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Slower than expected but faster than the rest…the IMF needs to look more closely at India

By India, News No Comments

As a wise man once said, there aren’t any fleas on a dead dog, but when the dog is an economy it’s even less informative to count the fleas than to check for vital signs of life. That’s a lesson the IMF might usefully have taken to heart when it laconically reported last week that India’s economy was “growing more slowly than expected”. Well, I suppose it depends what you mean by “expected” and how fast “slowly” can be before it speeds up. But rather than counting the fleas, lets take a look at some of the vital signs of India’s economy instead…lets take a look at it’s Industrial Output.

First though, a bit of context: in July of this year the US industrial sector suffered its first contraction since 2009 (when you could still buy VHS tapes). And more importantly, the PMI index (a key pointer to trends in manufacturing and service sectors) fell to 44.9 in the US last month: given 50 is the PMI threshold separating expansion from contraction, the US manufacturing sector is now officially in decline and it is impossible to rule out Donald Trump’s trade war with China as its root cause. America’s yield curve promptly inverted (again): a sure sign that bond investors fear a recession is on the way.

So that old American dog looks far from healthy at the moment, although it does (to be fair) have a few more fleas than it’s UK counterpart…

Industrial production seems to be dying on its knees in the UK with Rob Dobson, a director at the influential HIS Markit agency certainly declining to mince his words: The UK manufacturing sector is suffocating under the choke-hold of slower global economic growth, political uncertainty and the unwinding of earlier Brexit stockpiling activity…Production volumes fell at the fastest pace in seven years as clients delayed, cancelled or rerouted orders away from the UK.”

And unlike the States, the UK is now facing a double whammy in the shape of higher than expected inflation: in July the rate broke through the Bank Of England’s target of 2%, almost certainly because of the higher prices caused by a sharp decline in sterling’s value against the Euro and the Dollar (Brexit again I’m afraid).

On proper reflection the IMF might think these two old colonial dogs are probably better targets for its gloom.

Certainly over in India things couldn’t be more different. Industrial production on the subcontinent rose by 4.3% in July, much improved from the June figure of 1.2% and consumer inflation rose only very marginally in August to 3.2% (from 3.15% in July): well within the Reserve Bank’s target of 4% (unlike the UK counterpart). And, equally importantly, these promising trends continue to be underpinned by a range of measures introduced by the Modi Administration to improve capital fluidity and promote Foreign Direct Investment. The Reserve Bank is also set to cut base rates further having already announced a 110 basis point relaxation earlier this year.

On the subcontinent the manufacturing, mining and energy sectors (dynamo components of India’s rapidly expanding industrial base) have all reported better than expected figures in July at 4.2%, 4.9% and 4.8% respectively. Those are figures most western economies would die for.

Executive Overview

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.                                                                                                               

Executive Overview

I’m always wary when economic analysts report “slower than expected” growth because, as the article says, it depends what “slower” means and it depends what your expectations were in the first place. In that light I too found the IMF analysis last month to be particularly muddle headed.

The fact is that the key economic drivers of India’s economy, and particularly its industrial sector, are all outperforming their equivalents in the West and in comparison with the subcontinent the US and the UK are both languishing in the doldrums at the moment.

I’m sure the Fed and the Treasury would each give their institutional right arms for the “slower than expected” growth India is experiencing at the moment.

More than Roughly Right… Contrasting Fortunes of Infrastructure in the UK and India

By India, News No Comments

Nobody believes the HS2 Rail Project can (or will) be delivered to its original, fantastical budget of £56 Billion: Treasury Advisers hiked the figure up to £70 Billion as long as three years ago (albeit ignored by the Government), and now even Boris Johnson seems to have given up hope, ordering a “Public Review” that has all the hallmarks of a political volte face, not a foot of track laid and tunnels that exist only on paper or in Skanska’s worst nightmares. But major infrastructure projects like these are still the lifeblood of any modern economy: creating much needed employment, innovation and (particularly in these troubled times) something of a beacon of economic hope. So even though it’s not all beer and skittles on the executive floor of HS2 Headquarters at the moment, it’s worth remembering Keynes’ maxim that“ it’s usually better to be roughly right than precisely wrong”.

Which is why it’s a fair bet that the last thing Narendra Modi will be thinking about before he goes to bed is infrastructure and it’s probably the first thing, he thinks about in the morning too, because Infrastructure is now a key dynamic at the very heart of heart India’s economic miracle. By 2022 public spending on the subcontinent’s infrastructure projects is expected to reach $ 778 Billion and Mr. Modi knows better than anyone that this is the bedrock of sustainable growth. That’s why he’s prepared to commit more than eleven times the HS2 budget in a single year, to keep that beacon of economic hope burning as brightly as possible.

