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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

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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.

                                                                     View our investment products

 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.

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

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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.

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.

A Union Budget for Growth… Investing in India has never made more sense.

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The London based Institute of Chartered Accountants, obviously knowing a thing or two about balancing books and cooking up growth, ruffled a few feathers in Whitehall recently by criticising the Government for failing to invest in the regions, failing to invest in transport, failing to deliver fibre optic connectivity and allowing major public infrastructure projects to fall into stasis. Talk about kicking someone when they’re down, but it’s hard to disagree: especially with Hinkley Point still clutching at its footings ten years after commissioning, road, rail and utility networks creaking at the seams and public investment at an all time low.

But half a world away in India, things couldn’t be more different. This year’s Union Budget included a $125 Trillion, five-year splurge on infrastructure investment and just to put it in perspective, that’s enough to give every man, woman and child in the United Kingdom £1,515 to buy half a Virgin annual season ticket from Liverpool to Manchester. And, as ever, the Modi Administration hasn’t been short on ambition when it comes to spending these breathtaking sums.

For a start there are plans to make India a hub for Aircraft Finance and Leasing with new International Financial Service areas and Special Economic Zones; more urban Metro Rail initiatives, more gas grid works (expect more pavements dug up in Mumbai): more water networks and i-ways and much needed airports for the regions.

And even though India already has one of the world’s most extensive road networks, covering 5.5 Million kilometres with more than 10,000 kilometres added in 2017-18 alone, the Union Budget also includes plans to build a further 125,000 kilometres over the next five years (as well as opening up waterways to alleviate road congestion). India’s Highways and Transport Minister, Nitin Gadkari, said the subcontinent’s roads were the “country’s assets” and this Budget emphatically put its money where his mouth is.

And to put that in perspective, the United Kingdom currently has a total of 394,000 kilometres of roads and will have built just 643 kilometres of new highways between 2015 and 2020: assuming, as Costain recently found to its cost, that most of these aren’t cancelled.

Under the Union Budget provisions, Foreign Portfolio Investors will also be able to subscribe for listed debt securities issued by ReITs and as part of a program to encourage trade and give a boost to the Make in India Campaign, customs duties are being flattened on a range of goods including tiles, vinyl flooring and CCTV cameras.

The South Indian Chamber of Commence President called it “a transformational and forward looking Budget”…And he’s right, what’s not to like about it?

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 we look to explore opportunities to share in the potential of this, the fastest growing large economy on the planet.

                                                                 View our investment products

Executive Overview

Infrastructure investment is the key turbo charger of all modern economies, and by that standard India has certainly taken its place at the global top table.

The sums announced in last month’s Union Budget are simply staggering and I have no doubt they will now give added impetus to the explosive growth we have seen in the subcontinent’s real estate markets over recent years.

Why Donald Trump’s Twitters mean more Infrastructure Investment in India…and soon

Why Donald Trump’s Twitters mean more Infrastructure Investment in India…and soon

By Archive, India, News No Comments

There’s a good reason why global financial markets responded so positively to last month’s landslide BJP win in India, and it’s called Donald Trump: the President’s announcement of a 25% tariff on steel imports last year, with 10% on aluminium and an increasingly bitter trade war with China has sparked a worldwide economic slowdown. Mr Trump might think “trade wars are good and easy to win”, but he’s in a small minority because most of the engaged world dislikes nakedly protectionist policies for good reason: because they’re bad for global trade and worse for market stability.

Which brings to the new Modi Administration. Financial Markets have responded positively to BJP’s return to Government on the subcontinent precisely because of the lengthy period of stability it heralds in an increasingly unstable world (take note Theresa May), added to which, unlike Donald Trump, Mr Modi has already earned his economic spurs through a series of groundbreaking market reforms that have improved India’s global economic standing: rising from tenth in the world to third in just four years on Cebr rankings. And the financial markets aren’t slow to catch on either: since January of this year, the Bombay Stock Exchange Sensex Index has risen by 7%.

But there’s a snag, in this sea of global turbulence India’s very stability and growth means more that than ever before the subcontinent needs to fuel its domestic markets to become less dependant on imports.

