Good morning. Here's your daily dose of analysis and insights on Indian business backed by interviews and conversations with a range of experts. Today, take a look at how small-town India is driving an e-commerce boom, the return of the much-delayed Indian census and Ola's never-ending troubles.

DECODE THE NEWS

E-Commerce Boom: India's Small Towns Are Outpacing Big Cities In Online Spending

In August, 30-year-old Somesh Nishad from Bhopal, Madhya Pradesh, was pleasantly surprised when a parcel he ordered for his mother arrived just 24 hours later—perfect timing with the festive season on.

“Usually, it takes Amazon or Flipkart 4 to 5 days to deliver,” Nishad shared. “But getting a phone within a day? Super convenient, and I didn’t even have to step out to a store!”

The e-commerce growth isn’t just an urban story. Demand from tier 2, 3, and even tier 4 cities is fueling the boom. 

“In just the first 48 hours, the event (Amazon’s Great Indian Festival) recorded 11 crore customer visits, with 80% of those visits coming from tier 2 and smaller towns. Additionally, more than 65% of sellers have received orders hailing from tier 2 and 3 cities such as Moradabad, Saharanpur, Churu, Haridwar, and others,” Saurabh Srivastava, vice president – categories, Amazon India told The Core.

Customers now expect quick delivery, so platforms are optimising inventory by strategically positioning stock near demand centres by setting up warehouses in tier 2 and 3 cities as well.

Could this surge in demand from smaller cities reshape the future of e-commerce in India?

CO:RELATION

Hindustan Zinc’s Silver Lining 

Hindustan Zinc, a Vedanta Group company in which the Indian government owns nearly 30% stake, is riding high on the demand for silver. According to media reports, the company management is looking at a demerger of the silver business. The precious metal found 14 mentions in the analyst conference call transcript for the quarter to September 2024. According to the company’s assessment, there is a short supply of silver in the global markets, and the industrial demand is surging. That is reflected in record high prices of silver in the international market. In the Indian market, the customs duty cut on precious metals to 6% from 15% earlier is helping push the demand up. 

At 690 tonnes, India is the 12th largest producer of silver. Mexico produces 10 times more and is the biggest producer. Hindustan Zinc has a current production of 184 tonnes and is ramping up capacity by another 33 tonnes. The company’s share price is already up 65% in 2024 and carries significant investor expectations.

PODCAST

Markets Recover And Push Back Against The Bears

On Episode 422 of The Core Report, financial journalist Govindraj Ethiraj talks to Madhavi Arora, Chief Economist at Emkay Global Institutional Equities.

• Markets recover, push back against the bears. How long?

• Oil jumps as some calm returns to the middle east.

• India’s states are on an unprecedented spree of freebies even as their revenues slow down.

• Tata expands aircraft manufacturing capacity to Airbus light military aircraft.

• Uncertainty in Japan as a snap election has mixed results.

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CORE NUMBER

Rs 4.25 lakh crore

This is the total projected sales turnover estimated by the Confederation of All India Traders (CAIT), for Indian sellers and businesses during the upcoming Diwali festive season. This represents a 13% increase compared to the previous year's estimated sales of Rs 3.75 lakh crore. CAIT anticipates strong sales across various product categories, including consumer electronics, home appliances, and apparel. Delhi alone is expected to contribute Rs 75,000 crore in sales. This optimistic forecast contrasts with the muted growth reported by FMCG giants like Hindustan Unilever and Nestle India, who have cited weakened consumer demand, particularly in urban areas.

FROM THE PERIPHERY

—🤝 Swiss firms like ABB and Kuehne+Nagel are ramping up investments in India, enticed by a recent $100 billion trade pact that opens new doors to a market once dominated by China. According to The Economic Times, ABB, for instance, has expanded aggressively, adding eight new facilities since 2023 and boosting its workforce to 10,000. This push underscores a shift among European firms looking beyond China, especially as India’s economy outshines. Signed in March, the trade and economic partnership with the European Free Trade Association (EFTA) promises tariff cuts on Swiss exports, adding momentum to Swiss-India trade, including big perks for chocolates, watches, and machinery.

—🔢 After a four-year delay, the Indian government is set to launch the next census in 2025, continuing through 2026, as reported by India Today. Originally scheduled for 2021, the census was postponed due to the COVID-19 pandemic, and it may also usher in changes to the census cycle. Details remain under wraps, but this long-awaited survey will pave the way for a delimitation of Lok Sabha seats, expected to conclude by 2028. Opposition parties’ demands for a caste census are pushing for new data on sub-sects within General and SC-ST groups.

—🏦 In a landmark deal, fintech firm Slice has finalised its merger with North East Small Finance Bank (NESFB). This marks the first time a major fintech player has merged with a traditional bank, providing Slice with a regulated entry into the banking sector. This strategic move aligns with the ambitions of other fintech companies, such as Sachin Bansal's Navi, which have faced difficulties in acquiring a universal banking licence. The merger, first announced in October 2023, received final approval from the National Company Law Tribunal (NCLT) two months ago. The combined entity plans to offer a comprehensive suite of banking products and services, including savings accounts, fixed deposits, and credit products, according to a statement released by Slice.

—🧑‍⚖️ The Department of Consumer Affairs is scrutinising Ola Electric's claim of resolving 99% of the 10,000 complaints lodged against its after-sales service. The Central Consumer Protection Authority (CCPA) has issued a notice to the EV manufacturer, seeking to verify the accuracy of its claim and ensure transparency. This investigation follows a series of government probes into Ola Electric's service record and potential misuse of subsidies. The company has faced mounting criticism from customers regarding its after-sales support in the recent past, prompting regulators and government authorities to intervene and assess the legitimacy of Ola Electric's claims.

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