It’s a sign of the Policy’s success that Indian infrastructure projects are now starting to attract unprecedented levels of Foreign Direct Investment (FDI). Private Equity and VC Investment volumes topped $1.97 Billion last year, with 91 M&A deals being brought to market at $5.4 Billion in aggregate value (and rising), so the Prime Minister must be doing something right.

To sustain and build on this momentum the Indian Government has also announced a series of eye-watering initiatives of its own, everything from highways to renewable energy and urban transport projects in between. The 2019/20 Union Budget included $63.2 Billion in public infrastructure funding with Communications receiving $5.36 Billion, Railways $9.25 Billion and a whopping $11.5 Billion for new Road Systems. Over the next fiscal period new water supply systems will be rolled out to all households in more than 500 cities on the subcontinent and brand new government run medical colleges and hospitals will be dotted across the country as well.

More than 132,000 kms of new roads have been built in India over the last four years (that’s enough to stretch halfway from Mumbai to the Moon) and the number of Airports on the subcontinent rose to 102 at the end of last year. India has also entered into a series of joint venture agreements with the Japanese Government (and Japanese companies) for a series of projects in North Eastern States and the two countries are poised to enter an India-Japan Development Agency, so don’t expect the pace of growth to slow down anytime soon.

Whether we can ever expect to travel twenty minutes faster to Birmingham by train is, of course, a different matter altogether…

View our preference shares offer

Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.

Executive Overview

Keynes wrote that an economy could be stimulated simply by paying 100 people to bury ten pound notes in bottles, and then paying another hundred (presumably different) people to dig them up spend them. Nowadays we’re more likely to call it Quantitative Easing, but the expansionist impact of a freer monetary policy is now pretty much beyond question.

But how much better would it be to use the money instead to build something lasting and important for the economy? Something that can be used by our children and grandchildren and help make our day-to-day lives better too.

That’s why I’m saddened by the current state of public infrastructure policy in the United Kingdom: we could do so much better and make such a difference, whether with HS2 or otherwise but something that speaks to the ambition of the economy.

And, for my part, I certainly think there are important lessons to be learned from examining Infrastructure Policies in India where the Modi government is using Public Spending initiatives as a dynamo to supercharge the economy.

We could do a lot worse than to try that here.

Cryptocurrencies - India

Giving up the Goose… The Reserve Bank’s Attempt to Block Cryptocurrencies is Bound to Fail.

By India, News No Comments

Before the UK’s Malicious Communications Act passed into law, Parliament anguished over its reach: by all means outlaw threatening letters, but even a mild mannered bank manager can’t get the bank’s money back without threatening something so would that be illegal too? By the same token, if you’re a Bank a PPI pamphlet can look malicious but it’s often amusing or rewarding for the rest of us. And it was the same in India where the Information Technology Act meant anyone sending an e-mail causing “annoyance or inconvenience” could go to prison for three years. For those of us who find vacuous PPI advertising irritating, that might be a good thing: after all, what right thinking person could possibly object to three years in prison for the mastermind behind Gladstone Brookes?

But of course, there’s much more to it than that. What might be offensive for me may not be offensive to you, and what for you should be eagerly lapped up like ambrosia might be bile and vitriol for me. We’re all different, and in the words used by Indian Supreme Court Justice, Rohinton Nariman striking down the Indian Information Technology Act (see above) the legislation was not only “open ended, undefined and vague” but positively unconstitutional too. The Indian Government might have thought it was a good idea at the time, but the Indian Government was wrong.

And Justice Nariman was very cross again in August when the Reserve Bank of India had the misfortune to find him presiding over their long and drawn out litigation relating to the constitutionality of the 2018 Bitcoin Ban

The slightly bizarre nature of that ban and the curious circumstances which led to its imposition last year make “open ended, undefined and vague” sound something of an understatement, but the fact is that the ban is clearly unconstitutional and just like the earlier ban on unpleasant e-mails, the Reserve Bank is about to find out why: Justice Nariman is precisely the right person to tell them.