It’s not a lesson lost on Modi.

The BJP Manifesto for this year’s election included spending pledges of $ 1.4 Trillion to fund infrastructure projects over the next five years with the clear intention of building (domestically) on its economic growth and turning India into a global manufacturing hub. Infrastructure projects are the turbo charger of any advanced modern economy, and the Modi Government has already borrowed 4.4 Trillion Rupees ($ 63 Billion) since January to continue them at a faster rate than ever before.

And it’s not as though it can’t afford to do it either…India’s debt to GDP ratio is the lowest of all major global economies, running at at 67% compared with China’s astonishing 253%: so if all this looks overly ambitious, bear in mind that in the single year 2018/19 the subcontinent’s overall public sector expenditure was $352 Billion (more than five times the BJP Manifesto pledge) and it all means greater future public involvement in long-term infrastructure investment, which is good for India’s burgeoning real estate sector, good for the subcontinent’s economic prospects and, with a certain sense of irony, good for the global economy too.

Eat your heart out Donald Trump.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the challenges of India’s rapidly burgeoning real estate and infrastructure markets, delivering exciting opportunities for investors through the platform of its Red Ribbon’s Real Estate Fund. Because, when it comes to investing on the subcontinent, nobody knows India and its markets better than Red Ribbon.

Executive Overview

The exponential growth in India’s real estate sector over recent years, linked to an unprecedented growth in the subcontinent’s population and increased urbanisation, provides a powerhouse for future growth within the economy and, in conjunction with increased infrastructure spending over the next five years, that looks likely to take India’s economy to new heights. Not before time too: as the article points out, there is a pressing need for India to drive domestic growth further so as to insulate itself from increasingly turbulent international markets.

That’s why Red Ribbon has committed itself to supporting real estate investment on the subcontinent through its Real Estate Fund, established not only to meet the challenges of its markets but also to give our investors the best of the opportunities they have to offer.

Setting up the Sandbox…India’s Blockchain Technologies take a leap forward

Setting up the Sandbox…India’s Blockchain Technologies take a leap forward

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The Reserve Bank of India (“RBI”) might still be hedging its bets on Cryptocurrencies (more of which in a moment), but it has more or less given up trying to stop the inexorable rise of Blockchain, and given the technologies involved have never recognised national boundaries, that means imminent de facto regulation of Blockchain not only in the subcontinent’s own financial backyard but in financial markets everywhere. And it’s a smart move too: with no other major regulator showing the slightest willingness to step up to the plate, RBI’s decision to pave the way to full Blockchain regulation will almost inevitably lead to it becoming a lead regulator for Blockchain worldwide.

Which is a good place to be, because Blockchain technologies are set to radically change the way we all do business, the way we buy things and how we deal across boundaries in increasingly globalised markets, all of which demands an innovative regulator with the oversight skils to steward the complex processes involved.

And, at last, we have one.

RBI’s Framework Report was issued on 18th April and announced that a Regulatory Sandbox will be set up, a common regulatory tool that enables innovators, financial service providers and regulators to work together with a small number of consumers over a short(ish) period, conducting field tests and collecting evidence as a basis for future formal regulation. Or, in other words, as the RBI’s bloodless boffins put it: “a structured avenue for the regulator to engage with the ecosystem and to develop innovation-enabling or innovation-responsive regulations that facilitate delivery of relevant, low-cost financial products”. Talk about sucking the excitement out of a project…

But don’t let the geeky language get us down, let us instead unite in praise of the Sandbox because it gives Blockchain a lead into the fastest growing large economy on the planet as well as some of the world’s most innovative and exciting markets. With those factors in play, just imagine what India and Blockchain might do together. And according to the RBI’s Report these flesh and blood consumer trials will be completed within a mere six months, so in theory we can look forward to a Blockchain Christmas. What could be more exciting than that?

Interestingly the Reserve Bank has also given us a glimpse of the specific new technologies that will be tested in the Sandbox: mobile device payments, digital identity software, data analytics, AI and machine learning applications: all of which are certain to make the hearts of bankers and on-line retailers skip a little faster; as will the “eligible sectors” of the programme, which include well know finance friends such as retail payments (obviously), money transfer platforms, KYC checks (hurrah) and a limited number of cybersecurity products (admittedly not so exciting).

