Make India Competitive Again (Private)

The telecom ministry issued an order requiring phone manufacturers to pre-install Sanchar Saathi, a cybersecurity app developed by the state. 

Then, it changed its mind less than a week later, after criticism arose in many corners—the Opposition, civil-liberties groups, and companies that make phones.

India’s rapid digitisation is a positive development, but it also comes with opportunities for bad actors to commit fraud. The government wants this infrastructure to be safe for everyone, but the way it tried to go about it ruffled everyone’s feathers. Forcing a cybersecurity app onto every phone, after all, looks a lot like surveillance by default.

Meanwhile, there is a real threat—digital arrest, where fraudsters impersonate law-enforcement officials and convince their victims to part with vast sums of cash, is a common scam.

The Ken contributor Srikanth Rajagopalan offers a few ways to mitigate fraud without infringing on personal privacy in this edition of Make India Competitive Again, as read by Snigdha Sharma.

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This is the final episode of the Make India Competitive Again podcast. The newsletter will continue to be published every Monday morning. Subscribe here to keep up with timely commentary from The Ken: https://the-ken.com/newsletters/ 

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Eight hours a day, 48 hours a week. That’s the new limit on how much time India’s central government says people should spend at work. If an employee agrees to do more than that, then their employer must pay overtime—double their wage.

India, as it turns out, has one of the world’s highest overtime wage rates, but that doesn’t mean everyone can benefit from it.

The government’s own 2024–25 Economic Survey indicates that regulations like these discourage job creation and limit wages, so some workers are enticed to enter informal employment.

Meanwhile, the informal workforce—think of the likes of gig workers—are not eligible for overtime pay under the new regulation, even though many people who take on this type of arrangement end up working 10–14 hours per day.

That means the new rules aren’t really accomplishing their intended objectives. India’s gig workers could benefit from more structure, while employees could do with a higher degree of flexibility.

The Ken deputy editor Arundhati Ramanthan reveals the details in this edition of Make India Competitive Again, as read by Rahel Philipose. 

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Tenneco Clean Air, the manufacturer of auto components, went public last week. Aside from being an important moment for the company, that instance was an important outlier.

It listed with a premium close to 27% at a time when many Indian firms backed by private equity have had weak debuts. Its anchor book—pre-IPO share allocation to major institutional investors—was oversubscribed by 170X.

The US parent of Tenneco Clean Air is owned by Apollo Global Management, an asset management firm based in New York. 

Other companies with similar PE backing haven’t fared so well in recent times. Sona Comstar, for instance, went public in 2021 with a P/E multiple of 79—far higher than Tenneco’s 29—courtesy of its backer Blackstone. The stock is currently well below its peak, which it hit in six months after going public.

Here’s a fact: private equity has underperformed the S&P 500 index over one, three, and five years, according to McKinsey & Company. This category of investors in India extract value from their portfolio companies before they head to the bourses, leaving little opportunity for public investors.

The Ken editor Seema Singh shines a light on the situation in this week’s edition of Make India Competitive Again, as read by Brady Ng.

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Deep tech is increasingly connected to India’s national and regional sovereignty, and the way companies in this space are funded is changing.

The Indian cabinet earmarked Rs 1 lakh crore ($12 billion) earlier this year for a Research, Development, and Innovation Fund, then followed up this month with a call for “second-level fund managers”—entities such as alternative investment funds, development finance institutions, and non-banking financial companies.

All types of VCs recognise this is their new frontier. After all, the verticals of blitzscaled digital platforms, D2C, and consumer apps are things of the past, while artificial intelligence—the flavour of the season—carries too high a risk for most investors.

The result is deep-tech companies having their day in the sun, but with some caveats. Funding startups in this space means being in it for the long haul. Research and development take years, and Indian industry is notoriously gun shy when it comes to spending on R&D. Even if a new technology is developed by a deep-tech firm, commercialisation isn’t easy to solve. 

The Ken editor Seema Singh unpacks this new landscape for deep-tech firms in the latest edition of Make India Competitive Again, as read by Rachel Varghese.

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Earlier this month, the Competition Commission of India, or CCI, got a slap on the wrist. Its ban on Whatsapp from sharing user data with parent company Meta was overturned. Even though Whatsapp still had to pay a Rs 200 crore fine, the ruling was a blow to the CCI.

The fact is the antitrust watchdog has lost its bark when it comes to the digital economy. Where it used to take three months to close an investigation, the CCI now takes up to eight, and it currently dismisses 80% of the complaints that go its way. Among the cases that the commission does take up, nearly half are appealed.

Meanwhile, the digital economy is barreling ahead. Major tech companies—most of which are from overseas—have massive resources in the form of cash, lawyers, economists, and more to challenge the CCI’s decisions. 

All of this matters when the development of artificial intelligence makes it even more difficult to govern the way data is handled. As one startup founder told The Ken, “When algorithms start talking to each other without human intervention, competition challenges become more complex than before.”

Inderpal Singh looked into the trials and tribulations faced by the CCI in this edition of Make India Competitive Again, as read by Brady Ng.

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There’s one company that exemplifies the current moment in India’s AI investments. It doesn’t make advanced semiconductors or train large language models. Instead, it rents out space to companies that do.

The arrangement is called colocation—think of it as real estate for servers, where clients plug in their machines while the “landlord” provides power, cooling, and connectivity.