He was indignant, livid even: accusing the higher executive of the Reserve Bank of failing to respond appropriately (or at all) to concerns raised by the cryptocurrency industry over the legitimacy of the ban and even though the Government has recently argued (tenuously) that there was never a ban in the first place, nobody is really buying that. Indeed, the Government has now distanced itself even further from its Central Bank colleagues by setting up a regulatory sandbox to pave the way for a full throated Blockchain revolution, with talk even running to the possibility of a Digital Rupee. Talk about stabbing your friend in the front…The Reserve Bank must feel like a wedding guest with a slice of albatross instead of cake.

So the stark reality is that the Reserve Bank now has just two weeks to come up with an answer to the action, and it’s a safe bet that it won’t be able to do so because there is no answer. In the meantime Prime Minister Modi’s Government has gone still further in the other direction by announcing its intention of introduce a Bill to regulate the Blockchain and Bitcoin sectors in the forthcoming session, the Garg Committee has come out in favour of cryptocurrency (following Mr Garg’s slightly petulant resignation) and India at last stands ready to lead the world by taking over regulatory stewardship of this game changing sector. 

Blockchain at last has its moment, and it’s about time the Reserve Bank gave up the goose…or should that be albatross.

 Invest in North Block Capital Fund

North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I doubt the Reserve Bank of India has ever truly believed in its ability to prevent use of cryptocurrencies on the subcontinent, even if it wanted to (which I don’t think it does either): but the current stark divergence between in its own position in the Supreme Court litigation with that of an increasingly Blockchain hungry Modi Government is, to say the least, striking.

There can, I think, only be one outcome and I have no doubt the final Supreme Court decision (when it comes) will unequivocally signal a combined Blockchain and Cryptocurrency revolution that will change the way we all do business in the future, and India will be at its head.

Social Housing Modular COnstruction India

Modular Construction moves Centre Stage…And Here’s Why

By India, News No Comments

Within a year of assuming office in 2015 Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana (“PMAY”) Scheme, with an ambitious target of housing all India’s urban poor by March 2022 through provision of 20 Million new affordable homes: that’s five new homes every hour, every day (and night) for seven years, but the astonishing thing isn’t the scale of the ambition it’s that the programme is actually meetings its targets. To put that in perspective, the UK Government is currently working to build 300,000 new homes annually until 2022: leaving aside the prospect that it won’t be here in 2022, barely 40,000 new builds were completed in the first quarter of 2019 which is only a little over half the annual target (and a 9% decrease year on year).

In the same period 8 Million new homes have been approved under PMAY.

But divergent as their ambitions and performance levels might be, India and the United Kingdom do also have something in common when it comes to housing policies: each of them are increasingly resorting to Modular technologies as a cornerstone of policy delivery, increasingly viewing Modular Construction as a more reliable and cost efficient platform than traditional construction technologies, radically speeding up completion periods and reducing overall costs (not an irrelevant consideration, even for the fastest growing economy on the planet).

Historically sector participants have become used to building only as many properties as they are likely to sell in the short term, concerned about unwittingly accumulating a bank of unwanted buildings whenever there is a slump or even minor bump in market demand (as, of course, there has been in the United Kingdom recently despite historically record low interest rates). And with such a firmly entrenched mind set there’s simply no incentive for builders to step up construction and completion rates: certainly to nothing like the levels the subcontinent and the UK require at the moment.

But with Modular Construction inexorably moving to centre stage, all that’s about to change…Take skilled labour rates for example.

India and the United Kingdom have (in the case of India) or will shortly have (in case of Brexit) a significant skills shortage in construction: unsurprisingly so in absolute terms on the subcontinent given the sheer scale and ambition of the PMAY Project, but also in relative terms in the United Kingdom where the sector is so reliant on European migrant workers. No less an authority than JLL have highlighted this recently through its Head of Living Research, Adam Challis: “We will need to switch to modern methods of construction as a way of offsetting labour irrespective of Brexit, but there’s no question labour scarcity from the Continent will exacerbate the problem…we aren’t recruiting skilled labourers at anything like the rate they’re retiring.”

And factory built, site assembled modular homes not only require less skilled labour: they are also produced in controlled environments where completion timing can be defined much more accurately and specifications meticulously adhered to. As Luke Barnes of Ideal Modular Homes very appropriately puts it: “you wouldn’t buy a car that’s been built outside in the rain and mud”.

You certainly wouldn’t…Not if you want to meet those challenging targets you won’t.

Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

The Affordable Housing Program, and PMAY in particular with its commitment to India’s urban poor, is an enormous credit to Prime Minister Modi’s Government and the fact it is still on track to meet its targets by March 2022 is greater testament still. 

