Indigenous Investors Weekly Insights!
Top 3 well curated stories from the stable of Indigenous Investors incase you missed them. These can range from finance to sports, depends on what made the headlines. Stay tuned.
At Indigenous Investors, we pride ourselves on a simple but powerful habit: reading for 5 hours every single day. It’s something we’ve shamelessly borrowed from the Oracle of Omaha, Mr. Warren Buffet. To share the wealth of knowledge we uncover, we’re bringing you 3 top stories that you may have missed this week. If there’s a topic you want us to cover, drop us a line! We’re always excited to read more and refine our process.
Story #1: Slowing middle class is causing India Inc to panic (click here)
It’s a troubling situation for all the analysts and economists alike. There is such disparity in the consumption patterns of Indian middle class that you are as right as you are wrong to pick either of the two sides.
One report suggests that the fall in FMCG results is due to shifting preferences of the middle class that is led by PREMIUMIZATION of consumer preferences. More and more consumers are choosing premium products that are more healthy and personalized.
Another report suggests that technological innovations like AI has shifted preferences of businesses to hire and people are forced to get into jobs they are not prepared for or do not prefer. The spending from this class is also in stress due to consistently high inflation resulting from high food prices.
Story #2: India’s GDP has slowed down to 5.40% in Q2FY25 (click here)
India’s GDP growth for quarter 2 has been really slow. The biggest hit is in the manufacturing segment that has dropped down to 2.20% from 7% in the previous quarter. The only respite is from agriculture that grew by 3.50%, up from 2% in the previous quarter.
The data has sent shock waves among some analysts who predicted the growth to be over 8% as per the trends noted. It may be noted that the slowing of the growth is on a higher base that does not sustain forever.
In the previous year, the government had been the biggest contributor to the numbers through their high capital investments in national infrastructure. Ideally, better and bigger infrastructure should send the growth spiraling upwards as more and more private investments are attracted due to better logistical capabilities. However, that did not materialize and we may be looking at a further slowdown in private investments as the consistently interest rates do not create an atmosphere of free flow of money.
Story #3: The return of the license raaj? (click here)
Various Indian ministries have come up with new regulations of BIS certification that is now mandatory for importing over 380 items. The merit of establishing such standards is to safeguard the domestic industries from dumping of goods and external competition. It is said that lobbying by giant Indian companies has given birth to such draconian regulations for the supposed free economy that India is.
The new regulations so far seem to have caused more harm than good so far as there is lack of clarity on the requirements and importers are subjected to file an application to the concerned ministry to obtain a NOC for clearing the goods. Thousands (maybe lakhs!) of containers are stuck at the ports and importers are forced to re-export the goods in case NOC is not obtained which is practically impossible.
Being a part of various free trade agreements and bilateral and multilateral treaties, it is understandable that the government cannot play much with customs duty as it could cause retaliation by other countries for exporting our products. However, adding a second layer of regulations is only having a negative impact on free trade. Japan has flagged this issue to ministry of steel as it is damaging the trade relations of their companies with India for import of Japanese goods.
We are all in for the ‘Make in India’ initiative and support Indian goods. But efficiencies and innovations will occur only when we are more outward looking as a nation. For a lot of goods, India is only an assembler - meaning we are not yet capable to produce the inputs of those goods at scale or at all. Undue advantage of these laws can lead to India losing the China+1 charm.
In such turbulent times, it has become extremely important to make sure your money is invested at the right places. You can read our article on Portfolio Reshuffling (click here) to get professional insights into managing your wealth.