The Weekly Wrap | On Cloud Nine

In this edition, we talk about Amazon’s multi-billion-dollar investment in India and why Tesla is looking to take an about-turn. We also talk about the government’s push to the IT hardware industry and the demise of Hinduja Group patriarch SP Hinduja.


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If you live in New Delhi or its nearby areas, you wouldn’t be at fault if you thought that this week’s newsletter is about the unusually cloudy atmosphere that the national capital region has been seeing this summer. But no, we aren’t talking about the gas giants that float above our heads. We aren’t talking about clouds of the philosophical kind either. Instead, we are talking about the cloud that has attracted the world’s tech giants towards India. Inc., the world’s biggest online retailer and the largest cloud services provider, said this week its cloud computing unit—Amazon Web Services (AWS)—will invest Rs 1.06 trillion ($12.7 billion) in India by the end of 2030.


AWS will use the investment to build its cloud infrastructure in India and support over 100,000 full-time jobs annually. This takes the company’s total planned investment in India to about $16.4 billion by 2030.


Moreover, this investment is in addition to the $6.5 billion that Amazon has invested in the e-commerce sector in India, where it has rapidly grown over the past decade despite a harsh regulatory environment.


Amazon’s move is significant. India has been trying to attract big-ticket investments in the technology sector, and both Microsoft and Google have also ramped up cloud investments in the country as the government pushes tech companies to store data locally.


Outside the cloud sector, too, India has attracted high-profile investments in recent months. iPhone maker Apple Inc. has opened two flagship stores in India and its main Taiwanese supplier, Foxconn, will invest $500 million to set up factories in Telangana. U.S. networking equipment maker Cisco Systems is also starting manufacturing from India.


And then, there is Tesla.


Tesla’s turn


Last year, the U.S. electric car maker said it wanted India to slash import taxes on cars before it could consider setting up shop here. India imposes import taxes of as high as 100% on cars, and foreign automakers have been asking for tax rationalization—a demand that the government has denied.


Now, however, Tesla is relooking at the possibility of entering India. This week, senior Tesla executives held talks with Indian government officials about incentives being offered for car and battery manufacturing. The government is giving incentives totalling $6 billion to boost EV sales and manufacturing. 


Tesla has proposed setting up a factory in India to build electric vehicles and is also discussing plans to locally manufacture EV batteries. If Tesla does set up a factory in India, it would only be its third outside the US.


Tesla has a plant in the Chinese mega city of Shanghai—its largest factory worldwide—and one in Germany.


Tesla’s shift in stance comes as India’s automobile market—the world’s third largest—has rebounded strongly after the slowdown in 2020 and 2021 due to the Covid-19 pandemic. 


The government’s ambitious target of ensuring EVs account for 30% of total car sales by 2030 from barely 1% currently is further encouraging both local and foreign automakers to redraw their expansion strategies.


So, if you always wanted those spectacular Tesla cars, your wait may end in the next few years.



PLI push



The government doesn’t just want companies to make high-end EVs or set up cloud infrastructure in India; it also wants to boost local manufacturing of everything from laptops and tablets to servers and other electronics products.


This week, the government rolled out an expanded production-linked incentive, or PLI, scheme to attract investments in IT hardware manufacturing. The government decided to double the incentives to $2 billion to help companies such as Dell, Dixon Technologies, and Apple suppliers Wistron Corp and Foxconn. The original plan had an outlay of $1 billion and was announced in February 2021.


Rajeev Chandrasekhar, the Minister of State for IT, said the expanded programme will create additional incentives for companies to set up their manufacturing base in India.


The revised plan will be for six years. These companies are expected to produce nearly $41 billion of IT products and create more than 75,000 jobs, the government said. The expanded scheme will not only help meet the domestic demand for IT products but also reduce reliance on imports and boost exports.


Indeed, India imported a whopping Rs 5.5 trillion worth of electronics goods in the last fiscal year, much more than our gold imports and nearly half of our crude oil shipments. 


However, unlike oil, we can produce electronic products locally and that is why the government is leaving no stone unturned to attract big brands to make in India. Still, there are miles to go before India becomes a net exporter of electronic products.


SEBI in action


The Securities and Exchange Board of India has proposed to bring greater transparency in the cost mutual fund charge unitholders by suggesting a uniform total expense ratio or TER.  



Currently, mutual fund schemes are allowed to charge certain expense to unitholders over and above the TER. SEBI has proposed that all expenses, even the GST paid on management fees, should be part of TER. 


“TER reflects the maximum expense ratio that an investor may have to pay and hence it should be inclusive of all the expenses permitted to be charged to an investor and the investor should not be charged any amount over and above the prescribed TER limits,” SEBI said in its consultation paper.


The capital markets regulator has also suggested that unitholders must get an option to exit a scheme at prevailing net asset value without any exit load in case a fund house has to raise its TER.


SEBI has also proposed to allow any fund that does better than benchmark to charge higher fees.


SP Hinduja passes away


Indian industry lost one of its most well-known businessmen this week. Srichand Parmanand Hinduja, the chairman of the Hinduja Group, died on Wednesday in London. He was 87 and had been ill for the past few years.


Srichand, or SP as he was also known, was the eldest of four brothers—Gopichand, Prakash and Ashok are the others. He was born on Nov. 28, 1935 in Sindh, now in Pakistan.


The Hinduja Group’s origins date back more than a century. The group was started by their father, Parmanand Deepchand Hinduja, in Sindh before establishing business in Iran in 1919. 


Over the years, the group expanded into areas ranging from movie distribution to automobiles, banking and energy. The group’s main businesses now include bus and truck maker Ashok Leyland, lubricants maker Gulf Oil International Company and IndusInd Bank. 


But the group also had its share of controversies. In the 1980s, their name was dragged into the Bofors scandal. More recently, the brothers had been fighting over the family fortune. The family members had agreed on a truce last year but they are still said to be privately disputing certain issues.


How big is the family fortune anyway? Bloomberg estimates the family’s collective wealth at about $14 billion. This makes them the wealthiest family in Britain. 


Market Wrap


The stock markets fell in three out of five sessions this week, ending the five-day period with a loss as investors booked profits after a recent rally. The 50-share Nifty dropped 0.6% this week and the 30-share Sensex ended the week down around 0.5%. 


The stocks that gained the most during the week included Hero MotoCorp, IndusInd Bank, Indian Oil, Vedanta and Tech Mahindra. Others that also ended in the green were Coal India, Infosys, Tata Motors and Bharti Airtel. 


The stocks that lost the most value during the week included Britannia, GAIL India, NTPC and Asian Paints.


Other headlines


  • SBI Q4 net profit surges 83% to Rs 16,695 crore, tops market estimates
  • ITC Q4 net profit rises 21% to Rs 5,087 crore on steady demand, beats estimates

  • Thermax Q4 profit jumps 52% to Rs 156 crore, exceeds expectations

  • SBI Funds gets RBI nod to buy up to 9.99% stake in HDFC Bank
  • Future Retail gets six bids for bankruptcy resolution
  • Tata Sons Chairman Chandrasekaran gets France’s highest civilian award

  • Mondelez appoints Samir Jain as president of India business

  • Vedanta appoints Sonal Shrivastava as CFO
  • Reliance’s JioCinema unveils pricing in fight with Netflix, Hotstar
  • SpiceJet subsidiary SpiceXpress to get $100 million from UK group
  • Jupiter Life Line Hospitals files documents for IPO


That’s all for this week. Until next week, happy investing!



Interested in how we think about the markets? Read more: Zen And The Art Of Investing    


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