Our Top Reports For Today
- <01:04> The India Semiconductor Race Gathers Pace as AMD announces $400 million investment.
- <04:47> Can the sovereign of India be taken to court for deadly cough syrups exported by private companies? with Murali Neelakantan
- <17:32> Gig workers are a visible part of the country’s workforce.. A bill in Rajasthan wants to protect them. Can it? with Sabina Dewan
- <26:44> The Bank of England hires former US Federal Reserve head Ben Bernanke to find out why the Uk slept through inflation rises.
- <29:51> Will summer travel ever be the same again?
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
More Action in The Chip Space, AMD to step up India presence.
I recall meeting with Srini Rajam, who had set up Ittiam Systems in Bangalore, many years ago. Ittiam makes Digital Signal Processors and is considered one of the first companies to build intellectual property which it could licence out in this case for audio and now video codecs.
Rajam came from Texas Instruments which of course had been around in India for much longer. It started in 1985. Intel, Texas Instruments, and Qualcomm are in Bangalore and many of them do the core design for semiconductors which make up more than 50% of the value of the chip.
These engineers are in India though developing products for their parent companies mostly in the United States.
India of course is now in a furious race to start building semiconductors in India and several projects have already been announced as we have discussed in previous episodes.
The last week also saw a major conference held in Gandhinagar, the same place that hosted the finance ministers and central bank governors for a G20 summit the week before, this time to woo investors in Semiconductors.
Prime Minister Modi said India was a viable chipmaking hub. “Earlier, people were questioning our aim to make chips and were asking ‘why invest (in India)’. Now, the question has changed to ‘why not invest,’” PM Modi said. “We are rolling out the red carpet for investors,” Modi said.
At the same time, American semiconductor company Advanced Micro Devices (AMD) announced plans to invest $400 million in India over the next five years.
The planned investment includes a new AMD campus in Bangalore though, that will serve as the company’s largest design centre, as well as the addition of approximately 3,000 new engineering roles by the end of 2028. The AMD new campus is expected to open before the end of 2023.
AMD has been here for more than 22 years, since 2001, when its first site was established in New Delhi. The upcoming new 500,000-square-foot Bangalore campus is said to increase its office footprint to 10 total locations across Bangalore, Delhi, Gurgaon, Hyderabad and Mumbai.
"From a handful of employees in 2001 to more than 6,500 employees today, AMD has grown its India footprint based on the strong foundation established by our local leadership and the highly skilled talent pool,” said Mark Papermaster, executive vice president and chief technology officer, AMD.
AMD is not of course alone. All other chip companies are here as I mentioned earlier.
The investments are all lining up though it looking like more of the hardware will happen in Gujarat - where Vedanta which is working on reviving a venture that had Foxconn as a partner earlier - will come in while all the design companies are more likely to be in Bangalore or around that, where they already are, sitting in the very companies that have been around for decades, including AND of course.
All scenarios are of course fine but it will be interesting to see how and where the investments specifically flow within India.
Speaking about investments, last week, the BSE benchmark fell by 524.06 points and on Friday, July 28, the 30-share BSE Sensex fell by 106.62 points to settle at 66,160 while the NSE Nifty declined 14 points to finish at 19,646.05. The BSE benchmark had hit its lifetime peak of 67,619.17 on July 20.
The week ahead has many things to look out for, including of course results season which continues and another batch of IPOs, including a non bank finance company and a pharma company. The proposed raises are large, between Rs 1000 to Rs 1500 crore for the two, apart from 3 smaller IPOs.
Can India Government Be Taken To Court On Cough Syrups Case
A presidential task force has recommended the Gambia government to explore legal action against the Indian government, Maiden Pharmaceuticals and a local drug importer for deaths of 70 children last year due to kidney injury allegedly caused by India-made cough syrup, the Economic Times is reporting.
"It is safe to conclude, without any qualms, that the deaths of the 70 children below the age of five between July and October 2022 related to acute kidney injury (AKI) are a direct result of contaminated medicines found in four cough and cold syrups imported by Atlantic Pharmacy from Maiden Pharmaceuticals in India," the task force said in its report.
Gambia is a small country located on the West African coast and has a population of around 2.9 million.
The cough syrups were found to have been contaminated with cheaper substitutes.
While deadly cough syrups have been making the news for the right reasons, there are other medicines too which are turning out to be contaminated in India, again for various failures, advertisement or inadvertent in the manufacturing process.
Last week, Bloomberg News reported that a cold medication made in India and sold in Iraq is tainted with toxic chemicals, according to tests commissioned by the news agency itself.
A bottle of Cold Out purchased at a pharmacy in Baghdad in March contains 2.1% ethylene glycol, according to Valisure LLC, an independent US laboratory.
That’s about 21 times the widely accepted limit. The compound is lethal to humans in small amounts and played a role in mass child deaths caused by Indian-made cough syrups in Gambia and Uzbekistan last year, Bloomberg said.
To return to Gambia, could the sovereign of India be taken to court and in any case what is the current status on this matter which made headlines almost a year ago. To discuss this I am joined by Murali Neelakantan, Principal Lawyer at amicus and earlier global general counsel with Glenmark Laboratories and Cipla Laboratories.
Will A New Gig Workers Bill Help Them ?
The state of Rajasthan has introduced a new bill to protect gig workers, a subject that has seen much discussion, particularly in the last few years in step with the rise of the gig economy but not much action.
The Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill extends “rights” to gig workers, such as being registered with the state, having access to general and specific social security schemes, and having an opportunity to be heard for any grievances, among others.
