DeepSeek Is Opening Doors

January 29, 2025 • Estimated Reading Time: 10 minutes

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Good morning. In today’s edition — Can India jump on the DeepSeek bandwagon?; a bid for affordable housing in this budget; and a visible slowdown for infrastructure companies.  

DECODE THE NEWS

DeepSeek Is Opening Doors For Advancement Of AI At A Much Lesser Cost

The arrival of the Chinese artificial intelligence (AI) model DeepSeek has given Western tech giants a run for their money. Within a week of its launch on January 20, it has not only gotten the attention of AI enthusiasts but also the tech world. 

The efficiency of DeepSeek, made in China at a fraction of the cost of its peers like OpenAI’s ChatGPT, has surprised the world. DeepSeek’s R-1 has zoomed to the global top 10 in performance, according to a popular ranking. It is now the most downloaded app on the Apple store. 

Was this really a surprise? Jaspreet Bindra, founder and MD of Tech Whisperer Ltd and co-founder and CEO of Ai&Beyond told The Core that it wasn’t surprising that China wasn’t too far behind the US in terms of AI tech. “But the fact that they were this far ahead and looking at costs which were less than 3% of the costs that the Valley companies are building models at was a super big surprise. I think you see the effect of it when the markets opened in a few hours time.” 

Stock prices of almost all tech majors started spiralling downwards on Monday, including AI chip giant NVidia. The slide wiped off $1 trillion from the NASDAQ’s market value. It also raised questions about the sustainability of Western-led tech advancement. 

DeepSeek’s foray into the world of tech is not only a threat to Western tech giants, but also opens doors to smaller companies, including in India.

PODCAST

On Episode 493 of The Core Report, financial journalist Govindraj Ethiraj talks to Madhavi Arora, Lead Economist at Emkay Global Financial Services as well as Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Mirae Asset Sharekhan.

  1. Banking stock rally drives up Indian markets.

  2. Understanding the central bank’s liquidity boost measures, what caused the problem and now the solution.

  3. Oil prices edge up as action in the high seas continues.

  4. Colombian coffee prices are hitting record highs.

  5. What is determining the prices of gold right now?

THE CORE x TALENT SKILLVARSITY

The Executive Program in Business Journalism & Economic Reporting trains professionals in financial markets, economic reporting, and multimedia tools. Learn investigative techniques and AI-driven storytelling to thrive in modern media.

THE BUDGET WISHLIST 

📢 Budget Wishlist: Affordable Housing Needs a Lifeline

The share of affordable housing has been shrinking at an alarming rate, from nearly 40% of the total housing supply in 2018-19 to just 16% in 2024, according to data shared by property consultancy firm ANAROCK.

This worrying trend continues into 2025, with Bengaluru seeing no new supply in this segment, and Hyderabad and Chennai contributing a mere 2%. Only Kolkata and the Mumbai Metropolitan Region (MMR) show some activity, with affordable housing making up 31% of their total supply, ANAROCK added in a recent report. In the National Capital Region (NCR), affordable housing’s share fell drastically from 62% in 2020 to just 11% in 2024, reflecting a market shift towards luxury and high-end properties.

“(Affordable housing schemes) must be made accessible to more people, and awareness about it needs a big shot in the arm. New adaptable, sustainable, and low-cost construction technologies can rapidly develop large mass housing projects,” said Anuj Puri, chairman of ANAROCK in a statement.

Key Expectations:

  • Expand PMAY Reach: Enhance accessibility and promote awareness of subsidies under the Pradhan Mantri Awas Yojana to make affordable housing more inclusive.

  • Land Record Modernisation: Address title document hurdles to unlock subsidies and streamline ownership processes.

  • Low-Cost Technologies: Encourage innovations in construction to boost affordable housing supply.

  • Sector Reforms: Streamline approvals and eliminate bottlenecks in property records.

