Ideas

Peace

In a world set to reach nearly 10 billion inter-connected people, power will come from creating peace, prosperity and freedom so that we can make breakthroughs in how we live together, and this requires a transformation in the very definition of power, and the purpose and principles by which it is exercised

GPC’s Macro Thought Leadership

GPC’s research focuses on the geostrategic changes in the world and the implications of for peace, prosperity and freedom. Our analysis seeks to find the patterns and identify the new forces that are the signs of our times and will determine the future of the world


The world is in a historic transition of great power hegemony, world order, population and resources which will change the very nature of civilisation. These transformations create discontinuities and a dynamic canvas on which the world’s future will be written

The 21st Century has been widely predicted to be the Asian Century, in which the continent, home to 60% of the world’s population, will become the world’s dominant economic, political and even cultural force. Within this continent of 49 countries, two will disproportionately impact the trajectory of the 21st Century on account of their scale and growth potential: China and India. The relationship between these two countries as well as the trialogue with the world’s current hegemon, the United States, will will be critical to shaping global economic and political trends for generations to come.

 

A modern India lifting a billion people out of poverty will need a large, modern and diversified economy to not only realize the aspirations of people but also to clothe, feed, employ and educate what will become the world’s largest population within the next five years and this will require an India that is open to the world and dedicated to unlocking the potential of its people and its assets

 

We bring our network of business leaders, entrepreneurs, influencers and thinkers who are at the frontline of change across to provide insights into the global issues that are rapidly changing the world and how they see an impact being made for good

 

We recognise the complex and rapidly changing nature of India’s markets and economy as it grows and expands internationally and have focused the firm’s thought leadership on detailed research to generate insights into the macro-environment, market strategy, investment opportunities and challenges to generate attractive risk adjusted returns

We live in revolutionary times. Increasingly political, economic and social volatility is driving change on a global level, creating both risks and opportunities for international investors. Greater Pacific Capital’s thought leadership and investing strategy placed it at the forefront of global change

Selected news that makes the difference

India Retail Inflation Rate Rises to 4.91% in November 2021.

The inflation has increased sequentially, as it was recorded at 4.48% in October 2021, however year-on-year a dip has been registered as the rate of inflation in November 2020 was 6.93%. The uptick was led by an increase in food prices, particularly vegetables.

Germany Announces c.US$1.4bn in Clean Energy Commitments to India.

The German Ministry of Economic Cooperation and Development announced new development commitments to the tune of over Euro 1.2 billion (c.US$1.4 billion) to India to support its fight against climate change and assist in projects in related areas such as green energy.

Foreign Portfolio Investors (FPI) Inflows in IPOs Hit Record High.

Foreign equity inflows into the initial public offerings (IPOs) have hit a historic high, with US$8.8bn invested since April, crossing the previous high of US$8.6bn for fiscal year FY21 (Mar-end) in 9 months.

ADB Approves US$350m Loan to Help Improve Urban Services in India.

The loan supports the policies established by the Ministry of Housing and Urban Affairs to accelerate universal coverage of piped water supply and improved sanitation, benefiting the urban poor, including other disadvantaged, economically weaker section, and low-income groups.

India-UK Free Trade Agreement Talks Set for Early 2022.

Formal negotiations for an India-UK free trade agreement (FTA) are set to begin early next year with a trade deal expected to open huge opportunities for businesses in both countries over the coming years

Acquisitions in India’s Green Energy Sector Grow by 300% in Jan-Oct.

In a reflection of investors' interest in India’s green economy, the total value of acquisitions in India’s renewable energy sector surged by more than 300% to US$6 billion in the first ten months of 2021 (till October) from less than US$1.5 billion reported in 2020.

ESG, Green Bond Issues Rise to US$7bn in 2021 as Indian Firms Promote Sustainable Business.

Indian companies have increasingly engaged in more sustainable business practices, raising c.US$7 billion through ESG and Green bonds in 2021, compared to US$1.4 billion and US$4 billion in 2020 and 2019, respectively.

