India`s wheat export ban - Is it in right direction?

Having built up 3 major global marketing bases from India in chemicals, metals, and telecom cables businesses, one of the questions that I was constantly asked was whether Indian companies will prove to be reliable and consistent suppliers over a long term in the international markets.

In all products that I dealt with, due to import duty benefits in India, profitability from the domestic market was higher than the international markets.

Secondly, with the Indian market size growing normally every year, allocation to international markets was always under pressure every year.

Thankfully, all the businesses that I built up have sustained over the last many years.

The Indian government has been highlighting India`s exports crossing $400bn in the last fiscal year. If India has to sustain this performance consistently, Indian companies will have to prove themselves to be reliable and consistent suppliers over a long term.

In this background, the Indian government`s decision to ban wheat exports isn’t in the right direction. This move by the Indian government to curb exports will have the following repercussions-

1. Construed as a bad signal for India`s global market ambitions. True, it was done to ease inflation, but a phased movement to curb exports would have been better.
2. Detrimental to its ambitions as a global superpower and playing an influential role in global politics.
3. Indian Government could have used these high export prices to push through the contentious “Farm Laws” with the farmers' unions, as Indian farmers were earning more by selling to private exporters, which was exactly the basic motive of the farm laws.

Indonesia, a global major in the palm oil business, should be taken as a cue. It had banned exports for a short period of time but reversed the ban as prices cooled off and she was earning a bad reputation in the global market.

I sincerely hope that the wheat exports ban is revoked by the Indian government in a short time as prices cool off in Indian markets. Hopefully, good monsoons will provide the much-needed boost to wheat production.

I also hope that structural reforms are ushered in the agriculture sector to make India a global major in the international food supply chain.

Invite critical views and thoughts.

India`s new Non -Aligned foreign policy

India`s recent so-called "Non-Aligned Foreign Policy (NAFP)", in the context of the present global turmoil, is completely different from the Non aligned foreign policy propounded by Jawaharlal Nehru and Indira Gandhi in the 1960`s / 1970`s.

1) Previous NAFP was an inward-looking policy that shut India off from global markets and pursued nation-building efforts that bore little fruit.

2) Present NAFP followed by the present NDA government has its tenets on -

(a) Geopolitical issues with neighbors,

(b) Energy security,

(c) Defense security,

(d) India`s trade in the global arena.

3) India's neighbors are a powerful China which is slowing down a bit, Pakistan which is in a political turmoil, Sri Lanka whose economy has collapsed completely and a growing economic star in Bangladesh. It was not very far in the past when the situation was completely different - China with its economic clout, Pakistan with its belligerence towards India and backed by China, and Sri Lanka too backed by China.

4) India`s growing economy needs to secure its energy imports and hence non alignment helps it to get cheap Russian energy as well as other sources from USA, Middle East, etc

5) Russia is India`s major defense supplier. However, India has USA, France and other western majors too as its strategic arms suppliers.

6) India refused to join global trade blocs like RCEP but has signed FTA`s with UAE and Australia and many more to come.

Hence it's a new "Non-Aligned Foreign Policy" embracing India`s needs as well as its external ecosystems.

Invite critical views

Language policy in India – advantages to be highlighted rather than imposition

 The debate over learning of Hindi across the country has led to strong reactions from the non – Hindi speaking states especially the North East and South India!!

The national NDA government should adopt a different strategy rather than make it look like an imposition – similar to the hugely successful digital payments strategy

Instead, the national government should run a mass campaign highlighting “Advantages of learning different languages”.

Like learning English is seen as a passport to better job prospects, learning a foreign language is construed to lead to better prospects globally, learning Hindi can be highlighted as a major advantage in a huge and diverse nation like India.

Major advantages that need to be highlighted –

Better job prospects across the country- any company will prefer to recruit a Hindi speaking competent candidate from South India as they can give varied exposure to the candidate across the country

Enhanced ability to connect with more people across the country for business people – business people from say Kerala can converse with a business connect is say UP.

·       Easier for students whose parents are in a transferable job

·       Ability to connect with more diversified set of people across India and understand         different cultures

 

As a part of the same strategy, the national government can also make learning non-Hindi languages as an option in Hindi speaking states – why can’t a student in Himachal Pradesh learn Tamil or Bengali for a couple of years?? This will lead to better cultural sensitivity across a diversified country like India. Lack of teachers needn’t be constraint as it can be overcome using technology.