CO:RELATION

Build India Story Crumbles

If you look at companies that build the nation’s road and energy infrastructure, there is a visible slowdown in investor expectations. Share prices of major companies in the infrastructure sector, like Larsen & Toubro, HCC and in the power generation sector, such as Tata Power and NTPC, have witnessed a secular decline in share prices since the peak of September 2024. A primary reason is the slowdown in the tenders floated by the central and state governments. The profitability of these companies is at risk over the next two years as tender awarding continues to lag behind tender announcements, as observed by India Ratings, an affiliate of FITCH, a global rating agency. 

The revenue profile of engineering, procurement and construction or EPC players with already shrunk order books is likely to result in low revenue growth amid heightened competition, said the agency in a release. All eyes will now be on the Union Budget to be presented by Nirmala Sitharaman on 1 February 2025. If the government manages to create sufficient fiscal space for the capital expenditure on roads, power and other infrastructure projects with renewed vigour, it would inject a new lease of life into the crumbling ‘Build India’ story.

CORE NUMBER

Rs 246.83 lakh crore

—📱 This is the value of transactions resulting from 17,221 crore Unified Payments Interface (UPI) transactions in 2024, up from Rs 5.86 lakh crore in 2018, when 375 crore transactions were processed. UPI’s share of digital payments surged from 34% in 2019 to 83% in 2024, with a staggering 74% CAGR over five years. Meanwhile, traditional systems like RTGS and NEFT saw their share fall from 66% to 17%. Person-to-merchant (P2M) transactions outpaced person-to-person (P2P) in volume but lagged in value. UPI Lite, introduced by Paytm and PhonePe in 2023, also recorded 2.04 million daily transactions in December 2024, reflecting its growing acceptance of microtransactions.   

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FROM THE PERIPHERY

—✈️ India’s budget carrier SpiceJet will resume operations of its grounded Boeing 737 MAX on January 29, a significant milestone in its fleet restoration efforts. The aircraft will serve high-demand routes like Jeddah and Riyadh, CNBC reported. With only 25 of its 60 aircraft currently operational, SpiceJet plans to reactivate 10 more planes, including four MAX jets, by mid-April. The airline has teamed up with U.S.-based StandardAero and CFM International for engine servicing. The return of these fuel-efficient jets is expected to enhance cost savings and operational efficiency. 

—🛢️ Indian Oil Corp (IOC), India's top refiner, anticipates a decline in Russian oil imports this fiscal year due to tightened US sanctions on Moscow. These sanctions, targeting Russian producers, insurers, and tankers, have disrupted Indian refiners' supply chains. Russian oil accounted for 25% of IOC's crude imports in the first nine months of FY24, down from 30% in FY23. IOC plans to offset the shortfall with term suppliers and alternative markets. Discounts on Russian oil have also shrunk to $2 per barrel, compared to $3 in December.

—❓ Fintech app CRED on Tuesday launched an e-rupee wallet in collaboration with the Reserve Bank of India (RBI). While CRED touts this as a consumer-focused innovation, the move raises questions about its strategic intent. Digital rupee use cases have predominantly been business-to-business (B2B) payments, cross-border transactions, and settlements, leaving little clarity on its consumer application, especially when UPI dominates with over 16 billion monthly transactions as of December 2024. CRED holds just 1% of UPI's market share currently, which is led by PhonePe (48%) and Google Pay (37%).

—😷 In response to growing air pollution, the Maharashtra government has established a seven-member committee to evaluate the feasibility of banning petrol and diesel vehicles in the Mumbai Metropolitan Region (MMR), favouring Compressed Natural Gas (CNG) and electric vehicles. This initiative mirrors past measures in Delhi-NCR, where restrictions on older petrol and diesel vehicles were implemented under the Graded Response Action Plan (GRAP) during periods of severe pollution. Over 48 lakh vehicles are registered across four RTO offices in Mumbai and more than 2 lakh new vehicles (two and four-wheelers) enter the roads annually, Mint reported.. 

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👥 THE TEAM

✍️ Zinal Dedhia, Salman SH | ✂️ Rohini Chatterji | 🎧 Joshua Thomas