Spotlight on the key monthly news events shaping media coverage in India

Media coverage in India this month covered restrictions imposed by various Indian state governments amid Omicron concerns, Russia President Putin’s meeting with Prime Minister Narendra Modi in India the cabinet approving a US$10bn production linked incentive (PLI) scheme for the semiconductor industry

 

Fresh Restrictions Imposed Across Various Indian States Amid Omicron Concerns

 

The World Health Organization (WHO) has said the new Omicron coronavirus strain has been found 63 countries and will surpass the Delta variant in spreading speed, triggering a global alarm. While India’s total tally of Omicron cases currently stands at 61, states across the country including Maharashtra and Delhi have imposed new local restrictions and made institutional quarantine mandatory for all passengers from "ultra-risk" nations. Various media publications covered the potential impact of Omicron both in terms of number of cases and for the recovery of the economy.

 

An article in Hindustan Times outlined why the new Omicron variant of Covid-19 may pose “a fresh risk” to the ongoing global recovery, but its impact would be “less severe” for India due to the increasing pace of vaccination in the country, expressing confidence in robust recovery of the domestic economy over the coming quarters of the financial year. “India’s economic recovery is expected to gain further strength in the remaining two quarters of the current financial year, as evident from 19 among 22 high frequency indicators (HFIs) in September, October and November crossing their pre-pandemic levels in the corresponding months of 2019, the ministry said in its monthly economic review for November… “India’s economic recovery is expected to gain further strength in the remaining quarters of the financial year on the back of upbeat market sentiments, rapid vaccination coverage, strong external demand and continuous policy support by Government and RBI (Reserve Bank of India),” the report said… “That said, the economy is better prepared to work with Covid, with rapidly growing vaccination coverage and lessons learnt from second wave in containing the contagion,” it added.”

 

An op-ed in Livemint covered the downside risks Omicron potentially poses to India’s near-term growth outlook and how rising concern over the new covid variant could further delay the start of monetary policy normalization by the Reserve Bank of India. “Increased uncertainty surrounding the economy’s growth outlook, could be the key swing factor that sees the MPC delay the start of policy normalization, which we otherwise expected would commence at the December meeting, as growth data has improved considerably since the last policy review in early October.… It is against this improving trend in growth that we expect monetary policy normalization to start sooner rather than later, depending on the extent of risk that emerges from Omicron. As we are still at a stage of understanding this new variant, our base case expectations for growth and inflation are unchanged… In this light, to evaluate the potential risks from the new variant, we will be tracking: a) evidence of its transmissibility and virulence, b) restrictions being imposed by states, largely as a response to a potential sharp rise in cases and its impact on hospital capacity, and c) the pace of vaccination now that 46.9% of India’s adult population is fully vaccinated and at the current run rate we expect full coverage of adults by mid-March 2022… If the growth impact of Omicron is muted, then we expect RBI to take the second step in policy normalization at its February review, with an increase in its reverse repo rate.”

 

