India reinvents blockchain for the 21st century

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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.

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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

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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.

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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

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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.

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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

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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.                                                                                                               

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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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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.

Blockchain… it’s never been easier to predict its future in India’s financial markets

By India, News No Comments

The iPhone will get no significant market share…no chance”: step forward Steve Ballmer, former CEO of Microsoft and creator of quite possibly the worst market prediction ever. But it’s not by any means a walkover: Mr Ballmer has stiff competition from Alex Allen, the senior policy adviser who warned John Major in 1996 that ”e-mail will never catch on”. Mystic Alex was also concerned about the prospect of any old Tom, Dick and Harry being able to reply the Prime Minister at will, so he was “cautious about rushing into it”. And when they fired up the first transatlantic phone line between London and New York in 1926, one mutton headed stockbroker predicted it might result in two or three extra trades a day, but things would muddle along more or less as they were, with chalk boards and boys rushing around with messages in cleft sticks. Three years later Wall Street crashed…and stockbrokers have been extinct since 1986.

But the future isn’t always so hard to predict: India is currently shaping international financial markets with commendable transparency.

The snappily named Institute for Development and Research in Banking Technology (IDRBT), a division of the Reserve Bank of India, announced last week that it is developing a model Blockchain platform for use in the subcontinent’s banking sector. The new system is expected to go live early next year and will host a full spectrum of Blockchain applications capable of engaging with each other, something the sector has so far avoided despite its obvious appetite for and recognition of Blockchain’s potential.

And although the IDRBT has counselled “a cautious approach”, fresh initiatives are rapidly being set in train to push things along even faster, as exemplified by the vigour of India’s Fintech Forum. IDRBT’s Director, AS Ramasastri, certainly isn’t taking any Steve Ballmer style risks: “The dialogue is on and we are expecting good outcomes…India’s Fintech companies are rapidly accelerating and reshaping the financial services industry”: and they’re going to be doing it with improved cyber security, improved analytics, better payment systems and, most of all…with Blockchain. The Fintech Forum will play a central part in this by establishing a platform for continuous innovation.

And if that all sounds like complex systems and vague aspirations, take another look: the entire process is being overseen by one of the world’s biggest and most important regulators, and even if the agency it has chosen to front it all has an ugly and easily forgettable acronym on its brass plate, what does that matter? Even the best looking kid can have an ugly name and no other country in the world has seen a regulator of this stature taking an active and focused role in shaping our shared financial future.

So we can forgive it the faltering start, the Reserve Bank of India is obviously keenly aware of the central role Blockchain will play in that future.

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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

As I have previously observed on this site, there is every reason to believe the governmental and regulatory changes in India will shortly make the subcontinent the Blockchain capital of the world: all the time, new technologies and systems are being put in place which are steadily (but inevitably) placing Blockchain at the heart of the subcontinent’s digital economy, and unlike anywhere else in the world India’s regulator is showing a serious appetite to take on the challenges and manage the opportunities this presents for global markets.

I have no doubt the key innovations Blockchain has to offer will fundamentally change the way we all do business in the future and I’m proud Red Ribbon’s Crypto Fund will be part of that.

Why India is still on track

By India, News No Comments

As Philip Hammond is about to find out, the end for any Chancellor of the Exchequer is rarely other than nasty, sharp and brutal. When Hugh Dalton was sacked for leaking budget information to the Standard (of all papers), Clement Attlee got rid of the grand old man of the party with a shrugged “not up to the job”. And when Norman Lamont went prematurely French while sterling crashed out of the ERM in 1992, he quickly found out that far from having “rien” to worry about he actually had plenty to “regrette”. He was out on his ear in days. So the lengthening shadow of Boris outside Downing Street is, indeed, plenty for Mr Hammond to worry about.

Of course politics on the subcontinent can be equally nasty and brutish and we saw some of that in this year’s election, but India’s Prime Minister hasn’t had a Chancellor of the Exchequer to kick out since 1947 (a certain Hugh Dalton as it happened, ironically enough) and nowadays Nardendra Modi doesn’t even have to drive to the Palace so think of the savings in petrol. In truth, India’s State Finance structures have changed beyond all recognition since the Raj retreated to Whitehall.

For a start, The Chancellor of the Exchequer is now the Finance Minister and he is now a she. The redoubtable Nirmala Sitharaman ditched the colonial red box in favour of a red “bahi-khati” or “ledger book”, which sounds a much more professional accessory for this very modern Minister, tasked with stewarding the finances of the world’s fastest growing large economy. The Chief Economic Adviser, Krishnamurthy Subramanian, went even further, claiming the new look ledger symbolises India’s “departure from the slavery of Western thought”.

And the first Union Budget of the new Modi Administration wasn’t short on radical departures either.

