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Good morning. In today's edition—India's lost battle in attracting foreign tourists, auto sales stall, Swiggy IPO takes flight, and lovebirds land in debt.

DECODE THE NEWS

India’s Lost Battle To Attract Foreign Tourists

Despite the allure of India, with its rich history and vibrant culture, foreign tourist arrivals have yet to reach pre-pandemic levels, causing concern for the tourism industry.  This decline can be attributed to several factors, including cumbersome visa processes, the high cost of travel and accommodation compared to other South Asian destinations, and negative experiences shared online by travellers. These challenges, coupled with the rise of attractive visa-free options in neighbouring countries, have led to a noticeable shift in traveller preferences, impacting businesses and the overall tourism landscape in India

In the first half of 2024, 47.78 lakh foreign tourists arrived in India, a 9.1% increase from 2023 but still 9.8% lower than in 2019, according to the Ministry of Tourism. Monthly figures also echo this trend. For instance, March 2024 saw 8,59,688 foreign tourist arrivals, lower than the 9,78,236 in March 2019.

This situation contrasts sharply with the rapid tourism recovery in other South Asian countries. Vietnam, for example, is set to surpass pre-pandemic tourism levels by 13% in 2024, with tourism contributing 7% to its GDP.  Similar trends are evident in Thailand and Malaysia

This raises the question of whether India's tourism sector can effectively address these challenges and restore its popularity as a South Asian destination? And, if the current trend continues, will businesses bear the brunt of the impact?

CORE NUMBER

3,93,238

This figure represents the total passenger vehicle (PV) units sold in October 2024 during the festive season, showing a mere 0.9% year-on-year growth compared to the previous year.  The October sales figures cover festive sales from Diwali, Dussehra, and other celebrations. This growth trend is concerning when compared to the previous year's festive season sales, which recorded a robust 15.9% year-on-year growth in October 2023. According to the Society of Indian Automobile Manufacturers (SIAM), despite the festive season, passenger car sales experienced a decline of 17% in October 2024, reaching 1,075,20 units. Conversely, two-wheelers witnessed a strong 14.2% year-on-year increase, driven by scooters (up 22.3%) and motorcycles (up 11%).

PODCAST

The Markets Are Now Down 10% From Their Peak

On Episode 434 of The Core Report, financial journalist Govindraj Ethiraj talks to Gautam Trivedi, Co-Founder & Managing Partner at Nepean Capital as well as Garima Kapoor, Economist And Executive Vice President at Elara Securities

• The markets are now down 10% from their peak.

• Oil at 45 and what that means

• Foreign institutional investors are not the only ones selling heavily. What is driving the selling and could it turn?

• Decoding India’s multiple economic headwinds; slowest Government spending in several years and potential trade shocks in a Trump presidency.

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FROM THE PERIPHERY

—📉 India’s middle class is feeling the squeeze as high food inflation, now above 8%, forces tighter budgets, impacting everyday spending on consumer goods. The Economic Times reported that this slowdown in urban consumption is troubling for FMCG companies, which have seen revenues dip as city dwellers cut back. Economists from Citi and IDFC First Bank warn that slowing urban spending will likely cause July-September GDP growth to miss the central bank's 7% target, raising concerns about long-term economic momentum as rising costs weigh on urban households.

—🪙 Bitcoin surged to a record $89,915, spiking Indian crypto trading volumes and reviving local exchanges hit hard by taxes and market dips. Previously battered by a 90% drop in trading due to a 1% Tax Deducted at Source (TDS), exchanges are bouncing back. Crypto platform CoinDCX saw 24-hour volumes peak at $36.5 million, up from $5.8 million, while Crypto Currency Exchange Giottus’s daily volumes hit $2 million. Factors driving this surge include Trump’s election win, possible regulatory shifts, Exchange-Traded Funds (ETF) approvals, and Bitcoin’s upcoming halving event. However, caution remains as Indian traders still eye international platforms to bypass TDS.

—💰 Swiggy's initial public offer (IPO) debuted on Wednesday, with its shares closing the listing day at Rs 464 on the National Stock Exchange (NSE), an 18.97% premium to the IPO price of Rs 390. At the end of the trading day, Swiggy's market capitalisation stood at approximately Rs 1.03 lakh crore. Although Swiggy's listing performance exceeded expectations, the company still faces competition from Zomato, which has reported rising profits. Swiggy, in contrast, has been grappling with losses in both the quick commerce and food delivery sectors. 

—🏦 The Reserve Bank of India (RBI) has maintained the status of State Bank of India (SBI), HDFC Bank, and ICICI Bank as domestic systemically important banks (D-SIBs).  A Reuters report, quoting sources, states that these banks, now designated as "too-big-to-fail" institutions, must adhere to specific capital requirement regulations to safeguard the country's financial system. SBI and HDFC Bank will face increased capital buffer requirements starting April 1, 2025. SBI and ICICI Bank were the first to be recognized as D-SIBs in 2015 and 2016, respectively. HDFC Bank joined the list in 2017 and was recently moved to a higher category after merging with its parent company, HDFC, last year.  

UGGH

Marry Now, Pay Later

Millennial and Gen Z couples are increasingly opting for personal loans to cover the rising costs of their wedding celebrations. This trend is fueled by a desire for personalised experiences, unique settings, and destination or themed weddings, often influenced by the pursuit of "social media likes," according to a Business Standard report. Several online lending platforms have also been catering to this customer base, with flexible loan options and quick approvals making wedding loans appealing for couples, the report added. Data from the IndiaLends Wedding Spends Report 2.0 showed that approximately 26% of 1,200 millennial couples surveyed considered taking out personal loans, with 68% of those planning to borrow between Rs 1 lakh and Rs 5 lakh.

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