But they are certainly rigorous and challenging targets, so I’m not surprised Modular Construction is now starting to play a greater and greater part in achieving them and that applies to the United Kingdom too where social housing is now such a pressing issue.

Like most things, workable long-term solutions call for different strokes and I’m sure Modular Construction will continue to be one of them.

India reinvents blockchain for the 21st century

By India, News No Comments

Imagine the Government had decided to ban rubber, wheels and petrol and then immediately announced a funding initiative to produce more cars: we might rightly take the view its policy imperatives were out of whack. But that’s just the sort of the dynamic we can see playing out in India at the moment, where Blockchain sandbox initiatives are forging ahead at the same time as the Supreme Court is in the final stages of its death roll with the Reserve Bank over last year’s ban on cryptocurrencies. As the old song goes… “you can’t have one without the other” and its certainly hard to imagine a Blockchain world without cryptocurrencies, so where exactly is all this heading?

The Modi Government has been at pains to say the Reserve Bank ban does not necessarily mean cryptocurrencies are unlawful on the subcontinent, but such well modulated (and crafty) ambiguity is not an option open to the Judges currently hearing the case brought by the Internet and Mobile Association of India (IAMAI) against India’s Central Bank: these three Judges must finally come to an unambiguous decision on the issue, and when they do it’s likely to mark a decisive moment for the future of Blockchain not only on the subcontinent but for Global financial and commercial markets as well.

Lawyers for the IAMAI have been arguing the Reserve Bank simply doesn’t have the power to regulate virtual currencies, and certainly not without any prior legislative framework in place (there is none). They have also pointed out, not without justification, that the Reserve Bank would have been well advised to take market soundings and conduct market research before imposing its ban last year (it did neither), with the inevitable result that although Blockchain has now been given a green light for future development, the “arbitrary, unfair and unconstitutional” prohibition on its cryptocurrency life support system still remains in place.

But make no bones about it: the Reserve Bank will lose this case, not only because logic and fairness is against it (just like maintaining a ban on rubber, wheels and petrol), but the broader sweep of economic history is against it too.

Take, for example, recent events in India’s second largest State.

Maharashtra is currently preparing a regulatory sandbox for testing Blockchain technologies across a full spectrum of its own public services: everything from healthcare to vehicle registrations, agricultural produce, supply chain and document management systems and even printing children’s school examination certificates. It has earmarked no less than $1.4 Million for seedcorn investment in the project of which $560,000 has already been approved and allocated. Does any of that sound like it’s about to ignore a new model for technology markets?  Of course not, and in doing so Maharashtra is merely following in the footsteps of its own Government’s IndiaChain initiative which, according to the National institution for Transforming India, will lead to faster contract enforcement, help eliminate fraud and deliver faster distribution of agricultural subsidies (amongst other things). Does any of that sound like a Government hiding from the future?

Of course not…

The truth is Blockchain is already being used extensively across India: not least by the subcontinent’s own Banking and Finance Sector (regulated by the Reserve Bank of India lest we forget), where day to day functions including KYC, credit approval and trade finance are currently being revolutionised through the use of new technologies: transactions that used to take hours (sometimes days) to complete are now being put through in a matter of seconds.

 Invest in North Block Capital Fund

North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I don’t think the Reserve Bank of India can have any real confidence in its ability to prevent the use of cryptocurrencies on the subcontinent, even if it wanted to (which I don’t think it does). But if only for reasons of saving face, it is now clearly committed to fighting its Supreme Court battle through to the end, even if that means losing and losing badly.

Looking at the bigger picture though, I’m not sure any of that matters greatly: if only because the Bank is likely to lose its case and the Government has already made plain its willingness to recognise a cryptocurrency environment. That’s what the future will look like.

For the moment, I’m excited to be living through such an interesting period when cryptocurrencies and Blockchain are now more likely than ever before to come together in an all-Indian regulated market.

Modular Construction

India is building a new modular construction paradigm

By India, News No Comments

Mark Twain had nothing bad to say about the service at Watson’s Esplanade Hotel in what was then Bombay: his gripe was about quantity, the sheer volume of white suited, starched and over eager attendants tracking his every move and dishing up tea and tiffin every five minutes. History doesn’t tell us whether Joseph Conrad or Rudyard Kipling had the same reservations, but both of made a beeline for Watson’s Esplanade when they were staying in India: it was, after all, one of the subcontinent’s and Asia’s most luxurious hotels.

