Can Australia balance its Pacific Ocean strategy (USA) with an Indian Ocean strategy (India)? Seems it can.

The four leaders of the QUAD – a new closeness transforming this region

There’s a big change happening and it is spearheaded by the new dynamic of the Australia-India trade and security relationship – this is growing to provide a balance for Australia’s historic close alliance with the USA.

INTO INDIA has long felt that Australia has “looked north east” for too long and now is looking more “north west”.

For a while our diplomats and politicians talked about “the Indo-Pacific” as a way to introduce the change. But it is not a sustainable concept and there is no such region.

Australia has a Pacific Ocean strategy (USA) and is now building an Indian Ocean strategy (India). These relationship shifts affect our defence and security, as well as our trade and investment.

Matching that change, it is more than symbolic that an organisation such as the Australia India Chamber of Commerce is focussing on the key industry areas of greatest potential under the deal – and moving away from the old “federal” and state based approaches. Great! Under the old structures, outcomes were often lost in rivalries and politics.

The AICC model has one national organisation – supported by National Industry Groups. This frees up resources to make a difference.

So far the NIG’s include Education, Power and Renewables, Critical Minerals, Defence and Security, and Technology and Innovation. Small steps, but steps they are!

One step at a time, one change at a time, at so many levels, Australia is looking “north west” and taking a role in the Indian Ocean region by a close relationship with the new regional and global power, India.

The new strength of the QUAD (India, Japan, USA and Australia) is also part of the change and the new world of moving alliances.

If the move keeps going, Australia will have strength in two main regions and close relations with two major powers – India and the USA.

4 Indian cities rank in top 20 sustainability index for Asia Pacific

Pictured is Bengaluru (Bangalore) among the top Indian cities for sustainability

According to the Asia Pacific Sustainability Index 2021, the top 20 sustainable cities include four Indian cities: Bangalore, Delhi, Hyderabad, and Mumbai.

36 cities were ranked according to the APAC Sustainably Led Cities Index by global real estate firm Knight Frank based on urbanisation pressure, climate risk, carbon emissions, and government activities.

Singapore, Sydney, Wellington, Perth, and Melbourne were the top five green-rated cities in commercial real estate in the Asia-Pacific region.

Some straight talking on climate change and public policy

Patrick Suckling presents the clearest short paper on climate change and what we urgently need to do

Patrick Suckling is a non-resident Senior Fellow of Asia Society Policy Institute and former Australian Ambassador for the Environment – and former Australian High Commissioner to India.

He has written one of the clearest – and briefest – papers on the importance of climate change and how we need to respond.

Highly recommended reading –

Indian Budget 2022 – 6 takeaways

Finance Minister Nirmala Sitharaman delivers the 2022 Indian Budget

Finance Minister, Nirmala Sitharaman has delivered the 2022 Indian Budget – here are my 6 takeaways:

India is the fastest-growing large economy

At 9.2% for 2021-2022, India’s GDP growth will be the fastest of all the large economies.

Launching a digital currency

Indian minister’s 2022 budget speech focused on various incentives to boost India’s digital economy, including the launch of a digital rupee within 2022. Minister Sitharaman noted that the central bank digital currency will “give a big boost to the digital economy and lead to a more efficient and cheaper currency management system.”

India is going green

Calling climate change one of the highest external risks facing the country and the green economy a sunrise economy, the finance minister presented multiple proposals and pathways to climate action across different sectors. These include raising climate finance and developing greener public transportation.

Emphasizing inclusive development

The pandemic financially hurt millions of Indian families and analysts have warned against the threat of growing inequality amidst the pandemic. Prime Minister Modi’s government has, since 2014, laid a strong focus on citizen empowerment. India 2022 budget aims to expand its support for Indians, particularly vulnerable groups such as girls, women, senior citizens and farmers. The budget expands social welfare support, while economically empowering marginalised groups through job creation.