An important component of the Rajasthan law is the setting up of a Platform Based Gig Workers Welfare Board with multiple stakeholders present apart from Government.
There has been much clamour for laws that support gig workers who are informal and yet more visible than say traditional informal economy workers who in any case represent around 90% of India’s workforce.
The Rajasthan bill is a step in this direction but it is not clear how it would work, particularly when no other state has similar laws or how companies with pan India presence will comply that easily.
It does however seem like a first step towards formalisation. Or is it not ?
I tried to pose two questions, first, what does this bill say and mean. Second, where do gig workers in general stand post this move particularly in other parts of the country ?
To do this I reached out to Sabina Dewan, President of JustJobs Network, a global research organisation with an India presence and which produces empirical research on job creation and workforce development.
Getting Inflation Right, the UK response.
Of course, not everyone times the perfect response to inflation, like raising interest rates just when it could start cooling prices and not allowing citizens to be exposed to runaway prices and costs.
This happened in England though and it is widely acknowledged that the UK was slow to respond thanks to which much damage was caused and continues to be to household finances among others.
The Bang of England, UK’s central bank is doing a review now to find out why they underestimated a surge in prices that began more than 2 years ago and made life difficult for citizens, the WSJ is reporting.
The interesting thing is the person who has been hired to do this.
It is Ben Bernanke, the former Federal Reserve Governor, a move which would surely be ranked as anti-national in some countries.
Imagine calling someone from across the pond to find out why we messed up and so on. Though this is not the first time former Federal Reserve officials have been roped in by the BOE.
UK consumer prices had begun to zoom in early 2021 as post Covid demand took over even as supply chains were still choked. The Russian invasion of Ukraine of course did not help matters. With the result that inflation in the UK peaked at 11.15% in October last year.
It has come down since then to 7.9% but still some 4 times what the Bank of England would like. An inflation rate of 2% is what most western central banks are okay with. At this level, just to remind you, me and ourselves, it is higher than India which is at 4.81%. Such a reverse differential is rare.
In June, a committee of lawmakers had called for a review of the BOE’s forecasting process and the BOE has acknowledged that it has made mistakes, reports the WSJ.
The findings of this review by Bernanke will be published in spring 2024.
No, I am not making a case for any such review of the RBI’s actions in the middle of last year.
Though economic journalist and columnist Shankkar Aiyar did say in May 2022 that while the world was on fire with inflation, the Reserve Bank of India was hemming and hawing.
He did also write then that there was a perception in the financial markets that the RBI is second guessing the union government and the oft-repeated theory about lower interest rates helping government borrowing as also enabling investment and growth.
He also pointed out that rising inflation can derail the sustainability of the interest rate to growth rate matrix. And finally, that the RBI, to preserve its autonomy and credibility, needs to act autonomously and credibly.
Speaking of inflation in general and not the RBi, the US Federal Reserve approved an expected interest rate hike that takes it to a 22 year high. The only good news was that the markets had completely priced in the rate hike. The target range would be 5.25% to 5.5%.
Summer No More
Starting April to the second week of July, give or take, many well heeled Indians head for Europe, UK and the United States. So much so that people often quip that you are more likely to see your neighbour from Delhi or Mumbai in London in these months than maybe you would back home. This is of course the neighbour you didn’t want to see at any time or anywhere.
Many of these travellers from India have now returned, as schools have reopened and presumably work beckons for the parents.
Might this change from next year ?
Writer and historian Nial Ferguson writing in Bloomberg says an entire economic system has evolved to meet our needs. He is of course referring to people in the west flying within the west, from North America to Europe and vice versa and in and around.
Heat waves are changing all of this.
According to him, Marriott is the largest international hotel chain in Spain with a total of roughly 14,000 rooms, but the Spanish Meliá Hotels has more than twice that number, and has seen its stock fall by half over the last five years.
Rising global temperatures he says would appear to be killing this version of summer, referring to the fun, frolic and beaches. “None of what I have just described is enjoyable if the mercury is above 30 degrees C (86 F). Indeed, sunbathing becomes life-threatening. And who wants a week on Corfu if a large tract of the island is ablaze? This summer in southern Europe has been less Barbie, more Oppenheimer.”
He quotes figures to say there are 2.7 times as many days with mid-afternoon temperatures above 30 C in Athens; 3.7 times in Barcelona; 8.1 times in Paris; and an amazing 10.4 times in London.
All these cities are close to the sea, so it is not surprising that popular summer seaside destinations — such as France’s Côte d’Azur and Martha’s Vineyard — have also been notably warmer in recent years than they were in the 19th and 20th centuries.
And by the way, the Wall Street Journal has three articles on Summer Heat on its home page, ranging from Houstonians, America’s fourth largest city moving indoors to streets getting so hot it is burning and when to go inside..
Back to India and Indians, we are of course not as affected by heat.
Rajesh Poddar, Western Region Chairman of the Travel Agents Association of India tells me this season has gone fine but of course we don’t know about the next. And people are still booking tickets for Greece though a few months later.
Also, many people did not get visas for Europe this year. Maybe they would thank their stars that they did not revisit a Delhi summer while trying to get away from it.
Instead they went East, to Vietnam, Hong Kong, Singapore among others.
In the next year or so, more non stop east-bound flights are starting or restarting including to destinations like Bali which is dealing with an overdose of tourists from Russia and Ukraine.
Will extreme weather affect travel plans to these destinations? Maybe, maybe not, though Indians are particularly resilient travellers, landing up in Thailand in the middle of civil unrest some years ago while most other tourists had fled.
The urge to get away somewhere for those few months is strong. But next year may be tougher or as tough. It will not be all that much fun, particularly for big families with children.