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’s GDP Gains Momentum in Q2FY22, Grows at 8.4%.

India's Gross Domestic Product (GDP) grew at 8.4% in the July-September quarter of the financial year 2021-22, due to resumption of economic activity, aided by a higher vaccination ratio, and rapid improvement in the industrial and services sectors.

Goldman Sachs Raises India’s FY22 GDP Growth Forecast to 9.1% from 8%.

Goldman Sachs raised projections for India’s economic growth to over 9% in the current fiscal year because of the rising vaccination coverage situation, government capital spending, private corporate capital expenditure recovery and a revival in housing investment.

VC Investments in India More Than Doubled to US$14.4billion in Q3 2021.

Venture Capital (VC) investment more than doubled from its previous quarterly high of US$6.7 billion in Q2 2021 to US$14.4 billion during Q3 2021 driven by increasing participation by less traditional VC investors, and robust exit opportunities for investors through strong IPO activity.

ADB Approves US$1.5 Billion for Covid-19 Vaccines in India.

The Asian Development Bank (ADB) approved a US$1.5 billion loan to help the Government of India fund at least 667 million safe and effective Covid-19 vaccines for c.317 million people.

200 Nations Sign Climate Agreement at COP26 Climate Summit in Glasgow.

Nearly 200 nations, including India reached a climate agreement at the COP26 climate conference with an unprecedented reference to the role of fossil fuels in the climate crisis

Government to Introduce New Crypto Bill in Parliament.

The Bill pertaining to the cryptocurrency seeks to prohibit all private cryptocurrencies in India and create a facilitative framework for the creation of the official digital currency, which will be issued by the Reserve Bank of India.

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

Media coverage in India this month covered the Indian Parliament passing a bill to repeal the controversial farm laws, Prime Minister Modi pledging India’s Net Zero Commitment by 2070 during the COP26 summit and Indian start-ups attracting record investments in 2021, with the 41st Indian Unicorn for the year announced in November

 

Parliament Passes Bill to Cancel Three Farm Laws

 

Following massive farmer protests across the country for over a year against three controversial farm laws, the Parliament passed the Farm Laws Repeal Bill, 2021 during the first day of its winter session. The Centre's three farm laws has been repealed by both Lok Sabha and Rajya Sabha in the fastest repeal in recent years amid protests by the opposition parties. Various media publications covered the pros and cons of the farm laws being repealed and its impact on other such agricultural reforms in the future.

 

An op-ed in Livemint covered why the repeal of these laws was very unfortunate because it may mean that the farmers across the country are unable to commercialize agriculture for an extended period. “Why should farmers oppose an all-India law on the same? After all, we have an operational eNAM (e-national agricultural mandi), offering an alternative marketplace that has not aroused protests. Clearly, it’s powerful lobbies in Punjab, Haryana and Uttar Pradesh that are up in arms, as rich farmers fear a loss of hegemony…. The fact that farming is constitutionally a state subject means that the Centre has limited power on it, unless states are taken along. The Union government may have been compelled to withdraw these laws because it needs to stay in power to effect reforms, and if three states turn antagonistic, its future agenda would be in jeopardy…. Can we ever go back to getting these laws in? The answer is ‘yes’, and for this to happen, the government needs a stronger communication strategy, one that effectively conveys their benefits to all farmers across India. This will be a long battle that requires patience and perseverance, but it can be done.”

 

An article in Hindu outlined why Farmers should not only withdraw the protest following the repeal of the farm laws but also show a more flexible approach regarding the path ahead to reform the sector. “Prime Minister Narendra Modi has done the right thing by announcing the repeal of the three farm laws that are at the centre of a protracted confrontation between his government and a section of farmers for a year. The laws sought to reorganise India’s agriculture sector more in accordance with the principles of market economy…. Flexibility is not a bad trait in democracy, which is about constant negotiations, but it should not be merely political expediency… A consultative decision making would always be more sustainable and easier to enforce. Further moves on agriculture sector reforms must draw from the experience of the making, and now the repeal, of the three farm laws.”

