📰Yet Another Step Forward for Global Investment | Daily India Briefing

Just days after passing a landmark bill to allow for increased global investment into India’s insurance industry, the Indian parliament passed a bill to open its nuclear industry to foreign investment. Today, we discuss what this means for India’s economy.

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Macro

• The rupee rose 1 percent to 90.09 after RBI intervention, the most in 7 months. Some analysts believe that the RBI wanted to dispel the sense that the market was taking rupee depreciation lightly. The moves are more similar to former Governor Das who was more open to dollar sales. 

• A fleet of Russian Urals has expanded over China's East Coast with India not buying as much.5 vessels carrying 3.4 million barrels are now parked there, more than double last week. It is unclear if the barrels are still being marketed or if they have been sold to Chinese refiners.  

Equities

• E-commerce platform Meesho has risen 95 percent and is valued at $11 billion (₹992.2 billion) after IPOing. While e-commerce is crowded, Meesho has carved a niche by focusing on middle- and lower-class customers in tier 2 and 3 cities.  

• Aditya Birla's Nifty 50 ETF is up 12 percent due to tendering shares of an IT company doing a buyback. It's the only fund in its peer group outpacing the gauge, despite the management fees that normally drag ETFs down. The IT company has not been named by the ETF managers. 

• Maruti Suzuki expects new EVs to make up 45 percent of its Indian sales.The company is growing closer towards selling more electric vehicles than gas-powered ones, with the current ratio at 37 percent. They are also investing $28 million (₹2.5 billion) into charging and EV infrastructure.

Alts

• Star Air, India's largest regional airliner, is considering buying 20 Embraers for $1 billion (₹90.2 billion). The deliveries are going to start in spring 2028 and continue onwards. 

• Mizuho is buying a KKR-backed investment bank for an Indian expansion.The purchase price of 78.3 percent of Avendus is $521.1 million (₹47 billion) which will become Mizuho’s largest investment and holding in India. Avendus is a leading-player in India’s wealth management, asset management, and banking space.

Policy

• SEBI caps brokerage fees paid by mutual funds to 6 basis points, aside from other charges. The move should attract more investors who use typical savings instruments. Only 10 percent of Indians invest in stocks, bonds, or mutual funds.  

• The CM of Tamil Nadu said that export orders are drying up, costing $6.7 million (₹600 million) in daily losses.There have been massive knitwear losses, with production cuts up to 30 percent. The textile exports of Tamil Nadu are 28 percent of the nation’s total and leather and footwear is 40 percent of India’s total exports.

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Yet Another Step Forward for Global Investment

Just days after passing a landmark bill to allow for increased global investment into India’s insurance industry, the Indian parliament passed a bill to open its nuclear industry to foreign investment. Estimates show this unlocks around $214 billion (₹19.3 trillion) in investment opportunities. Modi is using the bill to grow nuclear capacity by 11x. The bill will now to go to the president’s desk for approval. 

Global interest in nuclear has risen with nations getting over the Fukushima disaster in 2011; Japan, China, Bangladesh, South Korea, and the EU are reopening interest in atomic energy. India’s new law abolishes the decades-old state monopoly in atomic power by reducing liability provisions that made investment difficult earlier. 

A large proponent of the bill, nuclear energy minister Jitendra Singh also is defending the choice to open the sector to foreign investors due to global pressure. Global nuclear capacity will likely double to 860 GW by 2050, requiring $2.2 trillion (₹198.4 trillion) of investment. Predicted future capacity keeps rising, with Morgan Stanley increasing their own prediction by 50 percent from last year’s forecast, due to the rapid energy use from AI.  

India should lead these additions if it wants to reach its goal to have 100 GW of capacity by 2047. Modi’s goal is to attain energy self-reliance and become a developed nation. The latter goal will require a much higher energy consumption and supply: India's per capita electricity consumption is well below half of the global average. Currently India’s energy demand grows by 0.1x for how much GDP grows, but historically it was 0.9x which would require multiple magnitudes of growth. 

The old controversial liability law being overwritten was introduced in 2010 due to public pressure. Suppliers would have damage claims in the event of an incident and allowed additional litigation under various other laws. The new bill spares these suppliers from liability and eases terms for operators. There is a cap on liability according to reactor size plus the government sets up a liability fund to handle claims exceeding those caps. The only major opposition was that profits were being privatized while the liability fund could be filled with taxpayer money, thus publicizing risk. 

The federal law also stands above state regulation relating to nuclear but the government is not privatizing all factors of the industry. All mining and processing of nuclear materials and nuclear power prices will remain under state domain.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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