Expanding education and mental health care

The pandemic has meant that many Indian school children have lost up to 2 years of valuable schooling. Major educational programs include expanded digital tools for schools in remote regions.

In a significant move, Minister Sitharaman announced the launch of a National Tele-Mental Health Programme, which, built around 23 core health centres, will provide citizens with access to quality mental health counselling and care services.

But Covid is the big concern this year

With a new growth in Covid numbers, there is growing concern that the pandemic could hit India big again this year and could impact the budget numbers.

India economy has weathered the pandemic and set for growth – ASK Capital Management report

ASK Capital Management is a Singapore based entity with a focus on managing and advising India centric investments for institutional and family office clients. Their latest report shows how the Indian economy has weathered the pandemic and is set for growth:

This report relates to ASK India Opportunities Fund – Fund 1

The rapid rise in COVID cases due to the new Omicron variant, hawkish tone by major Central Banks around the world and persistent inflation contributed to a volatile December for the global equity markets. Despite this the markets ended on a positive note with most markets registering positive returns in the month. India was amongst the better performing markets with benchmark BSE500 ending up 3.2% in USD terms while the Fund was up 2.7%, net of fees in December. For the year 2021, the Fund returned 29.7%, net of fees compared to 27.6% for BSE500.

After another year spent in the shadow of the COVID, we begin 2022 with a new variant of the virus disrupting resumption of normal life. This, along with inflationary pressures and a move away from high liquidity and accommodative stance of Central Banks are the biggest risks to global economy for the year. While the new variant of the virus appears less fatal, the disruption means global supply chain issues will take longer to resolve. Tighter liquidity and end of cheap money means investors will have to temper expectations of returns in the new year and bottom-up stock picking will become crucial differentiator.

The Indian economy has weathered the pandemic induced slowdown well due to the proactive and effective steps taken by the RBI and the Government. The economy is above pre-COIVD levels in size and expected to grow around 9% in FY22 and 7.5%-7.9% in FY2023 by various estimates, one of the highest growing major economies in the world. As described in the past, lower debt on corporate balance sheets, controlled NPAs in banking sector and Government policies such as “Make In India” and Production Linked Incentives (PLIs) for various sectors should revive a domestic capex cycle.

While the recovery in India has been strong, it has also been uneven with the rural segment affected more from the Delta variant in Q1FY22. This should normalise over the course of the year and aid in demand recovery. Similarly, hiring activity continues to remain strong which should support demand.

As commodity prices and inflation stabilise, companies should report increase in margins over the coming quarters as prices increases are passed on to consumers. Thus, companies with higher pricing power and better cost controls should be able to deliver superior earnings growth with likely increase in market share. This has historically been the case for our portfolio companies, and we see no reason that this cannot be the case again. Our expectation is for the portfolio to deliver an average earnings CAGR of 26% over the next 3 years.

During the month we exited from Pidilite Industries and added Avenue SuperMart to the portfolio. We believe Avenue SuperMart is a well-oiled business model in a large opportunity landscape with a strong focus on low procurement and operating costs. Its store ownership model, right store size and low supply chain cost with auto replenishments help it to maintain low operating cost to achieve the key pillar of its success – everyday low cost and everyday low price. In a predominantly food and grocery business (52% revenue contribution) with wafer-thin margins (15% gross margin), the company is able to offer everyday low pricing, unlike peers that offer discounts on select days in a week or month, creating a competitive edge.

Contact:

Nikhil Iyer, CFA, Head of Institutional Business, APAC

ASK Capital Management Pte Ltd

m: +65 83800064 EMAIL nikhil.iyer@ask-capital.com

https://www.askfinancials.com/

Will 2022 see continued “hard diplomacy” or can we embrace “smart” and “soft” diplomacy?

INTO INDIA wishes you all a peaceful, prosperous, safe and healthy new year for 2022. This is our last post for this year.

The question for next year is how will we all get on better than we did in 2021?

