Good morning. In today’s edition: are immigration concerns hindering India's Free Trade Agreement (FTA) ambitions?; government's decision on satellite spectrum allocation; plus Swiggy's upcoming mega IPO.

THE TAKE

Immigration Concerns Overshadow India's FTA Ambitions

A few weeks ago, a garment exporter I spoke to told me he wished India would sign the much-delayed FTA or free trade agreement with the United Kingdom. This, he said would help companies like his making specialised textiles and supplying large stores.

The current UK import duty for textiles from India is 9.6% while for Turkey, it is zero, thanks to the UK-Turkey FTA. He said this puts his products at a direct 10% disadvantage as compared to a Turkish manufacturer. The FTA in question, for which discussions began in January 2022 has been circling the pit for some years now.

According to reports, the UK wants cuts in import duties on a range of products, including scotch whiskey, meat, chocolates, and confectionary items. Meanwhile, India wants greater access for skilled professionals in IT and healthcare and zero customs duty for some products.

Access to skilled professionals is another way of saying easier migration which obviously in many cases would lead to immigration. 

Not surprisingly, the FTA is stuck. If you were to note some of the rhetoric in the campaign trail in the US right now, you would not be blamed for thinking the US economy is in the doldrums. 

Far from it. In the last 10 years, the US economy grew at an average of less than 2%. Last year, it grew 2.9%. This year, the  International Monetary Fund (IMF) says it will grow at 2.8% but that figure is an upward revision of the IMF's own July forecast which was at 2.6%. 

The US economy has never looked so strong in a long time. If nothing else, the US Dollar is a good indicator, driving down currencies across the world, including India.

Strong economies and democracies also attract immigrants, including from India. 

Attempts by Indians to illegally migrate to the USA are rising. A report last week says that in the last year, some 10 Indians were arrested every hour while attempting to cross US orders. 

Some 44,000 were detained at the US-Canada border, the highest recorded figure for Indian nationals at that entry point.

You have to remember that individuals who reach that point are not poor by any stretch, having marshalled a fair bit of resources, including airfares and agent fees. 

Not surprisingly, immigration is a key issue in the US elections once again. Donald Trump, who, if one were to go by Wall Street and the forex market, is poised to return as president, has clearly set the agenda on this one. 

Forcing vice president and opponent Kamala Harris to also make commitments on illegal immigration. 

The surround sound around immigration is high. Tesla founder Elon Musk for instance has been repeatedly alluding to illegal immigration and has now quite openly thrown his lot behind Trump, a somewhat unusual development even in the US where some businesses can be open about their political preferences. 

Unlike India of course. 

Musk may have good business reasons to do so but illegal immigration is something that he has been consistently speaking out against. 

The Washington Post put out an interesting report over the weekend saying Musk himself worked illegally in the US on a student visa when he became an entrepreneur. 

Be that as it may, immigration extends beyond the workforce.

Countries like Canada, Australia, and the UK are already clamping down on students—some more than others—because today's students are tomorrow's immigrants.

The Core Report pointed out several months ago that these countries would severely tighten inflows of students because, among other things, their own infrastructure including housing is being strained. And then there is the cultural context of immigrants.

To return to trade, India is unlikely to be on a strong wicket here if exports of people are a key point on the agenda, even if they are highly skilled IT professionals, as they have been.

Trump has been hinting at tariffs ranging from 10% to 60% on products imported into the US if he returns as president next month. That is mostly aimed at China but other countries including India could get hurt.

Trade talks that follow could see some rationalisation of expectations, but access to labour markets is likely to be off the table, except perhaps in small measures.

India is in a somewhat tough spot here, limited in product exports as well as people exports.

 But greater economic gain would lie in the ability for India’s exports to enter countries like the UK at a lower cost. 

And thus keep India's factories present and future humming with activity and creating more jobs in the pipeline.

JANUS VIEW

Government's Satellite Spectrum Conundrum

A noteworthy development last week was the government’s decision to assign satellite spectrum on an administrative basis rather than auctions, the kind used to allocate spectrum for mobile communications. Domestic players Jio and Bharti also favour auctions for allocating satellite spectrum, even as Elon Musk’s Starlink communication system strongly argues for administrative allocation of satellite spectrum.

Why do we need satellite broadband, when large investments have been made in laying optical fibre across the land and erecting telecom towers even in rural backwaters?  In India’s varied and complex geography, it is very difficult to lay cable in some regions: mountains, jungles, rivers, floods and intra-government feuds over who has the authority to grant right of way come in the way. 