Sify Infinit Spaces, the data-centre arm of Sify Technologies, is India’s poster child for this setup. It will be behind the country’s first IPO for a company of its kind.

By tracking the colocation industry’s growth around the world, there’s incredible promise based on demand. Capacity worldwide has more than doubled since 2019 to hit 42 gigawatts (GW) in 2024, and could reach 65 GW by 2027. Sify should head the same way, if not grow even faster.

But that assumes India has enough power to support rapid scaling. One Nvidia GB300 rack can draw enough electricity to power 100 homes in the US, and it takes thousands of racks to train a foundational model. 

Even Sify acknowledges the problem in its DRHP by referring to power supply risk, grid reliability risk, and related issues.

Sumit Chakraborty, The Ken’s head of desk, looks into Sify Infinit Spaces’ IPO and the company’s promise in this edition of Make India Competitive Again, as read by Rahel Philipose.

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Read this edition as a newsletter: https://the-ken.com/newsletter/make-india-competitive-again/indias-first-data-centre-ipo-shows-what-to-fix-before-india-can-scale-ai/

Download our app and subscribe to The Ken to listen to all our podcasts: 

• iOS: https://apps.apple.com/in/app/the-ken/id1282944688 
  
  
• Android: https://play.google.com/store/apps/details?id=com.ken.core&hl=en&gl=US&pli=1 
  
  

Check out Make India Competitive Again on Apple Podcasts: 

https://podcasts.apple.com/us/podcast/make-india-competitive-again-premium/id1810672381 

Or Spotify:

https://open.spotify.com/show/5yxzxRmN7idKJen5QdezPl

Artificial intelligence is no longer an option or privilege. It’s here to stay, even in schools.

OpenAI and India’s education ministry have partnered to distribute free ChatGPT licences to government schools, and AI is being introduced into CBSE and ICSE’s curricula.

The Ken conducted a survey in August to find out what our readers thought about language models becoming a constant presence in India’s education facilities. These were some of the questions in the survey:

• What do you think OpenAI’s goal is in Indian schools?
• Who should be responsible if data is misused?
• What data do you think OpenAI is most interested in?

On the ground, most schools haven’t figured out how to bring AI into the classroom, so they’re using it for everything except teaching, such as administration tasks and applicant interviews. That hardly lines up with the goal to make India’s students AI-literate.

The Ken reporter Atul Krishna unpacks the implications of ChatGPT’s proliferation in India’s education sector in the latest edition of Make India Competitive Again, as read by Snigdha Sharma.

Read this edition as a newsletter: https://the-ken.com/newsletters/make-india-competitive-again/

India is relaxing rules for states to approve and fund standalone battery-storage systems. There’s a rush to build those projects, and tariffs are going lower and lower.

Rajasthan set a “lowest tariff” record last week at Rs 1.77 lakh per megawatt per month, undercutting Andhra Pradesh. Maharashtra is now sending out feelers, so there may be an even lower figure soon.

It’s a situation that has played out in renewable energy before. Solar and wind projects were rapidly installed, but little was done to build local manufacturing muscle. 

The current rush of activity in the battery-storage space is only leading to market distortion. With government funding and other incentives, it’s “almost a risk-free business”, as one executive told The Ken.

There’s also the matter of relying heavily on Chinese imports, which also happened when solar and wind energy projects were being built. 

The result is an insecure supply chain for battery storage in India. The Ken editor Seema Singh has the details in the latest edition of Make India Competitive Again, as read by Brady Ng.

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The Indian Semiconductor Mission, or ISM, is one of the most ambitious initiatives undertaken by the government in decades. Out of Rs 76,000 crore earmarked for production-linked incentives, roughly Rs 65,000 crore has already been committed, and the mission supports 10 major projects across the value chain.

This is all good and great for building the infrastructure and facilities for making chips, but the right kind of human capital is just as important—and largely absent.

The ISM launched a skilling programme in July 2023 to address precisely that problem, aiming to train the professionals who would then populate India’s fledgling fabs. To do this, the ISM, the Indian Institute of Science, and California-headquartered Lam Research teamed up to use the latter’s virtual fab simulator, SEMulator3D, to prepare Indian college students for a career in semiconductor manufacturing.

The hitch is that this doesn’t really give students hands-on learning, so they aren’t truly prepared for life in fabs. The Ken reporter Keshav Pransukhka found out why in the latest edition of Make India Competitive Again, as read by Rachel Varghese.

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India’s production-linked incentive (PLI) scheme is meant to boost domestic manufacturing and exports. It rewards a range of companies, including those that produce 41 critical molecules in active pharmaceutical ingredients, or APIs.

Meanwhile, Chinese manufacturers have slashed their prices of several important APIs by 40–50%. In some cases, these prices are below the cost of production in India.

Even though the adjustment won’t be permanent, those lowered prices are a major blow to Indian companies that were making headway for the past five years in API production, and which formed India’s muscle in this space.

This isn’t the first time for Chinese producers to undercut their Indian competitors. The same situation happened in the 2000s. Here’s the kicker: aside from the Indian government’s PLI scheme, few conditions have improved for API manufacturers. 

The Ken reporter Sudeshna Ray explores the issue in this edition of Make India Competitive Again, as read by Seetharaman G.

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Read this edition as a newsletter: https://the-ken.com/newsletter/make-india-competitive-again/chinas-new-pharma-api-war-and-lessons-from-its-last-strike/