Looking to kick start a growth rate of 7% GDP that Philip Hammond would die for, the Finance Minister has introduced cuts in corporate tax rates, provided improved support for digital payment systems (that will make life easier for small businesses) and additional tax breaks for the Real Estate sector.

That last one, Real Estate, has of course become something of a totemic theme for Modi’s Government and there will now be a slew of new tax incentives as part of the Affordable Housing Programme: additional interest deductions on loan payments, stamp duty breaks, a realignment of the definition of “affordable housing” itself to conform with GST and income tax legislation and a new model Tenancy Law to encourage rentals. Conditions relating to tax exemptions for long-term capital gains on property have also been relaxed…and the list goes on…

So it’s obvious if only from the focus given to it in the Budget, that Prime Minister Modi’s Government will continue to pay close attention to the subcontinent’s real estate markets for the foreseeable future: given the exponential growth and increasing urbanisation of India’s population that’s certainly not a surprise, with these trends only likely to increase in significance over the coming years it’s hardly an area the Government can afford to ignore.

And unlike India’s last Chancellor of the Exchequer, Nirmala Sitharaman has shown on her first major public outing in the role that she’s certainly up to the job…

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 an 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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Executive Overview

I was pleased to read the terms of the Union Budget that struck me as setting exactly the right tone for the new Administration: continuing where they left off before this year’s elections and with an added focus on critical areas like housing and real estate generally. I feel sure that with this drive and determination the new Modi Government will be more than capable of rising to meet the challenges and opportunities the subcontinent’s real estate sector has to offer.

Here at Red Ribbon we’ll certainly be keeping a close eye on what comes next…

The Indian Economy outlook

By India, News No Comments

You’ve just scooped one of the bigger, life-changing Lottery prizes: millions beyond measure, and then catch breaking news that Donald Trump’s been struck mute and blocked from Twitter: but then Kwik Fit calls, your car has failed its MOT and needs new brake pads. How do you feel? Stricken with gloom because of the car or happy that everything else is better beyond compare? Of course, you’re happy …we take small setbacks in our stride when the world smiles. So how odd it was to read gloom-laden reactions to this month’s IMF Report that India’s 2020 growth forecast has been cut by 0.3% to a mere 7%. How odd, when GDP in the UK is projected to be 1.3% for the same year and Mr. Trump’s America will stumble along at 2%.

The economy will only expand by 7% in 2020…in the words of Kylie Minogue, we should be so lucky.

And then consider the reason given by the IMF for the “downgrade”: weakening domestic demand. This is India: the country with the fastest-growing population on the planet, increasingly affluent and increasingly switched onto the Internet’s newest consumer technologies (think Flipkart which now has a market capitalisation of $22 Billion). And assuming even an average boost from the projected 7% expansion of the subcontinent’s economy next year, these are trends are hardly likely to weaken.

Perhaps that’s why the IMF report also includes the surprisingly coy suggestion in its report that it expects “some of this to improve in the near term with a more accommodative monetary and fiscal policy on the part of the Indian Government”. It’s as though the IMF had put pen to paper before this month’s Union Budget but still correctly predicted what it would say because the Budget does indeed include significant monetary and fiscal initiatives on the part of the Modi Government: greater access to external savings that will ease pressure on domestic reserves and boost capital growth, increased use of public-private partnerships, an ambitious disinvestment programme and a fiscal deficit target set at 3.3% of GDP.

And added to all that, the Reserve Bank of India last month cut policy rates for the third time running: reducing the key rate by 25 basis points and altering its public stance on monetary policy from neutral to accommodating. Given inflation on the subcontinent came in at a lower than projected 3.18% in June, analysts are also expecting a further cut in rates at the next review scheduled for 7 August which means consumer spending trends are much more likely to strengthen than weaken over the medium term, whatever the IMF might think. Perhaps the Report’s author had just taken a call from Kwik Fit?

But for those still intent on scrambling in the dust for economic gloom, look north from the subcontinent to China: still enmeshed in its futile trade war with the United States following a further breakdown of bilateral talks in May. The United States has now increased tariffs on its imports from China to between 10% and 25% on $200 Billion worth of goods with threats of a further crippling $300 Billion to come. And, utterly predictably China, has responded with $60 Billion worth of its tariffs. Now that has to be unmitigated bad news…even if Donald Trump had lost his Twitter access.

Red Ribbon has been specialising in India’s Markets since the company was founded more than a decade ago, bringing unparalleled expertise to its investment policies on the subcontinent with specialist sectoral advisers working from it’s Head Office in London in conjunction with more than a hundred local experts on the ground in the subcontinent itself. And by drawing on that body of expertise it offers investors an opportunity to secure above market rate returns in this, the fastest-growing large economy in the World.