Not anymore…

The cavernous hulk of the Esplanade Mansion (now re-branded for our more prosaic times) is a decrepit shell of a building, echoing to its rafters and rusting to its Victorian core. Local Courts are currently deciding whether it should be demolished altogether, despite its cultural and historic significance and despite it now being home to dozens of Mumbai’s poorest families.

And the Esplanade Mansion is by no means alone: in May this year Mumbai’s Central Municipal Council identified no less than 499 buildings in the City in a dangerously run-down condition (down from 619 last year but that’s hardly a cause to celebrate), and in August this year the Court ordered 23 seriously dilapidated apartment blocks to be demolished: in the same month the sprawling Navrang Building caught fire and collapsed before it could be pulled down (killing one labourer) and in June the Kesarbai multi-storey apartment block, designated for demolition as long ago as 2017, collapsed leaving 24 families homeless (although, mercifully, unhurt).

According to Google, there are currently more than 3,500-registered demolition companies in Mumbai, so it’s not as though there aren’t enough of them to make sure Court Orders are listened to. So what’s going on?

Well, for a start, it costs an average of $18,000 to demolish even a small family home, never mind a multi-storey block like the Navrang Building and these “end of use” costs are quite literally stored up by traditional construction projects dating back to Victorian times, sunk immovably into the fabric of the building for future generations to pick up. And in the case of the impoverished neighbourhoods of Mumbai, that’s usually one cost too far, so many have little choice but to continue living in dangerous and unhealthy buildings like the Navrang and the Kesarbai, and all too often they’re dying in them too.

That’s a particularly graphic and harrowing illustration of the housing bottleneck facing Prime Minister Modi’s Government as it continues to push through the Affordable Housing Program, delivering the dwellings India’s urban poor so desperately need so that Navrang and Kesarbai can become a thing of the past. The Government is now on track to build 10,000,000 new homes by 2022 (in line with policy targets), making use of key initiatives such as RERA, GST and new tax breaks to steadily help address this pressing issue. But if the scale of the Government’s ambition is large, the challenge is larger still: millions of people are continuing to move from rural India in to the subcontinent’s urban conurbations so something more is required.

And in such challenging circumstances, Modular Construction may well be the answer: delivering new housing at the accelerated rate India needs, with design to handover periods half those of traditional technologies, construction costs lower and simultaneous completion systems allowing for tighter completion scheduling in absolute terms. For those in the most pressing need and those striving to look after them, those are hard facts that can’t be ignored. And, unlike conventional technologies, modular construction doesn’t store up excessive costs for the future either: once the building has come to the end of its useful life it can be readily disassembled or even removed altogether for reassembly elsewhere.

All of which might be bad news for Mumbai’s 3,500 demolition firms, but it is very good news for the rest of us.

 Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

With an increasingly urbanised and rapidly burgeoning population, it is simply impossible to understate the scale of the current housing challenge facing India: and although Prime Minister Modi’s Government has made huge strides to bring the Affordable Housing Program to a successful conclusion by its target date of 2022, it should be obvious to all of us that the remaining challenges are still immense.

That’s why I’m convinced Modular construction will be a major contributor to providing a workable solution that is also capable of delivering to the pace India needs.

Modular Construction schedules are half those of traditional building technologies. It’s also cheaper, more resilient, less labour intensive and better for the environment.

To get things right, and like most things, a workable solution will call for a variety of approaches, but I’m sure Modular Construction will be one of them.

Indian Real Estate and Habitat Home Furnishings

By India, News No Comments

Nirmala Sitharaman must have been having a bleak Christmas: selling home furnishings at Habitat on Regent Street and this was 1990, London was gripped by a property driven recession and although Nirmala had won a bottle of champagne for best sales that month, almost nobody was buying anything. How she must have longed to come back home to India, wading through the mud and slush of a London winter. And of course, eventually, she did…after a spell with Price Waterhouse the redoubtable Ms Sitharaman finally made it back, and now she’s the first woman to lead India’s Finance Ministry since Indira Gandhi who, let’s face it, gave herself the job so Nirmala Sitharaman’s really the first.

She must have brought some hard lessons back from that bleak month in London: first-hand experience of just how much a faltering property market can negatively impact on the economy and sales as a whole. Back then the UK’s base interest rate was an eye watering 13.9% and suddenly the new jargon phrase wasn’t “yuppie” anymore, it was “negative equity”. High interest rates can and do kill property markets quicker than a rat in a bucket of warfarin.