Finally, an op-ed in News18 detailed why India should avoid using travel bans as a method of countering the spread of the new variant, given travel bans can have quite a damaging impact on the economy since it restricts tourism and hinders trade and business “To begin with, we are just being naive by assuming that if we block air travel, the variant will not travel. Two confirmed cases of Omicron have been reported in Karnataka at the time of writing this article, it is certain that the new strain is already here. We’ve seen it before: a complete travel ban during the first two COVID waves did not prevent the virus from spreading, although there was a small delay in its inevitable spread. Even though the initial preliminary data shows that Omicron has higher transmissibility than Delta, this ban would have no benefit… India’s economy shrunk 7.3 per cent in 2020-21 fiscal and blocking international travel will further affect business. India’s foreign exchange earnings from tourism in 2019 stood at nearly $30 billion—following the pandemic, it nosedived to estimated $6 billion in 2020. As per Moody’s Investors Services, “The emergence of the new variant also comes during a period of fragile economic recovery, with stretched supply chains, elevated inflation and labour market shortages. Business disruption resulting from the spread of the new variant could prevent supply chain stresses from easing, dampening productive capacity and stoking further cost pressures in sectors with exposure to global supply chains.” Any further loss will dampen economic recovery... The present genome sequencing estimations in India are based on evaluating only 0.2 per cent of the total samples. It is imperative that we increase it to at least 5 per cent. INSACOG can also be asked to release its comprehensive data and daily updates. More private laboratories should be roped in for enhancing genomic surveillance in the country. This is the time for global cooperation, not shutting down borders, which will anyway lead to adverse outcomes. Targeting a few countries will do no good and impact the fight against COVID-19. As WHO says, “COVID-19 constantly exploits our divisions. We will only get the better of the virus if we work together for solutions.”

 

Cabinet Clears c.US$10bn Incentive Scheme for Semiconductor Industry

 

The Union Cabinet approved a production linked incentive (PLI) scheme for semiconductor and display board production in the country. Under this scheme, India will set up more than 20 semiconductor design, components manufacturing and display fabrication (fab) units over the next six years. As part of Modi government's bid to make the country a hub for electronics, the programme will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design. Various media publications focused on the implications of this scheme not just for India but globally given the recent disruption in the global supply of semiconductor chips.

 

An op-ed in OpenGov lauded the scheme and covered how India has an “unprecedented opportunity” to grow electronics manufacturing to US$300 billion in the next 3-4 years, building on scale, competitiveness, a large market, and enabling policies. “In an attempt to make India a hub for electronics, the government plans to provide incentives worth IN₹760 billion (approximately US$10 billion) towards setting up over 20 semiconductor designs, components manufacturing, and display fabrication (fab) units over the next six years. Through various PLI (production linked incentive) schemes, the centre has tried to broaden the scope of manufacturing and export from India while the semiconductor policy will help deepen India’s manufacturing base… An industry expert noted that the policy comes at the right time, given the ubiquitous uses of semiconductors; if the policy can attract foundries (fabrication units) to the country, it would go a long way in making the country self-reliant… In 2020, China’s and Vietnam’s electronics exports were respectively 70 and 11 times that of India’s. Attracting GVCs requires open trade and investment policies. Tariff and non-tariff barriers can deter the movement of component and sub-assembly manufacturers. Any constraint on investments will also be a barrier to attracting GVCs. Stability of policies, reducing delays in processes, and incentives, are key to attracting FDI and ensuring efficient operations. India’s policies should be WTO-consistent as the inconsistent ones can be challenged by competitors and create an uncertain investment environment.”

 

Another op-ed in Livemint covered how a time-bound incentive-led vision for semiconductors is critical for the country given how the shortage of semiconductors has severely impacted the production of automobiles and electronic goods, crimping demand at a time India’s economic recovery was gaining pace. “India seeks to reshape supply chains to cut its reliance on China amid a global chip shortage that has impacted the production of goods ranging from cars to computers... The government hopes the incentive plan will facilitate the production of critical components used in automobiles and mobile phones locally. In addition, incentives provided under the scheme will help design, fabricate, pack, and test the semiconductor chips and develop a complete ecosystem... Massive digitization following the pandemic outbreak drove up demand for chips and led to a supply chain imbalance, the minister said, adding the industry expects things to return to normalcy in six to eight months”

 