 

Finally, an op-ed in Indian Express was critical of the manner in which the controversial laws passed and got repealed in parliament, stating that without due consideration and debates, this approach could lead to deep distrust about the reforms itself in the society, particularly among a section of the farmer community. “It just took four minutes for the Lok Sabha on Monday to pass a bill that sought to repeal the three controversial farm legislations which saw farmers mobilise at the Delhi borders for over a year. It is shocking — but hardly a surprise — that the government refused to heed the Opposition’s demand for a discussion in the House on the subject that had been debated extensively on different platforms across the nation… In fact, the obstinacy of the government was a major reason why it failed to convince the protestors despite 11 rounds of talks and the intervention of the Supreme Court about crucial reforms…. So, what were the imperatives? Was the government’s failure merely a case of miscommunication? What has been the outcome of similar “reform” measures in the states? Should the Centre henceforth let the states decide their own agriculture reform paths as per the demands of local political economy rather than push centralised solutions on a sector rich in diverse cultivation practices and markets? Then, there is the continuing demand among farmers for making the minimum support price a legal right, which raises several fraught issues. It also seems even those who had opposed the farm laws agree that Indian agriculture is in a crisis and needs radical solutions… Debates are the lifeline of Parliament; their absence will diminish the institution, put a question mark on the next set of laws and deepen already hardening fault lines.”

 

Prime Minister Modi Pledges Net Zero by 2070 During COP26 Climate Summit

 

Prime Minister Narendra Modi gave a five-pronged target for India and finally committed to a Net Zero emission target by 2070, joining the likes of the US, the UK and China. The targets included non-fossil capacity touching 500 GW and 50 per cent of the country’s energy needs will come from renewable energy sources. From now to 2030, the projected carbon emissions will reduce by 1 billion tonnes and India’s overall carbon intensity of the economy will see a 45 per cent reduction. Various media publications focused on the steps the country needed to take to achieve these ambitious targets.

 

An op-ed in Indian Express by the chief India economist of HSBC outlined the opportunities for India through a net-zero approach, since the approach gives a clear signal of India’s intentions and would position the country well for better access to international technology, funding and markets. “India is the third-largest emitter in the world and technological development is making it possible to decouple economic and emissions growth by switching to renewables… The new net-zero approach will require dramatic changes in the power mix and industrial processes... And herein lies the opportunity… Much of India’s wealth is yet to be created. We estimate that 60 per cent of India’s capital stock — factories and buildings that will exist in 2040 — is yet to be built. The country can potentially leapfrog into new green technology, rather than being overburdened with “re-fitting” obligations. If India can now transition to green growth, it could create a more responsible and sustainable economy.”

 

An article in Money Control detailed how Prime Minister Modi’s net-zero declaration by 2070 is as much a demonstration of the government’s political intent to walk the talk on Climate Change as it is about setting a goal to conform to a global initiative. “On November 1, Prime Minister Narendra Modi announced that India will achieve the target of net-zero emissions by 2070…. This is a big step forward in two ways. One, India, the world’s fourth-largest polluter after the US, China, and the European Union, has set a clock for itself and the world to make the planet’s atmosphere less toxic. Two, the Prime Minister announcing the goal on the world stage brings in an element of domestic political commitment… While there is no gainsaying the government’s commitment towards climate-friendliness in terms of enabling policies and laws, the responsibility of execution lies squarely with the industry through collaborations with the government, civil society, and the citizenry to help India achieve its commitments. Businesses will have to draw up a growth strategy that is timescale consistent with the response to Climate Change, water scarcity, and other global challenges… This is the time for industry and consumers to hold the mirror, and take a long, hard look at themselves. A fundamentally new model of industrial organisation is needed to de-link rising prosperity from resource consumption growth — one that goes beyond incremental efficiency gains to deliver transformative change but evolves into a new B2C2C approach: Business to Consumer to Climate.”