From my own personal experience of hailing from Tamil Nadu but having lived mainly outside TN and outside India, I have reaped the benefits of learning different languages especially being a fluent Hindi speaker. During my first overseas stint in China, me and my wife learnt Chinese too understand China better.

Time to have a holistic approach to the language debate!!

Sustainability can start affecting new age businesses - like fossil fuel businesses

Preamble

New age businesses like renewable energy, electric vehicles, social media technology giants, etc. are the talk of the world with their businesses attracting very high valuations.

These new businesses are expected to usher in a new business models attarcting high valuations. However, these business might start facing different type of sustainability issues in the days to come very similar to the issues faced by traditional fossil fuel firms

In this article, I explore some issues and trends relating to sustainability for these new age business.

Invite critical views

Main Article

A few weeks back I was attending an online webinar on Electric Vehicles and got connected with a retired gentleman who had worked in the automobile industry in his entire career. When I quizzed him about his views on the advent of electric vehicles and especially on its effect on climate change, he said he wasn’t sure! I was perplexed. After all, EV`s were supposed to be the panacea for the pollution that we all face from normal combustion vehicle engine car!!!

He told me a story. When cars were first introduced more than a century back, they were actually solving a pollution problem!! Before cars, horse carts were used by people to travel, in which the biggest issue was the cleaning and disposal of horse dung! Hence when combustion vehicles cars were introduced, people were happy that the dung problem will be a thing of the past. Now when the world is talking about solving climate change issues by replacing fuel powered cars with electric vehicles, he said he wasn’t sure of the downside effects of the EV`s !!

Recent sustainability concerns with new age businesses

The above story made to think about some of the sticky events across the world involving the new age businesses – especially the global digital technology giants.

• Recently, the famous Chinese company, Alibaba was fined $2.8bn by the Chinese government as the Chinese government wasn’t happy with the monopolistic tendencies wielded by Alibaba`s digital reach!

 

• China recently introduced a Personal Information Protection Law (PIPL) that lays down a comprehensive set of rules around data collection and protection. Along with a new antitrust law, the data protection law is seen as part of a broader effort by Beijing to rein in the power of its technology giants such as Alibaba and Tencent and creating a regulatory model for the next-generation internet.

• European Union (EU) introduced the General Data Protection Regulation (GDPR) in 2018 to regulate citizen`s data collection and privacy concerns. Many of the EU countries have also implemented a digital tax levy on digital services at point of consumption which has added to the controls on the global digital firms.

• Closer home in India, the Indian government recently had a faceoff with Twitter over blocking some accounts associated with the farmers protest. Twitter had to take some quick action to avoid facing a total blockage by the Indian government.

 

• Google and the Australian government have had a tiff on whether news on Google feed needs to be paid for by Google or not. It was resolved only after Google acceding to the Aussie governments concerns.

 

• USA law makers are so highly concerned about the power wielded by the technology giants like Google and Facebook, that they are talking about breaking up the companies like the telecom major AT&T many years back. Regular Congress sessions, in which the digital technology majors CEO`s are grilled, give an insight into the seriousness with which the USA government is looking warily at the influence of these companies over the general public.

 

• Cobalt and Lithium, which are the essentials to make batteries for Electric Vehicles’ face mining labor issues especially in Africa which can constrict the supply of these products in the days to come.

All the events described above, might be seen as discrete events in a common man`s eyes but the common thread is that all the new age businesses will very soon face a sustainability wall block very similar that the fossil fuels businesses have faced. The movie “The Social Dilemma” portrayed how the digital companies use algorithms to manipulate the general public`s thoughts and purchasing decisions.

Oil and Gas companies were global economic stars till sustainability backlash...

Oil and gas propelled the growth of global economy in the second half of 1900`s with geopolitics too affected by oil business dynamics. Downstream products of oil like fuels and plastics gave a boost to industries like automobiles, heavy machinery, and consumer products. However, soon these businesses were accused of being primarily responsible for the various society ills like global warming, climate change, oceans pollution, emissions, etc. Importantly capital markets too have been highly influenced by these trends with markets according higher valuations to firms with better compliance to environmental norms.

Backlash has been higher in Europe as compared to the USA, till last year which has forced European oil and gas firms like BP, Eni, Total, etc. to announce aggressive zero carbon target dates and move to renewables. In fact a leading company like BP sold of its prized chemical business assets in 2020 in order to be seen as a “green” and “environmentally compliant” company.

New age companies have phenomenal valuations Vs traditional firms…

Comparison of valuations of new age firms like Tesla, Google and Exxon over the last 10 years shows that new age firms have far greater valuations with the key reasons being - wider geographical reach and highly scalable, asset light models.