The sensible solution is not to declare the project complete, even if only a quarter of the target number of panchayats have broadband routers that are ‘lit’, but to rise above the problem — all the way into outer space. Use satellite broadband.

CORE NUMBER

Rs 2.09 lakh crore

This is the total quantum of market-cap value erosion suffered by nine of the top 10 listed companies followed by a dip in the main benchmark indices. Hindustan Unilever, Reliance Industries, State Bank of India, Bharti Airtel, TCS, LIC, ITC, and ICICI all witnessed massive losses in last week’s trading. Livemint reported that main indices including the BSE Sensex tanked 662.87 points, or 0.83%, to 79,402.29 points on Friday. The Nifty 50 ended 218.60 points, or 0.9%, down at 24,180.80. This is the fourth consecutive week of benchmark indices falling consecutively.

FROM THE PERIPHERY

—💲 Foodtech platform Swiggy's much-awaited IPO is expected to launch in the first week of November, with the foodtech platform aiming to raise around Rs 11,300 crore. The IPO is likely to open for subscription on November 6 and close on November 8, as reported by The Economic Times. The offering includes an offer for sale of Rs 6,800 crore and a fresh equity issue of Rs 4,500 crore. However, Swiggy has reduced its IPO valuation by 25% to $11.3 billion (Rs 9.2 lakh crore), down from the initial target of $15 billion (Rs 12.2 lakh crore). This adjustment is reportedly due to current market volatility and the subdued demand for the recent Hyundai IPO. 

—🧑‍💼 A recent report by AuthBridge, a background verification company, reveals a concerning rise in discrepancies found in background checks within the BFSI sector, particularly in employment verification. In FY 2023-24, discrepancies rose to 10.4%, an 18.1% increase from the previous year. The report identified employment verification as the area with the most discrepancies (14.6%), followed by education verification. Discrepancies in criminal record checks and identity verification are also on the rise. Worryingly, AuthBridge's Annual Trends Report 2024 found that a staggering 73.4% of all reported discrepancies occur in identity verification checks. This highlights a critical need for improved verification processes within the BFSI sector.

—⚒️ A report by Libtech India reveals a concerning 8% decline in active workers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) compared to the previous year. The report also highlights a net deletion of 39 lakh workers, raising concerns about inadvertent deletions in the scheme. While 84.8 lakh workers were deleted, only 45.4 lakh were added The report also notes a significant drop in employment opportunities under the scheme, from 184 crore to 154 crore person-days compared to the previous year. Additionally, 27.4% of all workers (6.7 crore people) are ineligible for receiving wages through the Aadhaar-Based Payment System (ABPS).

UGHH

50 Flights Receive Bomb Threats

Around 50 new flights operated by various Indian airlines received bomb threats on Sunday, October 27, 2024. Akasa Air reported that 15 of its flights received threats but were cleared for operation after inspections.  In the last 14 days, more than 350 flights operated by Indian aircraft operators have received hoax bomb threats, mostly through social media. Sources told Moneycontrol that IndiGo also received threats for 18 flights and Vistara for 17. Union Civil Aviation Minister Ram Mohan Naidu had earlier stated that legislative action is being explored, including amending Aircraft Security Rules and potentially adding perpetrators to a no-fly list.

SUPPORT THE CORE

Dear Readers,

Some of you have written to us expressing your intent to contribute to The Core’s journalism. While we currently do not have a subscription or membership plan, you can still support us by clicking the link below.

Another way to support The Core is by sharing this newsletter with like-minded people in your communities, colleagues, friend and family.

SPONSORED

• Join 14,000+ subscribers, including employees from JPMorgan and Forbes, on AI Akimbo for cutting-edge AI insights and tools delivered weekly! Subscribe

• Beehive Partner Program | Thinking about starting a personnel newsletter or one for your brand or business? Try Beehive using this link and get 30-days trial and 20% off for 3 months.

• TheTechOasis is the newsletter to stay ahead of the curve in AI. Subscribe

• LLMs Research is a daily newsletter categorizing & easily explaining LLMs research papers as they published. Subscribe

• The Closing Chronicle delivers actionable insights for B2B sales professionals and startup founders, focusing on strategies to close deals, optimize sales processes, and stay ahead of industry trends. Subscribe

Was this email forwarded to you? Subscribe