Finally, an article in Business Today highlighted how the initiative would provide opportunities for both import substitution and export propulsion as well as herald an end to end presence for India in the electronics value chain. “As India is aiming to become self-reliant, the government has announced industry-friendly measures for the development of semiconductors and display manufacturing ecosystem in the country…. In addition, to promote the fabless ecosystem in India, the government has announced design linked incentive as well and will offer up to 50 per cent of eligible expenditure and product deployment linked incentive of 6-4 per cent on net sales for five years. Support will be provided to 100 domestic companies of semiconductor design for integrated circuits (ICs), chipsets, system on chips (SoCs), systems & IP cores and semiconductor linked to design and facilitating the growth of not less than 20 such companies which can achieve turnover of more than Rs 1,500 crore in the coming five years… The new scheme announced by the government will contribute to $1 trillion digital economy as a part of $5 trillion DP by 2025-26. It has a production target worth Rs 9.57 lakh crore over the next 20 years and exports are expected to touch Rs 5.15 lakh crore (US$70bn) over the next 20 years. In total, the Government of India has committed support of Rs 2,30,000 crore (US$30bn) to position India as a global hub for electronics manufacturing with semiconductors as the foundational building block.”

 

Russian President Putin Visits India, Meets Prime Minister Narendra Modi

 

Prime Minister Narendra Modi met Russian President Vladimir Putin in New Delhi following which leaders of both countries reaffirmed the strength of their countries’ multi-decade ties, building further confidence through substantive defence agreements. The two countries agreed to a 10-year military-technical plan that includes technology transfer from Russia to India. Various media publications focused on the implications of this visit for India-Russia relations going forward.

 

An op-ed in New Indian Express outlined why the Modi-Putin summit was a clear signal of the commitment to new large-scale initiatives across trade to further strengthen the bilateral partnership between the two nations and reinforce strategic balance as an enduring factor in ties. “The timing of the meeting, just before the Biden-Putin virtual summit and the conference of democracies hosted by the US President, was significant. The last in-person summit was in 2019 when PM Modi travelled to Vladivostok. Putin had set the tone for the visit by calling India one of the authoritative centres of the multipolar world whose foreign policy philosophy and priorities are close to that of Russia… Both countries are hedging against any structural imbalance in the international order that might affect the two nations. Change is inevitable and the summit sent the signal that despite changes and shifting priorities, both countries wish to maintain strategic ties… One weak pillar of the bilateral relationship is trade. India-Russian trade languishes at around $10 billion. India-Bangladesh trade is around the same. While bottlenecks exist, both governments must focus urgently on this, and a joint task force should be mandated to come up with options if the new trade target of $30 billion is to be achieved by 2025.”

 

Another op-ed in Economic Times covered how given India's economic interests are complementary to Russian requirements in the region, the summit between the two leaders displayed a steadfastness of the relationship between the two countries which has the potential to shape the future of the region. “India's Prime Minister Narendra Modi and Russia's President Vladimir Putin would meet on December 6 in Delhi. It is important to note that Russia displayed its proximity to India, when the Russian President participated in the UN Security Council conference on maritime security chaired by PM Modi. To achieve the goal of a 5-trillion economy over the next few years, India's energy and mineral resource requirements are set to increase manifold. Russia needs labour resources, capital, technology, innovation, space, and market whereas India focuses on energy security, mineral resources, and farming land through bilateral relations... India and Russia can work with countries like Japan and Korea to promote joint investments for exploration in the Far East, the Arctic and Siberia. India's need for energy sources, especially coking coal, and hydrocarbons, entails the quest for overseas investments and asset acquisitions as a logical corollary. Russia can be a reliable, robust, and steady partner to meet these requirements. As part of its diversification strategy, the first shipments of LNG from both Russia and the US were received. The strategies of India and Russia- both internal and external naturally draws one to the other's energy sector orbit. The warm relations and mutual interdependence between the two have catapulted energy cooperation as one of the cornerstones of Indo-Russia relations - as underlined in the agreements signed during PM Modi's visit to Vladivostok where the focus was on trade and investment”

 