 What lies ahead?

With the recent sustainability backlashes facing the new age firms, will this run of higher valuations continue? Will there be roadblocks like what the oil and gas firms faced? Will capital markets start reducing the future cash flows as business model scalability becomes a question mark?

Interesting times ahead.

Indian cricket win Vs global Indian companies

Being an ardent lover of the game of cricket as well as business/ economics, Iam inclined to find parallels between the recent insipid third cricket test match between India vs England (which ended in less than 2 days as compared to the stipulated 5 days) And development of the Indian economy over last 30 years since economic liberalisation since 1991.

The recent cricket test match at Ahmedabad saw one of the most bizarre test cricket matches I have ever seen. It was the shortest test match since 1940. Pitch used was sub standard to favour the home team India. Test pitches normally break from day 4 but this pitch broke down on day one itself. Intention  was to favour the Indian spinners and hence win the match. Well home team advantage is given in cricket but one shouldn't overdo it. Local umpires ( officiating referees to use a parallel to football) used were sub standard and some ludicrous decisions were taken which favoured the home team.

In all, conditions were doctored , protectionist environment created to favour the home team !!

Indian economy was highly protected till 1991 to favour sub standard local companies. However once the economy started liberalizing, most of the local Indian companies stood up to shape themselves up and face global competion. Many of them now are world class companies now and aren't afraid of competing in the global business environment now.

The Indian cricket team, achieved global respect a month back when a team ravaged by injuries but led by an humble but astute second in command captain beat a full fledged Australian cricket team in Australia beating all odds. Very similar to a global Indian company beating  global competition in their own backyard.

Young and globally competitive India isn't of afraid of taking on the global big boys !!

Hence the recent conditions, under which the recent Ahmedabad test cricket match was played and won by India, is very similar to Indian companies playing in the pre 1991 license raj era where everything was doctored, using a pliant inward looking government, to favour uncompetitive, inefficient Indian local companies which thrived under protection.

Indian cricket team now consists of world class players . Hence it doesn't make sense to create hugely favourable conditions to suit them to win matches.

Hence I would urge the Indian cricket authorities, under the cricket board BCCI, to not resort to subterfuge methods like in the recent test match . On the other hand, they should create sporting even conditions so that the competitive Indian cricket team,very similar to their business counterparts who faced global competition, can prove and mantain their dignity as world beaters and not be branded pusillanimous local heroes.

Race to de carbonization: Convergence to financial goals is the key

The iconic global company, British Petroleum (BP) made a very interesting move recently by selling off its coveted petrochemicals business and opting to play only in the energy businesses – oil and gas.

In its Q2`20 results announcement, BP`s strategy statement under its new CEO, says that it will reshape BP`s business as it pivots, from being an international oil company focused on producing resources, to an integrated energy company focused on delivering solutions for customers. 

In pursuit of its new strategy, BP aims to reduce it oil and gas output, in the next 10 years, by 40% from the present levels, with emphasis on low carbon technologies especially on renewables - bioenergy, hydrogen and on CCUS (Carbon capture, utilization and storage). Clearly BP is moving towards the global wave towards greener world and sustainability, with the better stock market valuations as the key objective.

Similarly, the other global oil major Shell has also announced similar moves to a zero carbon future as a part of its “Our response to Climate Change” report and is moving on the same lines as BP.

Stakeholders on common platform – boost for sustainability initiatives

Sustainability and climate change has become an integral strategy of all the global firms, especially in the energy and downstream area, thanks to public pressure as well as due to sustained efforts of think tanks and activist organizations like Greenpeace. 

In fact, unlike the past when the global firms were reluctant to engage with the pressure groups, there is an increasing acceptance by the global firms to engage and shape their sustainability strategies with activists like Greenpeace.

Recently, in a virtual discussion forum shared by Shell, Greenpeace and Green Alliance[1], the convergence was very visible with the statements of the senior executives of these 3 organizations. The welcome sign, that was very evident, was a rising acceptance to work together to achieve climate actions goals. 

Gone is the acerbity that used to cloud such discussions and debates in the past.

Higher financial returns for sustainability investments

Environment, Social and Governance (ESG) investing has taken a big leap in the last few years and the trend has been given a further boost especially with the recent Covid pandemic. 

Data published recently by FE analytics show that in the last 3 years, socially responsible investments have generated about 7% more returns as compared to benchmark indices and about 11% more returns than non-socially responsible investments. 

Global investments in socially responsible assets is at present estimated to be at about $45 trillion as per a JP Morgan report.

