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Good morning. A technology development fund and a lion’s share of the budget, and yet it wouldn’t be far from truth to say that India's innovation in defence technologies is lagging. Former defence secretary Ajay Kumar, who has also set up a fund for innovation in defence and space, feels that India has massive potential that hasn’t been tapped. Read on to know more. 

In other news, there is unlikely to be a relaxation in the giant tax notice to Infosys. Meanwhile, word is that Zepto is moving its headquarters to Bengaluru. 

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CORE CONVERSATIONS

India Has Potential To Lead Tech Innovation In Defence: Ex Defence Secretary Ajay Kumar

A recent study by the Foundation for Advancing Science and Technology (FAST India) in collaboration with IIFL Securities, found that Indian defence firms seriously lagged behind its counterparts in other countries when it came to research and development (R&D) despite good spending. The only exception was Bengaluru-based Hindustan Aeronautics Limited. 

Ajay Kumar, former defence secretary of India and an expert in the defence industry believes that India has immense potential in the sector which has not been tapped into. Kumar, who has founded Mount Tech Growth Fund  that works in the space of innovation, deep tech, defence and space, told The Core, “Interestingly, five countries actually control more than 75% of this industry. Of course, we are nowhere close or we are a very small player in it now. But I really think that we have the capability to be among those top five countries to become a leading creator, developer, producer of new innovative technologies which are really defining the frontier, the leading edge of where technology is going.”

Kumar said that there had been a change in the nature in which war is now being conducted. “There is greater focus on autonomy. Everything is becoming autonomous, whether you are on land or on water or on any other. We see that even a simple soldier today, they are equipped with so much of technology on their body that they are much more aware and much more potent.” 

Kumar also spoke about the transformative role of technology in modern warfare, the role of venture capital in defence innovation and the opportunities for Indian startups to become global leaders in defence technology.

PODCAST

The Stock Markets Fail To Track Global Market Recoveries

On Episode 357 of The Core Report, financial journalist Govindraj Ethiraj talks to Karan Taurani, senior vice president and consumer industry analyst at Elara Capital.

• The Take: The Power of Doing Nothing

• The stock markets fail to track global market recoveries, poised to stabilise

• The rupee hits a fresh low

• If you had invested in Sovereign Gold Bonds in

• The latest GST tax target; foreign airlines

• How pizzas are now India’s favourite fast food though competition is rising

CO:REletion

Temporary Snag

Titagarh Rail Systems is one of the biggest beneficiaries of the government’s capital expenditure on infrastructure. There is a demand for wagons from the Indian Railways as well as various metro projects in cities. Over the past month, the share price of the company has received a hammering. Most of it during the selloff over the past week. Even then, the share price is up 32% for 2024. 

There is a lot going for the company’s business. The management’s response to queries related to the demand is simple. The government's ambition is to double the railway freight traffic to 3 billion tons by 2030. With a 25% market share, Titagarh Rail Systems is likely to feed into a steady demand for train coaches. The company makes coaches for Indian Railways for Vande Bharat trains and metro route networks in various cities.

CORE NUMBER

Rs 10,000 Crores

This is the amount of unpaid tax claims being faced by ten foreign airlines operating in India, including British Airways, Lufthansa, Oman Air, Emirates and Singapore Airlines, The Economic Times reported. The Directorate General of Goods and Service Tax Intelligence (DGGI) issued show cause notices for tax dues on services imported by their Indian branches from headquarters. Airlines argue GST should apply only to services within India. Aircraft maintenance, crew payments, and rentals are scrutinised. After involving embassies and the finance ministry, the GST Council approved a circular on June 26, which clarified the valuation of the "supply of import of services". This comes at a time when massive GST notices to companies across sectors in India have raised eyebrows. 

FROM THE PERIPHERY

—💰 Another big GST notice that has made headlines is the one slapped on IT giant Infosys. Now, Reuters is reporting government sources as saying that a relaxation of the tax notice is unlikely. Infosys received a tax demand of over Rs 32,000 crore last month, which amounts to 85% of its revenue for the quarter ended June 30. The tax demand pertains to the services received by the company from its overseas branches between July 2017 to 2021-22. Infosys has asked for ten days’ time to submit its response. 

—🚚 Moving Out! Quick commerce platform Zepto is moving its headquarters from Mumbai to India’s tech capital Bengaluru. In doing so, it will bring all its 1,700-1,800 employees under one roof. Earlier the business verticals worked out of Mumbai while the tech and product teams were stationed in Bengaluru. The move would cost the company Rs 3-4 crores as it has promised to bear the relocation costs for its employees too. The company will vacate both its current offices in the two cities and move into a new 1.5 lakh square feet space in Bengaluru.

—🛍️ Need Human Help! A report by consulting firm EY found that 78% of Indian shoppers prefer humans as customer support while online shopping. While 61% did find AI-driven suggestions helpful, the risk of data breaches has caused concerns. The survey also found that Indians follow and trust social media influencers and even base their purchases on their recommendations, much more than global consumers. 

–🧳 Planning a foreign destination travel but unsure of your visa approvals? Fasten your seatbelts because Atlys, a travel tech startup, has recently launched an AI-powered Visa Probability Evaluator that will tell you about your chances of getting your visa. This tool uses advanced AI and machine learning models to predict visa probability. Atlys claims it can assist in reducing visa rejections by 80%. Users planning a trip after a year or two can also check their visa chances.

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