And for those of you who are now starting to re-read that list again, don’t bother: Cryptocurrencies aren’t in it (yet). At least as far as India is concerned, the non-fiat end of the currency spectrum is still struggling to get out from under the Finance Minister’s Budget Statement from 1st. February last year. But even so, industry pressure groups are already stepping up their lobbying for Crypto’s exclusion from the Sandbox to be removed. Take Nasscom for example (which represents Indian IT companies, so its voice certainly counts), which has called for a regulatory re-think, arguing (correctly) that “…cryptocurrencies are an important part of Blockchain technologies and their exclusion will inhibit testing for technologies already approved for use in the Sandbox”. And the Payments Council of India has also weighed into the debate: arguing that the exclusion of non-fiat currencies is likely to be a major fetter on innovation. Those are pretty powerful arguments, coming from highly influential bodies and they’re certainly not alone. For one, the Supreme Court has now re-listed the Cryptocurrency appeal for the second week of July (to give RBI time to come forward with a new regime rather than have its 2018 policy declared unlawful), so don’t bet against another U Turn from Mint Street in the not too distant future.

North Block Capital Fund I is an open-ended regulated fund listed on the Gibraltar Stock Exchange specialising in crypto assets and blockchain related technology.

Executive Overview

Like most of us, I suppose, I listened with interests to the comments made last year by India’s Finance Minister as part of the Union Budget Debate, which not only caused the value of Bitcoin to soar on international exchanges, but also precipitated the Reserve Bank (as Monetary Regulator on the subcontinent) to issue what now seems to have been a singularly ill advised policy attempting to strangle these new technologies at birth. These policies have since been subject to formal challenge in the Supreme Court of India and, as we have commented on this site before, the resulting litigation has inexorably driven the Regulator to back away from its original position.

This latest announcement of the Sandbox initiative, and likely introduction of cryptocurrencies into the process is all part of that process of re-evaluation and I believe it is to be warmly welcomed.

Because it is now beyond question that Blockchain has the potential to fundamentally change the way we all do business, which is why I’m so proud that the North Block Capital Fund will play a part in that process. India is now squarely at the forefront of major regulatory and technological change, and I want our investors to be able to share in the exciting opportunities this offers.

Who is J Christopher Giancarlo anyway, and why is India the future of Blockchain?

Who is J Christopher Giancarlo anyway, and why is India the future of Blockchain?

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Just when we were waiting for Theresa May to leave Downing Street and Donald Trump to come to Regents Park, J. Christopher Giancarlo has pulled stumps without fanfare or ceremony and left altogether, he just went. But who is this fellow and why should we be interested in him anyway? Well, taking those questions in order: he is (or rather was) the Chairman of the US Commodity Futures Trading Commission (“UFTC”), and we should be interested in him because he’s only been regulating our crypto and Blockchain markets for the last two and a half years.

This is the man who describes himself as being humbled at being called “Crypto Dad”; a regular chap who grew up amongst the exotic complexities of Blockchain, and a self-confessed “quantitative regulator” with an “exponential growth mindset” (whatever those might mean).

But the fact remains that although this Bitcoin ubermensch made it his mantra in office to  “embrace market based solutions” in a period of digital revolution, he ultimately turned out to be a reactionary: the Flight Control Jeremiah with a divine mission to tell anyone who will listen that landing on the moon is impossible. In 2017 he told us (without a smile on his face) that fiat currencies and ICOs were too complicated for your average Joe, that they should be discouraged and it might be better to stick with paper stock and assets you can photocopy. So much for embracing our digital times…

But, as someone once said (Margaret Thatcher actually), you can’t buck the market and as e watch J. Christopher Giancarlo retreat from the world stage to spend more time with his money, the markets are already finding a new home where Blockchain can spread its wings and rise to its full potential: half a world away, in India.