Finally, an article in Hindu highlighted the complex geopolitical landscape both India and Russia have to navigate while deepening ties, following signs of rising tension between Russia and the U.S. following the US warning Russia of “economy-jarring sanctions” if it seeks to occupy Ukraine. “The challenges facing Mr. Modi and Mr. Putin in terms of maintaining this momentum in bilateral exchanges are multidimensional. First, and most imminently, the pandemic has periodically crippled the growth of both economies and the threats to public health remain despite considerable progress with vaccinations… India and China have forged an uneasy truce across their Himalayan border in the aftermath of the Galwan valley exchange in 2020, yet there are numerous potential flashpoints that could send ties into a spiral again, including China’s historically provocative actions in the South China Sea and its thinly veiled insecurity about India joining the Quad for Indo-Pacific security…. Moscow has adroitly managed to remain friends with both its mega-neighbours, but it will require a robust focus on confidence-boosting cooperative initiatives if India and Russia are to safely navigate the complex geopolitical landscape that they occupy.”

Key insights and forecasts that show us what is to come

Visualizing 2022: Trends to Watch.

Experts from the Council on Foreign Relations highlight the most important trends they will be following in the coming years.

Digital Government: Foundations for Global Development and Democracy.

Digital government is critical for sustainable development: Seven of the indicators across four SDGs relate to digital capabilities, making government digital service provision critical for developing countries.

Democracy Playbook 2021: 10 Commitments for Advancing Democracy.

Analysis by the Brookings Institution proposing ten pro-democracy commitments for consideration by participants in the upcoming first Summit for Democracy on December 9-10, 2021, and the subsequent year of action.

What Happened to Supply Chains in 2021?

Like global supply chains themselves, the story of their disruptions in 2021 is complex. Pandemic-related disruptions threw a wrench into global supply chains this year, causing shortages of goods. An analysis by the the Council on Foreign Relations

Seven Charts That Explain the COVID-19 Pandemic in 2021.

COVID-19 continued its worldwide spread in 2021, spurred by more contagious variants. Vaccines are highly effective, though have been unevenly distributed. Follow the pandemic’s story over the last year through graphics.

Are Russia and Ukraine Once Again on the Brink of War?

Russia’s military preparations and other actions signal that Moscow has recognized the danger of coexisting with a fortified area on its border but does not yet know what to do about it.

The Human Rights Risks and Opportunities in Blockchain.

Blockchain technology has been proposed as a potential answer to a variety of human rights challenges, from ease of access to voting and identity-based service delivery to land rights protections and supply chain traceability.

Xi Jinping’s New World Order.

As Xi’s ambition and China’s global prominence have become indisputable, many observers continue to question whether Beijing wants to shape a new international order or merely force some adjustments to the current one

Time to Overhaul the Global Financial System.

For low- and lower-middle-income countries to pursue their development goals and do their part in tackling problems like climate change, they need to be able to borrow reliably on decent market terms. Yet the current two-tiered global financial system extends this privilege almost exclusively to rich countries.

The Great Tech Rivalry: China vs. the U.S. in the 21st Century.

In the past two decades, China has risen further and faster on more dimensions than any nation in history. As it has done so, it has become a serious rival of what had been the world’s sole superpower.

Examining the Taliban’s Words, Thoughts, and Deeds, Part I: The Myth of Taliban 2.0.

Since taking power in August 2021, the Taliban have been on a PR blitz to re-brand for international audiences.

The Key Events Driving Global Instability & Opportunity

Big Picture TEST Metrics for the US, India and China, January 2022

India’s manufacturing activity grew at its fastest pace in 10 months in November with PMI rising to 57.6 in November 2021 from 55.9 in October 2021, as companies scaled up input buying encouraged by strengthening demand and improving market conditions. Exports and imports grew by 28% and 59% respectively as compared to the same period last year. No further rate cut was announced by the RBI during this month.

 

China’s Manufacturing PMI rose to 50.1 in November 2021 from 49.2 a month earlier, beating market estimates of 49.6. with the country continuing to lose momentum as it grapples with a slowing manufacturing sector, debt problems in the property market and Covid-19 outbreaks. Exports and imports grew by 22% and 32% respectively as compared to the same period last year.