 

Green bonds – huge inflows in last few years

Green bonds, which raise money for climate and environment projects, had a very slow start when they were first launched in the year 2007. However, in the last few years, green bonds in various forms have seen a huge interest with about $258 bn of investments in the year 2019 – a 51% increase on a year on year basis.

As per Morgan Stanley Capital Index, about 70% of the green bonds issuance are in alternative energy (38%), green buildings (17%) and sustainable transport (15%). Renewables energy has accounted for a bulk of the alternative energy investments over the last few years. 

Thus, the rise and convergence of financial incentives to the environment and social aspirations of all stakeholders, has led to a change in approach, thinking and business strategies in the last few years towards decarbonization and environmental goals.

What are the incentives for all the stakeholders ? 

Global firms see better market valuations, government authorities visualize lower pollution and emissions while activists, like Greenpeace, gain more traction and funding with their contributions for global wellbeing.   

  

What can be done in India?

India, like any developing country, is faced with a dilemma of balancing development vs environmental concerns. Like China, India too is plagued by issues like high air and water pollution, some of which can be attributed to the high usage of fossil fuels like coal, diesel, etc. 

Some of the initiatives that can be pursued by the Indian authorities:

1. Alternate Fuels :  Push towards cleaner sources of energy needs to be incentivized for greater penetration. The shift towards solar power was given a boost with the financial incentives to the producers. Installation costs crashed by about 80% between 2010 and 2019 which helped Indian capacity to about 31GW from 2.6 GW in 2015. Indian solar power prices, at present, are estimated to be one of the lowest in the world. Hence, the government needs to continue such an approach not only to solar power but also to other alternative energy sources.
2. Electric vehicles (EV`s), have been sustained in the western nations, with government incentives. Charging stations are required for higher penetration of EV`s. Indian government needs handhold the auto industry to manage the transition to EV`s through tax breaks especially support the charging station infrastructure development.
3. Incentivize companies to reduce carbon footprint with regular audits and tax breaks to support such initiatives.
4. Hydrogen as a clean fuel is being actively pursued in China and other western nations. India can adopt hydrogen quickly and leapfrog in its adoption. 

     

   

 

 Convergence of financial and aspiration goals is important to make any sustainability, climate action and environmental initiatives work by making it an economically sustainable model.The recent global shift in this direction is an encouraging move which will lead to benefits for the global society as whole.

         Let’s hope for the best!

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[1] Posted on the website Thinkunthink : https://www.thinkunthink.org/latest-unthinking/2020-07-28-oil-giants-and-sustainability-campaigners-the-new-common-cause

Life in a lockdown – An Insider View

Blog written by Vani Narayanan, a designer by profession and Ram Narayanan, a corporate professional. The couple live in Mumbai, India.

In early February`20, when the corona virus wreaked havoc in China, we were was regularly in conversation with our family friends, official contacts and associates in China. Hearing their experiences in the clampdown in China, we could only empathize with them and were very hopeful that the world would be back to normalcy by early March`20. How wrong we were! Life has returned to normalcy in China but the entire world has been shaken by the Corona virus!!

When the Indian Prime Minister, Narendra Modi, announced the first phase of lockdown in India in mid-March`20, lives of many corporate professionals and business people turned upside down. After all, March is the financial year end in India and is the peak time for economic activity in India. The lockdown not only threw economic activity out of gear in India but also affected the work practices of working professionals, businessmen, gig economy workers and sadly daily wage workers.

As we speak now, the process of easing the lockdown has started in India and jury is out on the pluses and minuses of the lockdown. Nevertheless, the lockdown experience in the past couple of months portends to a different future of work. 

Lockdown adjustment issues have been galore for working professionals

Many corporate professionals, especially those living in crowded cities like Mumbai, have been vouching for work from home (wfh) flexibility for enhanced productivity and work-life balance. 

The present extended has forcefully necessitated an extended remote working but has had its own set of challenges some which are –

·      Getting used to extended remote working with no face to face interactions. Setting up new work processes for remote working and align team members accordingly.

·      Remote working tools like Microsoft teams and Zoom were of great help but issues like clogged networks, IT hardware issues, etc had to be dealt with.

·    Lack of face to face social interactions between employees were replaced by structured online conversations or phone conversations. However, staring into computer screens all throughout the day for all work activities builds up its own pressures as after all the human is a social animal.

·        Lack of wfh enablers – No proper demarcated work space at home (especially in cramped houses in places like Mumbai), family pressures from the household work in the lockdown especially with the mobility restrictions imposed by the authorities. 