 In particular, the Reserve Bank of India now seems to be regretting its hasty decision to ride on Mr Giancarlo’s coat tails last year, by issuing a directive effectively banning crypto banking activities on the subcontinent. Counter intuitively, and as is often the way with that sort of precipitate, ill thought out action, the RBI Directive has actually signalled something of a renaissance in Blockchain technologies in India, stepping up to occupy the yawning regulatory gap left by the UFTC.

It did this first through an explosion in exchange escrowed peer-to-peer services, designed to allow cyber markets to thrive with little or no regulation. And secondly, because a lack of regulation is inherently a bad thing (ask Carillion), court proceedings were issued by the Internet and Mobile Association of India (hardly surprising given it is the fastest growing mobile and internet market in the world): the proceedings sought to overturn the Reserve Bank’s 2018 decision on the basis it was unlawful (commercial myopia not being a legal basis of challenge). And significantly, these proceedings have now reached the Supreme Court of India.

 The Supreme Court last month heard submissions in the action on behalf of the Reserve Bank that its Committee, tasked with overseeing regulation of crypto markets, had reached “…the final stages of its deliberations, and these proceedings should be delayed until after its report is produced”. In other words, and in plain English: Dear Judges, delay your ruling because we and the Government are going to give in. Crypto markets, Bitcoin and Blockchain are about to step into the daylight on a new Indian stage after being consigned to the gloom by Mr Giancarlo.

The Court didn’t need telling twice: it quickly granted the Reserve Bank a four-week adjournment to allow an “opportunity for the Government to do the needful”.

And this, in short, is how international markets actually work. One leading regulator declines to accept the challenge posed by a new sector, so another steps forward to take its place. The United States gives way to India, because markets abhor a vacuum. And having called it so badly, last year it is greatly to the Reserve Bank and the Government’s credit that they have now shown themselves ready to take on the challenge. They are certainly unlikely to meet any lack of appetite for Crypto markets amongst its fellow citizens or across the wider commercial world. The torch has been passed to a new generation of regulators….as someone else might once have (almost) said.

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, the Red Ribbon Private Equity Fund offers unique opportunities to share in the potential of this, the fastest growing large economy on the planet.

 

Executive Overview

I remember being surprised when I read the comments made by India’s Finance Minister in the Union Budget Debate last year, comments which caused the value of Bitcoin to soar on international exchanges and which seem directly to have precipitated the Reserve Bank’s intervention as described in the article. I remember too thinking that whatever the merits of Bitcoin and Blockchain might be, this was at least a powerful statement of the role that India might play in any future Blockchain driven market.

And now we seem to have come full circle.

The comments made in the Supreme Court on behalf of the Reserve Bank of India (and, at least by implication, on behalf of the Government as well) clearly signal a willingness to step into the regulatory void left by the United States and meet the challenges and opportunities posed by Blockchain on a concerted basis. And in a sector so obviously in need of regulation and so obviously lacking in effective oversight to date, that has to be a good thing.

So watch this space, it should get interesting!

It’s Modi by a Mile…and here’s why it matters.

It’s Modi by a Mile…and here’s why it matters.

By Archive, India, News No Comments

If you felt tremors under your feet this week, it’s because we’ve just witnessed the biggest expression of democracy in history: with some 800,000,000 Indian citizens, 67% of its population, taking part in the subcontinent’s elections and, perhaps equally significantly, more women than ever before turning out to have their say on who will take the subcontinent forward. Everything about the process was monumental, including the sheer scale of abuse and bile freely heaped on one another by both main parties. Nardendra Modi called the assassinated Rajiv Ghandi (fresh faced Rahul’s dad) the “number one corrupt man in the country” and Rahul was probably stung too by the accusation that his family used an Indian Navy Aircraft Carrier as a glorified taxi to take them on holiday. To be fair, Rahul tried to get his revenge in first: accusing Modi of fraudulent involvement in the controversial Rafale Jet affair, but that backfired when he was forced to apologise for (inadvertently) suggesting the Supreme Court had agreed with him (when it didn’t).