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Executive Overview

Like the author, I was surprised by the slightly gloomy reaction to this month’s IMF report which predicts economic growth for the subcontinent at more than four times the rate of the UK and more than double expected growth in the US next year. It’s certainly difficult to find any dark clouds in such an optimistic outlook and particularly difficult to pin them on India’s resurgent consumer markets which are now leading the world in so many sectors.

The recent Union Budget will, I’m sure, reinvigorate those markets still further so perhaps whoever wrote the Report should have waited a week or so before putting pen to paper…

Whatever the reasons, I’m sure the UK Treasury and the Fed in Washington would love to have GDP growing at ONLY 7% annually.

The Wolves of Wall Street aren’t coming to London…they’re heading for Mumbai

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Most people would accept their fate more stoically: but when Charles Yerkes was wiped out by the Great Chicago Fire of 1871 and then promptly convicted of public larceny, he blackmailed two prominent politicians and President Ulysses Grant pardoned him to keep his mouth shut. Yerkes walked free and went on to build the world’s largest telescope (1892), financed Chicago’s streetcar system (1895) and finally made it to London by 1900. Using methods suspiciously similar to those that got him in trouble in 1871, he built an underground railway line between Baker Street and Waterloo and called it …well, you know what he called it. The Railway Magazine from 1906 grumbled the Bakerloo Line was a “gutter name not to be expected from an English Railway Company”.

Not that Charles Yerkes could have cared less what the public thought: this is the man who told the judge at his trial that he lived by the maxim of “buying up old junk, fixing it up and dumping it on some other fellow” and modern-day commuters packed into his Bakerloo line might find that still has some resonance.

But bear with me, here’s the point: those Edwardian Londoners who objected to Yerkes’ gutter language in 1906 wouldn’t actually have known who to blame because his Bakerloo investment was made through nominee companies to stop it becoming public. By 1927 no fewer than 27% of listed UK companies were owned by American overseas interests, almost none of which were publicly disclosed because of the supposed taint attaching to this brash new brand of capitalism running rampant on Wall Street. British consumers and investors wanted their companies to be homegrown, home owned and home run: most of them would never know how wrong they were.

How things have changed.

Now we have entire Whitehall Departments devoted to drumming up foreign direct investment (FDI) and the wolves of Wall Street are more welcome than ever before, but efforts to attract them over have been stalling over recent years and often failing altogether. FDI into the UK has plummeted since 2016: falling 14% in the year to March 2019 alone, with a 29% decrease in related employment in key sectors including financial services and automotive manufacturing (infrastructure is even worse, dropping by a whopping 40%). And while UK inward investment has slumped equivalent returns for other EU states are showing a relative increase, which might give you a clue to the underlying reasons. It is, as you will have guessed, the “B” word.

Archer Howard, Chief Economic Adviser to the EY Item Club articulated the cause in sober and non-gutter language “foreign companies have become more cautious about investing in the UK due to Brexit uncertainties

Quite so…

Things are very different in India, where crucial FDI policies are starting to reap conspicuously handsome returns.

On the subcontinent FDI is already a major source of non-debt finance with key investment privileges and tax exemptions, not to mention lower wage structures, proving particularly attractive to overseas investors. Figures released by the Department for Promotion of Industry and Internal Trade reported last year’s FDI inflow into India at $ 44.37 Billion: $3.4 Billion of that from the United States, with Singapore coming top of the pack at $ 16.23 Billion. India also came out top on Commonwealth sourced FDI funding so it’s obviously spreading its net wide when it comes to attracting overseas investors, and that’s likely to remain the case for the foreseeable future given the Modi Government plans to secure $100 Billion FDI inflow over the course of the next two years with a range of initiatives including relaxed rules for e-commerce and telecoms enterprises and removal of prior government approval on real estate projects.

Of course, whether that would make it any easier for a modern-day Charles Yerkes to pitch up in Mumbai is, a different matter altogether…

Red Ribbon has been specialising in India’s Markets since the company was founded more than a decade ago, bringing unparalleled expertise to its investment policies on the subcontinent with specialist sectoral advisers working from it’s Head Office in London in conjunction with more than a hundred local experts on the ground in the subcontinent itself. And by drawing on that body of expertise it offers investors an opportunity to secure above market rate returns in this, the fastest-growing large economy in the World.


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Executive Overview

It’s impossible to overstate the importance FDI has for any modern economy, not least because it provides the sort of secure and resilient, non-debt based finance needed to sustain growth without repeated recourse to taxes and public borrowing. And of course India is the fastest-growing large economy on the planet so I’m not surprised to see it placing such an emphasis on FDI initiatives.

Tax concessions and administrative incentives have made the subcontinent a much more business-friendly environment for overseas investors over recent years and further concessions included in the recent Union Budget will now underpin and strengthen that trend.

That’s one of the reasons why I’m convinced there’s never been a better time to invest in India and take full advantage of the opportunities its markets have to offer.

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.