So Nirmala Sitharaman isn’t about to greenlight a rise in rates…

This month the Monetary Policy Committee of the Reserve Bank of India cut interest rates for the fourth time running, with the repo rate (the rate at which it lends to domestic banks) now falling 35 basis points to 5.4%, an aggregate cut of 1.1% this year which prompted the State Bank of India to cut its own rate by 15 bps overnight (no sluggishness at passing on benefits there). And whilst the Finance Minister has, of course, no direct input into the decisions of the MPC, don’t forget this is the woman who was described in Parliamentary Debate as a “one woman demolition squad”, who conducted a bitter tussle with Rahul Gandhi over allegations the Government was a party of business (it is) and who, perhaps most of all, survived the sharp elbows of Christmas shoppers at Habitat. Who can resist her powers of persuasion?

She more than anyone knows how important Real Estate is for the future of India’s economy and this latest reduction brings rates down to a nine year low which will be a shot in the arm for a sector already riding high on a surge of favourable demographics and fiscal trends (think Affordable Housing in particular).

The Chairman of Apex Association of Real Estate Developers, Prashant Solomon (a man of few words) said it would all be of “great benefit” while Anshuman Magazine, Chairman and CEO of CBRE India and Southeast Asia (a man of slightly more words) positively purred: “We believe this announcement will result in a further reduction in home loan rates and will provide an impetus to the Government’s initiative in affordable housing.”

Quite right…both of you.

And as reported on this site last month, the Reserve Bank of India has also maintained its so-called “accommodative stance” which pretty much takes any prospect of an interest rate hike off the table for the foreseeable future. That has to be good news too for India’s real estate sector, for the subcontinent’s increasingly urbanised population and for the wider economy as well.

Whatever the future holds, it’s a safe bet Nirmala Sitharaman won’t be working at Habitat again…unless she’s running it.

Capitalise on the growth of modular construction

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

As a young man arriving in the UK from India at about the same time as Nirmala Sitharaman, I remember just how cold those winters could be. They still are!

And it’s hard to believe the lessons India’s Finance Minister learned during her stay in the UK can have been easily forgotten: how important the real estate sector is for the economy, the knock-on effects of a property slump on markets generally and, above all else, the importance of are supportive fiscal structure for sustained growth. Hard to believe too that someone with her grounding in economics and strength of character would have failed to make her views known to the Reserve Bank’s MPC before it reduced repo rates to a nine-year low last month.

It all points to the Indian economy being in safe hands, and the subcontinent’s real estate sector in particular.

With demographic and societal factors all pointing towards resurgent growth for Indian Real Estate, that can only be a good thing.

A Threshold Moment …DLT, Blockchain and India’s Digital Revolution

By India, News No Comments

The entire text of India’s Regulation of Digital Currency Bill was leaked last month before it even reached the Prime Minister’s Desk, and if form is anything to go by someone should probably be asking Gavin Williamson for his download history. But there again maybe not… this is beyond the ambition of a former fireplace salesman, now inexplicably back in Cabinet before the ink is even dry on his police report: this is much more important because once enacted, the new Digital Currency Bill will fire the starting gun for India’s Digital Revolution. And we didn’t need a leak to tell us what is about to happen…two recent events in particular have signalled the way forward and (without wanting to sound all Sweeney) it might be worth taking another look.

First, there was the Finance Minister being asked Parliament on 16th July whether cryptocurrencies had actually been banned in India. Note the phrasing of that question: it’s a clear reference to the legal uncertainty caused by a Reserve Bank embargo imposed on crypto businesses last year, a ban that immediately ignited the maelstrom of litigation now being fought out in the Supreme Court (and which isn’t looking good for the Bank).

And what was the Finance Minister’s Answer to the question? Well, with the smell of burning rubber that usually accompanies a hastily executed “U” turn, she simply said “No Sir”. The Government hadn’t “banned” cryptocurrencies and wasn’t planning to step into the storm currently engulfing the Reserve Bank: quite the reverse, it seemed to be opening the door to cryptocurrencies. What could be happening?

Three days later, on 22nd July, the second event happened: the long-awaited Garg Report on Blockchain Technologies or, as the geeks are insisting on calling it, the Report on “Distributed Ledger Technology” or “DLT” for short.  For those of us of a certain age, “DLT” has other connotations but never mind that, back to the future: the Garg Report is looking like a real game changer for Blockchain technologies on the subcontinent.