I hope we will see “smart diplomacy” dominate next year – this is the kind of diplomacy that works with cultural and cross border differences. It is not insulting and does not force the other country into an aggressive response. It takes into account major global shared challenges such as climate change, Industry 4 and the continuing pandemic.

It is “smart” to talk to other countries in a way which allows them to make their own positive contribution to the debate – does not corner them into hostility.

Australia has done some “smart” diplomacy things this year – such as using former Prime Minister Abbott as a special envoy, a move well received in Asia.

Hoping countries will all be a lot smarter in 2022.

It would make it a good year for all of us.

8 things we need to know about India

Confident young Indians like these are driving new entrepreneurial spirit

CAUTION – generalisations are just that, and you will almost always encounter those who do not fit in this list. This is offered to assist those visiting India for business, education or tourism.

1. Successful and confident

Economic success has restored Indian confidence. Indian entrepreneurs are now recognized around the world and there is a national expectation that the next Bill Gates will be an Indian. This entrepreneurial spirit permeates the nation (most dream of becoming entrepreneurs) which is now confident.

2. Never forget rural people

Indian business and political leaders may live the urban lifestyles, but they do not forget the small towns and villages at the centre of rural life – and it’s not just the politicians with an eye for votes, with major corporates such as Infosys pouring resources and funding into village developments.

3. Avoid pointing the finger

Indians become instantly passionate when challenged on subjects like their high tariffs, especially if the challenge comes from the west. The message is, point the finger at India and you can expect a robust response.

4. Oceans of patience

Indians have oceans of patience which can drive westerners crazy, but it gives them a special strength in negotiations. This patience is derived from deeply held spiritual views such as impermanence – Indians are constantly reminded of the impermanence of this life, everything changes, and they can wait when often we cannot. Who has the advantage in this situation?

5. Not just an IT miracle

Do not be fooled with the view that the Indian economic miracle is just driven by call centres and IT. Important as these are, look also at insurance, energy, retail, clean technology, manufacturing, pharmaceuticals and even agriculture as areas where efficiency is producing startling results.

6. Not especially “Asian”

While India feels great about the success of “Asia”, in many ways it does not feel particularly “Asian”. First and foremost, Indians feel Indian, and to them that is vastly more relevant than being geographically part of Asia.

7. Remember the “Father of the Nation”

Whether dealing with the young or the old, in India never forget the “Father of the Nation”, Mahatma Gandhi.

8. Equity up there with democracy

Partly because of Gandhi, Indian leaders are more concerned with equity than with spreading democracy around the world – and cannot understand the enthusiasm of the USA and its allies to champion democracy in unlikely locations.

New “Business Champions” group to provide much needed top level links between India and Australia

Indian Commerce Minister Mr Piyush Goyal

A new “Business Champions” group will lead top level business engagement between India and Australia – and it was launched last week in India.

INTO INDIA welcomes this move to bring the “top end” of both countries together. Business engagement at this level has not worked well in the past. Most of the business councils and chambers have provided lower level SME engagement – important as this is.

“Supply chains” is behind the enthusiasm of India for the new Australia-India Business Champions Group’s role. Mr. Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution, Textiles, Government of India said this when addressing the Inaugural Meeting of the Australia India Business Champions.

The Minister is co-chairing the group with Australian Trade Minister, the Hon Dan Tehan.

“The Australia-India Business Champions Group’s key aim is to liberalise and deepen bilateral trade between both the nations and pave the way for collaborative economic growth.” stated Mr. Dan Tehan MP, Minister of Trade, Tourism and Investment, Government of Australia.

Major business organisations leading the group are the Confederation of Indian Industry (CII) and the Business Council of Australia (BCA). Both represent almost all the major business corporations in both countries.

Mr. Chandrajit Banerjee, Director General, CII, pointed to areas such as mining, education, defence, space and emerging sectors which the group can take forward.