·        Prison effect - People who are used to travel regularly and in the creative field, which needs face   to face social interactions, had to adjust to the new reality.

However, there have been many positives from the lockdown too...

Enhanced work productivity making companies happy

ü  Enhanced productivity from remote working busted all myths and perils of wfh. Many companies like the Indian IT behemoth - TCS have announced wfh for a majority of their employees on a permanent and structured basis. In fact, many soft skills-based firms, like legal firms, have plans of reducing their office space areas to reduce costs.

ü  Many core industries companies, especially those with a number of non-IT savvy and anti – wfh employees, have accepted the strengths and advantages of this new era practice. Time and effort saved in commute to work have been converted to enhanced productivity.

Better work – life balance

Lockdown has ensured that many working professionals who led a hectic life and been mostly on the 

move have been able to spend more time with their families. With no

social interactions, travel and other distractions, family activities have

been on the increase. Social media posts of families working out,

family cooking sessions, teaching kids, etc have been on the increase.

Fitness as a way of life 

Runners and cyclists like us had to change exercise routines and adapt 

to the lockdown guidelines. Varied indoor workouts, thanks to our coaches as well as social media,

ensured that we all stay healthy and fit. Many people in our friends’ circle and perennial couch 

potatoes have utilized this time to start exercising and look fitter!! Similarly, online workouts have

been given a boost, which if sustained continuously, will lead to more healthier people on the planet.

Upskilling and reskilling

ü  New hobbies: A foodie like Ram, having tasted different cuisines across the world and different states in India, never ventured into the kitchen ever to cook a meal for the family. The lockdown enthused him to start learning to cook and try different cuisines. Its proved to be a great de - stresser from his professional pressures and of course a great feeling from gaining a new skill.

ü  Online learning: Training and Development teams across organizations have been very active in promulgating online learning.  Thanks to LinkedIn learning, Coursera, etc the opportunities to learn have been vast with online webinars, virtual conferences, etc having mushroomed all across.

Cleaner and Greener planet

ü  In a polluted city like Mumbai, the sight of azure blue skies, birds chirping throughout the day and

   clean and fresh air haven’t been experienced by people of my generation at any time. In the northern parts of India, the Himalayas can be sighted from many cities thanks to the clear skies. The waters of the holy Indian river Ganges, which were polluted by the many industries on this path, have turned crystal pure something which the authorities have been trying to unsuccessfully do for the last 30 years with various scientific options.

Living with limited means

ü With supplies of many items, especially non-essentials being restricted, people have learnt to live with what they have. No fast food items, no going out to restaurants, no movie theaters, no shopping malls. Taking cue from this experience, a permanent reduction in consumption of discretionary spend items can lead to lesser consumerism, lesser pressure on natural resources, better resources spend on essentials like education, healthcare, etc.    

However,  we need to spare a thought for the people adversely affected

While some of the regular salaried corporate professionals can count on the gains from the lockdown and ponder over the work challenges, one should spare a thought for the people who have lost their daily livelihood due to the lockdown.

Daily workers, some of whom have been glamorously christened as gig workers, - Uber cab drivers, pizza delivery boys, restaurant waiters and many more of the same fraternity have been rendered jobless and without any income. In India, with many medium and small firms shutting shop many daily wage migrant workers lost their jobs and, with no money, many of them in fact embarked on a multi-day, long distance walks back to their villages in the scorching heat leading to a migrant crisis.  Many firms especially those exposed to travel, airlines, etc have retrenched some of their personnel.

What are the takeaways for the future of work...

The future world work space will certainly look different as one can’t imagine. A whole new set of practices will surface with more adoption of technology and lesser social and more online interactions. As an extreme thought many firms, like start-ups, may exist only virtually with no permanent establishments. Firms will move with an enhanced vigor for digitization in the post Corona world to meet social distancing norms.

Hence many challenges with spring up in the future a few of which we can foresee-

• Will any new consumer behavioral trends, from the lockdown experience, lead to a structural change in the jobs market? Will retail consumerism be affected?  For instance, social distancing norms leading to lesser shopping mall visits by people, can led to lesser showroom sales boys and sales girls jobs. A new set of skill sets will have to be developed to meet a new set of job skills.

 ·  What will be the governments policies in this new way of work like taxation of commercial

     establishments? 

     

     ·   Will newer mode of social interactions among workers effect adversely or enhance innovations,

         path breaking scientific work?

Interesting times ahead for sure certainly. Still then stay safe folks!!