For the first time since last year’s Interim Union Budget with its attendant anti-crypto comments from the then Finance Minister, the Indian Government has now accepted through its Inter Ministerial Committee that “digital currencies can have positive effects if deployed in financial services” despite there being “risks associated with them”. That little tail end qualification is, of course, nonsense as anyone with a shoebox full of Turkish Lire under the bed will tell you or, indeed, anyone with a stash of Sterling (wherever they keep it) given the UK now seems to be heading inexorably for a No Deal Brexit: the truth is that all currencies have associated risks; just some more than others, it depends which of them you have and when you have them.

Not that the venerable Chair of the Committee, Subhash Garg, was going to allow any tail end risk statement to dampen his enthusiasm when he tweeted after the publication of the Report (yes tweeted: this fellow is digital to his fingertips):

The Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services. It opens up the door for a possible official digital rupee”.

There you have it, you heard it here first (almost). Those more esoteric cryptocurrencies can stay in the shoebox with the Turkish Lire: the bright new grail of cryptofinance will be the Digital Rupee. This may well be the first time ever that a Non Fiat Currency will be issued with Government backing.

But who really cares about the U turns and the Geek speak? The fact is, this is how the Indian Government has decided to square the circle of its previous disavowals of Bitcoin last year, and at the end of the day it is the disavowals that matter not the language in which they are delivered. This is no time to demand sackcloth and ashes as penance for past sins. It’s the repentance that matters.

We should celebrate what is likely to be a threshold moment in the subcontinent’s technological revolution that will change the way we will all do business in the future or, as the Garg Committee put it: “DLT will play a major role in ushering in the Digital Age” (and no, they don’t mean an ageing disc jockey: see above). In its unbridled enthusiasm, the Committee even went so far as to advise Financial Sector participants to consider investing in Blockchain Technologies as a platform for trade finance, credit provision and KYC (where they can take advantage of much reduced compliance costs). Plus ca change

However you phrase it, this is a Digital Revolution and India is leading the way.

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North Block Capital Fund is an open-ended fund that listed earlier this year as a platform for investment in developing Blockchain technology ventures and ICOs: primarily in India where Red Ribbon Asset Management has more than a decade’s experience of advising on the dynamic changes in this, the fastest growing and most exciting large economy in the world.

India’s consumer spending revolution

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In the dying days of his Empire, hemmed in by the generals who would shortly shuffle him off to obscurity (in the back of a Volkswagen), Haile Selassie tried one last throw of the dice: he would build a series of great dams across Ethiopia, each bigger than Egypt’s Aswan Dam and each speaking timelessly to his greatness, like the Great Pyramid and the Sphinx (had he never read Shelley?). But with a bravura born of the end of empire, as well as a shocking disregard for the famine raging in the north, his Finance Minister disagreed: “Egypt is wealthier than we are…it has more people than we do and they have more money”. The Finance Minister might have had appalling political instincts, but he was right about that single demographic truth: great economies and great projects are built on mighty populations, wealthy enough and willing to put their money where their dreams are.

Sadly for Haile Selassie (or probably not), the thinly populated and famine ravaged regions of Ethiopia had little if anything to dream about beyond food, and no interest at all in building dams.

Aside from the fact India’s Prime Minister Modi is a million miles away (in every way) from the former Emperor of Ethiopia, that story has a certain resonance with the subcontinent today, where the economy is growing at unprecedented rates borne up by a perfect demographic storm: India’s population is now the fastest-growing on the planet, wealthier than ever, increasingly urbanised and more than ever prepared to put their money behind the dream of a consumer-driven economic boom.

And we’re about to witness the full tectonic impact of these changes, changes which some commentators have called the Fourth Industrial Revolution: a radical realignment of India’s economy as it begins to accommodate to the reality of more than 300 Million new consumers, all of them getting ready to do some serious shopping.

In their report, The Future of Consumption in Fast-Growth Consumer Markets, Bain & Co forecast that by 2030 India will have experienced a fourfold increase in consumer spending, whilst at the same time remaining one of the youngest nations on earth with more than 700 Million youthful internet users, one hand on their smartphone and the other reaching for their credit card (a posture parents will be all too familiar with). But this is no teenage phase. Millennial and Generation Z preferences “will significantly shape the market” for the foreseeable future: 77% of Indians were born in the late 1980s, and that’s precisely the demographic already spending more and spending it faster than anyone else (think Flipkart).