Ms. Jennifer Westacott AO, CEO, BCA, highlighted that we must strengthen and reform regional and global institutions, so they deliver for our citizens.  She said the Business Champions would engage directly with the top tier of Australian and Indian Governments on matters critical to business. 

Other panelists at the meeting included H E Mr. Manpreet Vohra, High Commissioner of India to Australia, H E Mr. Barry O’ Farrell AO, High Commissioner of Australia to India, Dr. Anish Shah, MD & CEO, Mahindra & Mahindra Ltd, Ms. Julie Shuttleworth, CEO, FFI, Mr. Rakesh Bharti Mittal, Vice Chairman, Bharti Enterprises, Mr. Mike Cannon-Brookes, Co-Founder and Co-CEO, Atlassian, Mr. Nitish Jain, President, SP Jain School of Global Management, Ms. Verena Lim, Asia CEO, Macquarie Group, Mr. Girish Ramachandran, President, Tata Consultancy Services Asia Pacific, Professor Duncan Maskell, Vice Chancellor, University of Melbourne.

Australia: home to 48 of the world’s top 50 most innovative companies

Bosch and Monash University team up on “smart agriculture”

When you think Australia you might call to mind minerals, vast fields of agriculture or cricket.

But there is another reality about Australia – it’s a smart place.

International companies are leveraging Australia’s talent, government support and research to boost productivity, competitiveness and growth – according to data from Austrade and Boston Consulting Group.

Forty-eight out of Boston Consulting Group’s top 50 most innovative companies operate in Australia. These companies have partnered with Australian organisations to research additive manufacturing, renewable hydrogen technology and cloud supercomputing, among other areas.

Advanced manufacturing: General Electric

GE subsidiary GE Additive and the University of Sydney are establishing a high-tech manufacturing hub. The Sydney Manufacturing Hub will advance Australia’s capability in metal additive manufacturing technology.

Agricultural technology: Bosch

Bosch Australia and Monash University are co-developing Australia’s first smart agriculture research facility. The facility will contain a prototypical ‘smart farm’ to test: artificial intelligence; automation; robotic and advanced sensor technology solutions

Energy: Hyundai

Hyundai, Fortescue and CSIRO are working together to develop renewable hydrogen technology. The group seeks to:

  • develop new hydrogen technologies with the potential for bulk transport
  • build a renewable hydrogen refuelling facility, to deploy hydrogen fuel cell coaches
  • build the first combined hydrogen production and refuelling facility in Western Australia. 

Healthcare: Johnson & Johnson

The Johnson & Johnson Innovation Partnering Office @ Monash is a hub for researchers and early-stage companies. The facility allows them to develop novel pharmaceutical, medical devices, and consumer healthcare solutions.

Technology: Amazon Web Services and Intel

Amazon Web Services, Intel and AARNET established Australia’s first cloud supercomputing facility. Based at RMIT University, the facility focuses on advanced data processing and computing.

So, from the land of minerals, farming and cricket – there is also an advanced technology reason to team up with the Aussies.

Australian critical minerals, infrastructure, energy, technology, agribusiness, education and space – step up to the table for FTA talks with India

The Australian Trade Minister, The Hon Dan Tehan MP, last week pointed to Indian FTA priority areas such as critical minerals, infrastructure, energy, technology, agribusiness, education and space.

He announced a speeding up of talks with India last week and chose the launch of the Canberra chapter of the Australia India Chamber of Commerce to also announce an update of the India Economic Strategy.

This is a great time for business to step forward. You can have a say. You can be at the FTA discussion table.

The Minister said he had asked former Prime Minister, Tony Abbott, to visit India for meetings around the Comprehensive Economic Cooperation Agreement (which is an FTA).

He announced to the AICC that both countries were hopeful of concluding negotiations this year – a dramatic ramping up of the pace.

The AICC has the Hon. Ted Baillieu AO as its Founding Patron.