 

Finally, an article in Livemint covered a study by CEEW Centre for Energy Finance (CEEW-CEF) that states India will need a total investment of US$10.1 trillion to help decarbonise India’s power, industrial, and transport sectors to achieve net-zero emission by 2070 and also estimated that India could face a significant investment shortfall of US$3.5 trillion to achieve its net-zero target. “Recently, Prime Minister Narendra Modi announced India’s aim to achieve net-zero emissions by 2070 at the COP26 Summit. The study suggested that India would need investment support of $1.4 trillion, in the form of concessional finance from developed economies to mobilise foreign capital that bridges the gap. As per the study, the majority of the investment would be needed to transform India's power sector... The CEEW-CEF study noted that at least $8.4 trillion will be required to significantly scale up generation from renewable energy and associated integration, distribution, and transmission infrastructure. And, $1.5 trillion will have to be invested in the industrial sector for setting up green hydrogen production capacity to advance the sector’s decarbonization… However, the first-of-its-kind study also estimated that India could face a significant investment shortfall of $3.5 trillion to achieve its net-zero target.”

 

Indian Private Firms Attract Record Investments, with 41st Indian Unicorn for 2021 Announced in November

 

2021 has seen 41 unicorns from India so far, compared to 26 unicorns in the entire decade prior. Privately held start-ups have raised c.US$31.2 billion in 2021, nearly three times 2020’s c.$11.2 billion, and more than double the previous record of US$13.1 billion in 2019. Various media publications covered the key reasons for the growing investor interest in Indian start-ups and why India is well positioned in the unicorn race.

 

An article in Indian Express coutlined why the policy/regulatory environment needs to complement the growing willingness of investors, both private and public, to take a longer view to back disruptors, for this ecosystem to flourish. “Buoyed by the success of these companies in tapping the public markets, several such unicorns (startups valued at over $1 billion) are in the process of firming up their IPO plans. This not only attests to the depth of the domestic capital markets, and the willingness of investors to back these startups, but is also a promising sign for the larger startup ecosystem, one of the most vibrant parts of the Indian economy at the moment… Reports of new unicorns being created are now a regular feature. These unicorns exist not only in well-known segments such as e-commerce and fintech, but also in other verticals such as logistics…. Beijing’s crackdown on China’s tech sector is only likely to facilitate greater foreign capital flows towards such companies. The policy/regulatory environment also needs to be conducive, however, for this ecosystem to flourish.”

 

An op-ed in Money Control by a former executive director of World Bank writing in his personal capacity covered how India, already home to the third-largest number of startups valued at US$1 billion or more, is poised to capitalise on a host of global and domestic factors that could create many more such companies. “India seems to be the new global hotspot for corporate unicorns. The country is home to the third-largest number of such privately held companies with a valuation of $1 billion or more, behind the United States and China. Besides India’s entrepreneurial spirit, credit needs to be given to the government for streamlining the regulatory environment to facilitate this… A key factor to this success is the tightening of regulations on China’s tech sector, and the increasingly rocky relationship between the US and China, which is helping channel global capital flows, including from Silicon Valley investors to Indian entities… The ease of doing business (EODB) has been a focus area of Prime Minister Narendra Modi’s vision, and it is clearly working. In the World Bank’s EODB ranking of 190 countries, measuring how easy it is to start a business, enforcing contracts, cross-border trade, employing workers, etc., India jumped from 142 in 2014 to 63 in 2020. Is India perfect when it comes to doing business? Well, it’s a work in progress, and there are many more reforms in the pipeline. But the ship is clearly sailing in the right direction. The stampede of new Indian unicorns is just beginning.”