And whereas in the past the subcontinent’s economy has been traditionally built from the “bottom-up”, that’s all set to change too: by 2030 close to 80% of Indian households will be middle class, as against 50% at the moment, so by definition they’ll have more money to spend. Forecasts expect the middle-class Indian segment to spend up to four times more on services and entertainment than they do at the moment: think Flipkart again, and imagine you had just been awarded a 400% pay rise, it’s that radical…

But perhaps most significantly of all, the Bain Report predicts companies on the subcontinent will now start to move beyond existing Western models to meet these trends: “localising and personalising business models” to address the unique preferences of the subcontinent’s consumers. India by 2030, it predicts, will be a “hotbed of growth and innovation”.

Who could argue with that? It’s certainly better than a load of old Dams…

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.                                                                                                               

Executive Overview

We tend to focus so much these days on supply-side economies (Brexit springs to mind, naturally, with its focus on real-time delivery logistics), so it’s sometimes easy to lose sight of the importance of the demand side of the equation. Even so, the economic impact of India’s rapidly changing population has been difficult to ignore.

Within a decade or so the subcontinent’s mostly rural population has become increasingly urbanized, wealthier and much more technology literate and by itself that is a perfect mix for creating the demand-side conditions necessary to sustain explosive growth within any developed economy. But in India’s case, that same population is also rapidly expanding (soon to be the biggest on earth) and also getting ever more youthful, meaning there will be an increasing propensity to spend across more and more people.

It is, as the article says, a “perfect storm” for growth and I for one will be keeping a close eye out for what comes next…

Right Time, Right Place… Innovation’s White Heat burns more brightly in India

By Archive, India, News No Comments

The Duke of Devonshire was at his wit’s end by 1874: what should he do with that box of old papers? They weren’t as interesting as his grandfather’s work on inflammable air (don’t ask) or how to weigh the earth, both of which had brought the old boy, Henry Cavendish, a certain measure of fame, but recycling bins were still a century off and the subject of the papers, electricity, was starting to interest the public. So with unusual prescience (for him) the Duke gave the box to James Clark Maxwell (foremost scientist of his day) and Maxwell was impressed enough to name a laboratory after Henry Cavendish: within forty-five short years, scientists working in a small back lane in Cambridge at the Cavendish Laboratory had untangled the mysteries of electromagnetism, isolated the neutron and the electron and in 1919 went the whole hog and split the atom.

The rest, as they say, is history…

It’s the equivalent of striking the first flint spark and going on to build a fully functioning internal combustion engine within half a lifetime, but that’s what scientific innovation is all about: chance decisions (like the Duke’s), resolute determination and, most of all, being in the right place at the right time.

And right now, according to the Global Innovation Index, the right place is Bangalore, Mumbai and India where innovation is running white hot. The subcontinent rocketed up the Global Index last year and currently ranks 15th in R&D Expenditure worldwide.

Francis Gurry, Director General of WIPO (which compiles the Index), had no doubt about the importance of the subcontinent’s Silicon Ghaatee: “India is now consistently ranked amongst the top countries in innovation worldwide” he gushed.

And when it comes to those other two Cavendish ingredients, chance decisions and resolute determination, well the Modi Administration might be short on the former (not being in the habit of leaving anything to chance) but they’re definitely long on resolute determination: having already worked remorselessly for years to make the subcontinent a Global Innovation Hub.

But don’t take WIPO’s word for it, or mine, take a look at the evidence: the Atal Innovation Project is already inspiring a culture of innovation and entrepreneurship across India with Atal labs dotted everywhere; the Mangalyaan mission to Mars saw India become the first Asian Nation to send a spacecraft into orbit around the red planet and, of course, Chandrayaan 2 is currently on its way to land an exploratory craft on the Moon: prompting Prime Minister Modi almost to burst with the pride and enthusiasm of a new father: “Indian scientists are second to none…they are the best. They are world-class”.

But who would be rash enough to disagree? After all, whatever our preferred holiday destination might be for Donald Trump and Boris Johnson, just how many US or UK spacecraft are currently on their way to the Moon? Does the UK even have a spacecraft?

Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in the potential of this, the fastest-growing large economy on the planet.

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 Overview

As a proud Indian living in London I am delighted by the technological achievements India has made over the last few years, and landing a craft on the moon within the next month will make me prouder still. When I was young and growing up in India none of that seemed possible, and now we have a craft in orbit around Mars!

But the steady process of day to day innovation and development is important too, and it’s difficult to underestimate the sustained work Prime Minister Modi and his predecessor have both put into making India a Global Technology Hub: day by day and step by step, they have inexorably helped move the country towards a new, technology-based economy that is infinitely better suited for the new millennium.

It’s nice to see that those efforts too have now been recognised.

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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