And of the 2,800 odd candidates who stood for either of the main parties, an astonishing 464 (a little under one in five or 20%) had criminal records: indeed, the Congress Party ran 40 candidates who were facing current criminal charges including rape, murder and attempted murder: only narrowly beating the BJP tally of 38. These aren’t necessarily the sort of people you would want to bump into after dark in a Mumbai alley.

Small wonder then, that with admirable prescience the BJP Party cautioned its opponents on Wednesday to accept “defeat with grace”, prompting Congress to make one last allegation of voter fraud to keep the pot boiling.

They needn’t have bothered…It was Modi by a Mile.

And after all the dust has settled; after all the recriminations, allegations and abuse has been hurled, something rather splendid has happened too: the world’s largest democracy, and one of the world’s most diverse and richly textured countries, has just overseen a peaceful transfer of power. And it doesn’t matter a jot that this power has been given back to the person who gave it up: not when you consider the electoral records of neighbouring Pakistan and Myanmar across the Bay it doesn’t. In truth this was a democratic triumph for the 800,000,000 Indian citizens who stood for hours in the blazing sun from Utter Pradesh to Kerala to have their voices heard, and we should celebrate it as such.

Its certainly going to take more than a few unwholesome rogues in a dark alley, harbouring a grudge to diminish the scale of the triumph.

But this election, and its emphatic result in particular, matter much more even than that: because the policies of Nardendra Modi’s last administration were largely responsible for transforming India’s economy since 2014.

And yes, economic change was certainly in the air on the subcontinent before 2014, but it’s been turbo charged ever since. Think of the milestone economic events that have emerged in those few short years: Demonetisation, Inflation now running at less than 4%, GST Reforms (creating a genuine prospect of whole India trade), a revamped Insolvency Code, the Jan Dhan Yojana Rural Program, the Affordable Housing Program (now back on target after years of stagnation) and four times more new highway miles built in a single year on the subcontinent than have ever been built in Ireland and the United Kingdom put together.

India’s GDP growth rate is still amongst the highest in the world (among major economies) and it will be the fastest growing large economy in the world for at least the next two years according to the IMF, projected to grow annually at 7.3%. Compare that with Brexit bound Britain where the equivalent figure is 0.6%, the United States’ at 3.2% and even China, which is running at 6.9%.

As the old joke about the three legged pig goes, you don’t eat it all at once and when things are going this well for India, it’s unsurprising so many of its citizens have decided to hang on to what you’ve got. That, in short, is why it was Modi by a mile…and that’s why it all matters so much.

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, the Red Ribbon Private Equity Fund offers unique opportunities to share in the potential of this, the fastest growing large economy on the planet.

Executive Overview

As an Indian National, I’m proud of the manner in which the subcontinent’s elections have been conducted and as someone doing regularly business on the subcontinent, I’m pleased at their outcome too.

It is no small matter of local administration for a country where more than 900,000,000 of its citizens are eligible to vote to shepherd the mammoth process so smoothly over a polling period of more than a month. No small matter too, lest we forget, that the entire process was conducted peacefully despite the usual rough and tumble between candidates, which has come to charecterise politics in India. As somebody once said, there aren’t any fleas on a dead dog.

And as the article points out, we should never take a peaceful transition of power for granted: especially in view of the events over recent years in Pakistan and Myanmar.

And as a businessman too, who has been investing in India for more than a decade through Red Ribbon platforms, I am pleased that Prime Minister Modi has been re-elected because BJP economic policies have been the foundation of the unprecedented economic success the subcontinent is enjoying today. I want that success to continue, and with Narendra Modi at the helm I’m confident India’s economy is now back in safe hands…

Kaam, Daam...thank you Ma’am: Indian Housing Policy and the Congress Manifesto

Kaam, Daam…thank you Ma’am: Indian Housing Policy and the Congress Manifesto

By Archive, India, News No Comments

As the World’s largest democracy rumbles towards the finishing line in its polling marathon and with a final announcement due 23 May, neither of its major parties have been pulling their punches. The Congress Manifesto branded BJP’s Smart Cities Mission a “colossal failure and a waste of money with no visible results”. Unlike Jeremy Corbyn then, Rahul Ghandi doesn’t seem to have any difficulty getting off the fence, but spirited and unequivocal as his comments might be, is Congress right to be so critical of BJP’s performance in this crucial policy area?