 

Finally, an op-ed in Livemint detailed why the increasing quantum of investments into privately held start-ups and the incubation of more value-generators could help rewire the Indian economy for faster expansion over the decades ahead. “Remember, money is relatively easy to raise in the global glut of liquidity that central banks released to cushion us from the covid crisis. Also, our addressable market online is now so vast that scaling up almost any ambitious business model requires a sum that can turn a garage venture into a unicorn if a slice of it is sold for the same... Crucially, the billions of dollars going into startups represent large bets on distant outcomes, not value generation by way of revenues. Nor can we assume a high rate of enterprise survival, as assured by profits… Our startup space can be said to reflect a Schumpeterian shift of sorts, an embrace of ‘creative destruction’ as a vital sign of progress, with old ideas yielding to new ones and with innovation in command of capital.”

Key insights and forecasts that show us what is to come

After Glasgow: The Good, the Bad, and the Hopeful.

A review of the recent COP26 climate summit in Glasgow, including climate action since the Paris Accords and how governments and businesses can step up to address the complex challenges of climate change and adaptation.

The Path to Climate Credibility.

Accelerating the green transition will require like-minded countries to form a “climate club” and impose import tariffs on trade partners not contributing to the collective effort.

How Technology Can Help with Methane Regulation.

One step would entail North American commitment to employ state-of-the-art technology to systematically measure and report methane emissions, where both government and businesses can build on the established continental model for toxic emission releases and expand its application.

How Europe Can Build Upon COP26.

If climate action fails, the EU will succumb to economic breakdown of supply chains and migratory pressures and to avoid this, the bloc must advance climate justice and restore trust between developed and developing economies.

India’s Road to Net-Zero.

India’s recent commitment of net-zero carbon emissions by 2070 only fits a general pattern of incremental progress on climate action at the global level and lacks the collective sense of urgency required to limit global warming to 1.5 degrees Celsius below pre-industrial levels.

The Taliban Could Get India and Pakistan to Cooperate.

For Afghanistan to survive further chaos and mayhem, Pakistan and India’s cooperation is necessary, and the Taliban should make further efforts to pose difficult questions to both capitals and push them to start discussions over the question of India and Pakistan’s cooperation in Afghanistan.

Growing American Leadership on the Sustainable Development Goals.

The Biden-Harris administration—as it works to re-engage and rebuild credibility at home and abroad—is advancing policy priorities that are consistent with the SDGs, even if it has not yet signalled how it might apply them to its domestic agenda.

What the Federal Reserve Should Do Now.

The stance of the US monetary policy should move in a less expansionary direction as a result of three developments over the last 18 months, some of which have accelerated in the last three months.

China’s Evolving Food Security Strategy.

Since the implementation of Deng Xiaoping’s reforms, domestic food production in China has rapidly increased, however, food consumption is also skyrocketing, and the challenges presented by these factors have resulted in China’s domestic food production being unable to maintain current lifestyles and consumption habits.

Infrastructure Development in Tibet and its Implications for India.

Under President Xi Jinping, China has continued building a vast network of infrastructure projects like roads, railroads and airports in Tibet – all with dual-use capabilities, which has helped China to gain an operational advantage along the border with India.

The Opportunity for India as Supply Chains Reorganize.

While a global supply-chain gap across trade and manufacturing presents a major opportunity for India, its success will depend on dramatic improvements of India’s logistics capacity and capability, consistency in regulation and tax policy, and governmental non-interference in the conduct of business.

The Key Events Driving Global Instability & Opportunity

Big Picture TEST Metrics for the US, India and China, December 2021

India’s Manufacturing PMI increased to 55.9 in October 2021 from 53.7 a month earlier and above market consensus of 54. This marked the fourth straight month of expansion and the strongest growth since February, as both output and new orders expanded at the fastest rate in seven months, amid the easing of COVID-19 restrictions. Exports and imports grew by 44% and 65% 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 unexpectedly fell to 49.2 in October 2021 from 49.6 a month earlier and missing market expectations of 49.7. This was the second straight month of contraction in factory activity, with output, new orders and export sales all declining, amid the Delta variant of COVID-19 outbreaks, higher material cost, power shortage, and a campaign to reduce carbon emissions. Exports and imports grew by 27% and 21% respectively as compared to the same period last year.