led by the Middle East carriers with a 28% year on year fall, which is, as it happens, an improvement over the roughly 47% decline recorded for April.

IATA says they saw year on year contractions in demand in both North America and Asia, largely related to domestic market conditions in the US and China. IATA also says that while the recent sharp drop in oil prices is an encouraging development, the challenges created by the war will likely persist for some time. IATA also said that airlines operating on a 2% margin will have little choice but to continue testing demand resilience with higher fares that attempt to cover elevated fuel costs.

Opportunities for Indian Dairy Exports in the Protein Segment?

The world is talking about protein, and in the context of the dairy industry as well. This opens up opportunities for India as well. According to dairy industry veteran Rajiv Mitra, who is also a former CEO of Lactalis India and co-founder of Bangriwala Agro Products, according to him, healthy ageing and the importance of Asia, India particularly, are also in focus and were so at a major dairy conference he attended recently.

I spoke to him earlier and I began by asking him whether he was seeing an impact of the free trade agreement that kicks off with the UK next month from a dairy industry point of view on the outbound side since inbound is fairly protected.

INTERVIEW TRANSCRIPT

Rajiv Mitra: Outbound opportunities in the future is definitely going to open up because if I for want of a better word, if I may say, if we are protecting dairy, protection is being taken as a bridge to competitiveness, not as a substitute for competitiveness. So I see us gaining in terms of competitiveness, in terms of technology adoption, in terms of circular economy and therefore becoming more competitive, and maybe in the coming years, opening bilateral trade in dairy. So there could be outbound opportunities in the coming days as a result of the FDA.

Govindraj Ethiraj: Right. So you were recently at the 19th Global Dairy Congress in Barcelona, and you were telling me that you saw some amount of interest in India, but larger trends, which could benefit as trends that are global trends. Do walk us through that.

Rajiv Mitra: Yes, I was there in Barcelona this month, middle of June for the Global Dairy Congress, and there was considerable interest in India. I made a presentation on India's key opportunities, but the trends that I picked up, you know, there were people from all over the world, from all the major dairy regions of the world were represented. And I see remarkable alignment in terms of trends.

One being protein. Protein is the demand driver, is the growth engine in the coming days. Every, almost every discussion was around protein or had protein in it.

And in my opinion, India becomes important being the largest milk producer in the world. In the coming future, India could be an important contributor to the protein economy of the world, the dairy protein economy. So it is not dairy or milk is not being taken as just milk alone.

We are talking of gut health, of healthy ageing, of sports nutrition, medical nutrition, and everywhere it's about protein. That's the most important trend that I could pick up. And then about sustainability, you know, sustainability is no longer CSR activity or an obligation or a compliance.

Sustainability globally is being seen and practised as good business. So be it a simple thing as a rooftop solar or, you know, bio gas using cow dung to light up homes, or maybe even bigger things like Suzuki's investment of a few thousand crores for the bio CNG plant, which will help us drive vehicles. So I see sustainability, trend number two, as good business opportunity, good business, not just a compliance point.

Three is digital adoption. You know, adoption of AI and digital adoption is becoming increasingly important, which could be, say, precision farming, herd management, ultimately productivity, improvement in productivity. And fourth, as we started the increased interest in Asia, and particularly India, India is known in the world as the largest producer of milk.

But other than that, dairy industry being very internal to India, we are consuming as much as we are producing. There hasn't been too much of interest in Indian dairy externally, despite being the largest producer, because exports are minimal. The participation, our external participation is minimal.

I see that changing for India gradually. And for Asia, it is already there. I mean, as you see large Chinese dairy companies or even, say, Vinamilk of Vietnam celebrating their 50 years, you know, a war-torn country 50 years back and doing so well.

So there is increased interest in Asia and gradually increasing interest in India. So these are the four major trends that I could pick up at the Dairy Congress in Barcelona.

Govindraj Ethiraj: Right. And we've seen fair amount of multinational investment over the years, including in dairy, and you've worked with some of those big giants as well. What's changed or changing, if so?

Rajiv Mitra: Yes, I think premiumization we are getting used to. It's no more that one litre in to the dairy and one litre out of the dairy, out of the processing. It is no more that way.

It's about, say, seven litres in or eight litres in and one kg out. So it's no more about volume. You know, nobody will care in the coming days, how much are you producing?

What we will care about, the world will care about is how much value you are making per litre of milk. So that realisation, that understanding is changing. I wouldn't say it is fully changed in India, still being largely unorganised.

You know, India is the dairy economy is an unorganised economy. So this is changing. But having said that it is an unorganised economy, you can see that the share of organised sector is gradually increasing.

So much so, my guess is, my expectation is by 2035, that is in about 9-10 years from now, we should be more than 50% organised. I think that will be a good achievement.

Govindraj Ethiraj: As compared to?

Rajiv Mitra: Currently, we are about, say, 35% organised. If I am to take myself back 15 years or 10 years, let's say by 2014-2015, I think we were at 25%. So it is not just we are making a future commitment, we have seen growth in the last 10 years.

So we are confident of similar or faster growth in the coming 10 years.

Govindraj Ethiraj: Right. What would you say are some of the bigger challenges or issues that the industry is grappling with right now? Because we're also in a situation where we are facing some amount of agrarian stress because of delayed monsoons and so on.

And what could we be doing from a policy response point of view? Or what could we be doing to draw greater attention to this sector?

Rajiv Mitra: India's biggest challenge perennially has been farm productivity. That remains. I mean, in the last 10 years, I don't think we could change this number one challenge point, which is not fair.

I mean, we should be more productive, farm productivity and market linkages. I think these two are the bigger challenges that we have in hand now. There have been a lot of effort from NDDB, from the private organisations, from the government side.

There are concerted efforts. So things are changing, but farm productivity and market linkage, these two remain big challenge. Third would be a challenge and opportunity put together is the circular economy.

We never really did much about it as much as we are doing now. And in the coming days, I think the largest number of livestock population. So you can imagine the kind of dung that we have, simple thing and converting that into gas.

There hasn't been too much of effort in that other than some cottage industry kind of effort. So that is changing. Fourth and the last point would be the realisation that we can be a contributor to the protein demand.

You see in the last three years, protein price has risen five times globally. The largest producer, why can't we participate in that business? And I think we have realised and we know how we can now.

So these three, four challenges and the corollary to that would be the opportunities are something that we should work on and the industry is working on quite well.

Govindraj Ethiraj: Right. Rajiv, thank you so much for joining me.

Rajiv Mitra: Thanks, Govind. Thanks for having me today.