In the Kaam (“Employment and Growth”) section of its Manifesto, the Congress Party rightly draws attention to the major implications of India’s increasing urbanisation: with more than a third of its population now living in the subcontinent’s sprawling urban conurbations and growing rapidly day by day, what is to be done about the significant macroeconomic challenges this creates? Certainly it feels like something of an understatement for Congress simply to highlight that “India’s Cities can become engines of growth’ when the real question is surely what does it all mean and where is the trend leading.

And it is here that the Manifesto falls strikingly short on detail. Rather than advancing concrete proposals, Congress promises instead that it expects to “formulate a comprehensive policy of urbanisation after wide consultation” and will “support State Governments to build new towns and cities” all of which means very little, and feel alarmingly like the kind of phrases Sir Humphrey Appleby might have coined (or Theresa May in “strong and stable mode”). Perhaps more bravely (or at least more concretely) Congress commits itself to giving the urban poor a “right to housing” and, until the right materialises, a programme of night shelters and clean water for all.

Especially on such an important issue, it all sounds troublingly like jam tomorrow. But doesn’t Nigel Farage remorselessly tell us manifestos and modern politics don’t mix. What should we make of it all? Has the Modi inspired Smart Cities Mission really been nothing short of a dismal failure?

Well, as with most (if not all) matters political, the BJP Policy has certainly not been an unmitigated diet of bread and roses, but to call it a “colossal failure” and a “waste of money” is going way, way too far the other way.

In July last year Prime Minister Modi announced that the Affordable Housing target would be met by 2022, with 5.4 Million homes already by then having received approval for construction out of the target total of 10 Million. And fast forward, by March this year the number of homes approved for construction had risen to 8 Million: well ahead of the rate required to pipeline a further 2 Million within the next two and a half years so as to meet target. Bear in mind too that 8 million figure already achieved is more than the entire number of properties approved for construction in the 10 years of Modi’s immediate predecessors in office.

The problem, as you might imagine, is the real world difference between approving a property for construction and actually building a property. As of March this year only 1.8 million of these 8 Million homes had actually been topped out and occupied. And whilst it takes roughly a year to secure administrative approval (a figure which has incidentally fallen as a result of the Modi “red tape “reforms), the average time it takes to build a property in India is still currently 8 months. That may be where Congress had intended to direct their fire, despite saying little if anything about what they might do instead.

So lets take a look at the nuts and bolts: there are three key factors giving rise to this serious drag in approval to final construction timing: first, an industry wide deficit across the subcontinent in construction technologies; second, a scarcity of urban land and third, the significantly higher price of land in areas such as Mumbai and Delhi. You can’t do much about land availability and market price, so the first of these three is by far the most important.

And that’s one reason why Modular Construction has now risen to the top of the political agenda in India, with a capacity to reduce construction times from 8 months to 6 weeks it is a genuine game changer, which makes it all the more odd that Congress hasn’t made more of its potential in their Manifesto rather than focusing on what are essentially tired and negative platitudes on this, an issue of the greatest social importance.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the challenge of the subcontinent’s urban housing shortages in a practical and focussed manner. It was established to harness the potential of India’s dynamic and fast evolving markets and to deliver opportunities for investors through Red Ribbon Asset Management.

Executive Overview

Whichever side comes out top in these elections, there will be no escaping the imperative to with the economic after effects of India’s status as the fastest growing large economy in the World, with a burgeoning and increasingly urbanised population projected to be the largest on the planet by 2022. That presents not only challenges but opportunities and that will inevitably make the subcontinent an attractive proposition for any investor.

And as the article points out, there is no escaping the sheer scale of the real estate challenge India currently faces. Traditional technologies just can’t cope with the sheer scale and pace of the delivery required, no matter how successful BJP policies might have been (and they have been successful) in cutting away the unacceptable levels of red tape that previously disfigured the subcontinent’s approval process.

No wonder then than Modular Construction has become policy priority for the Modi Administration. I expect it will only be a question of time before others follow suit…

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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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