Ideas

Peace

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

GPC’s Macro Thought Leadership

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


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

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

 

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

 

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

 

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

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

Selected news that makes the difference

India’s Foreign Direct Investment (FDI) Grows 90% in June Quarter to US$22.5bn.

FDI increased to US$22.5bn during the June quarter, 90 per cent higher from US$11.8bn in the year-ago period, mainly attributable to measures taken by the Government on the fronts of FDI policy reforms, investment facilitation and ease of doing business.

India Signs Pact with Maldives for US$500m Connectivity Project.

The Maldives government and an Indian construction firm commenced the US$500m Greater Male Connectivity Project, the largest-ever project in the Maldives that will boost connectivity between the four islands, which account for almost half of the Maldivian population.

India in Process of Fast-Tracking Free Trade Agreements (FTA) with Six Nations.

In line with its revamped foreign trade strategy, the Commerce and Industry Secretary announced that India will fast-track free trade agreements with at least six nations — including the UAE, the UK, Australia, Canada, and the EU — over the next few months.

Green Bond Market in India to Cross US$10bn in 2021.

According to global investment bank JP Morgan, the ESG-focused fund-raising (green bonds) market, which has already scaled an all-time high so far this year and is set to cross the US$10bn mark by December 2021.

India’s GDP Grows by 20.1% in April-June Quarter of FY22.

India's GDP grew by 20.1% in the April-June quarter of FY22, its best-ever fiscal-quarter numbers, marking a significant improvement from the negative growth last year, driven by accelerated manufacturing despite a devastating second wave of Covid-19.

India, Russia to Ink Deal in Logistics, Naval Coordination.

India and Russia are expected to conclude the bilateral logistics agreement, Reciprocal Exchange of Logistics Agreement, and a Navy-to-Navy cooperation Memorandum of Understanding in December with the two sides also looking at expanding cooperation in Central Asia.

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

Media coverage in India this month covered a milestone India’s vaccination drive with half of India’s eligible population receiving at least one dose of the Covid jab, Indian start-ups seeking direct overseas listing rights and the Indian Parliament approving a bill to end retrospective indirect taxation for companies.

 

Half of India’s Eligible Population Vaccinated with First Dose of Covid Jab

 

Half of the country's adult population eligible for Covid vaccines – c.473 million people - has received at least one dose, which includes 99% coverage among healthcare workers and 100% front-line workers for the first dose. The country’s health ministry is in process of accelerating its vaccination drive and has been working with regional governments to increasing the pace of inoculation to stave off another wave of infections and vaccinate all Indians by the end of the year. Various media publications focused on why ramping up the vaccination drive is important for India’s economy to recover and to give large swathes of the population protection from hospitalization if a third wave of Covid-19 hits the country.

 

An article in Indian Express outlined how the unlocking of the economy remains contingent on a critical mass getting vaccinated, which on materialising should trigger a revival in consumer and business sentiment that will positively impact India’s near and medium-term growth story. “ However, in the near term, there are two impending macro pivots to navigate. First, is the vaccine pivot… The vaccine pivot is also an effective insurance policy against a possible third wave — a risk to near-term growth… The second pivot is that of policy. When inflation is under control, then flush liquidity and ultra-accommodative monetary policy will help kill two birds with one stone — ensuring easy financial conditions, and helping control borrowing costs of the government’s expansive borrowing programme… The RBI’s consistent message recently has been to view the current inflation surge as a “ temporary hump” However, CPI inflation is tracking 5-6 per cent on an already high base of 6.6 per cent in 2020, amid elevated inflation expectations, ongoing supply-side shocks, and imminent demand-side ones… The broader, and probably trickier issue for central banks, governments, and indeed the public is how to live with “ long Covid” Even with widespread vaccinations, future pandemic waves may well be unavoidable. Fiscal, monetary and administrative policies cannot remain in a suspended emergency.”

 

An article in The Hindustan Times detailed how despite the milestone, improving India’s vaccination coverage is critical prior to a possible third wave or new variant hitting the country, with the data clearly indicating that nations with high vaccination rates have managed to keep their deaths far lower than in previous waves despite the spread of the Delta variant, while nations in Asia and Africa with low vaccination coverage have been struggling to do the same. “ Data shows that the country needs to double the current pace of vaccinations till the end of the year to completely vaccinate all adults by the end of December, a commitment the government has made in a submission to the Supreme Court… while the Delta variant of Covid-19, a highly contagious variant of Sars-CoV-2, has led to a massive surge in infections nearly across the world, nations that have high vaccination rates have managed to keep their deaths far lower than in previous waves… This, experts said, is a crucial factor for improving India’s coverage. Should a possible third wave of Covid-19 hit the country, mass vaccination may give large swathes of the population protection from hospitalisation, severe disease, and if things go south, death… But vaccination can’t be the only measure... We still need to wear masks, avoid crowded areas even after being fully vaccinated. This is because new mutations can always take place that can even evade the immunity produced by vaccines.”

 

Finally, an op-ed in the Indian Express covered why local governments should build on the vaccination drive efforts to frame district and block-level specific models to increase the reach of the vaccination drive and cover areas with limited health infrastructure and those more prone to vaccine hesitancy. “ Vaccine hesitancy has crippled various government programmes even before the Covid outbreak, including for polio elimination. It has been more prevalent in rural areas for a variety of reasons, including the dearth of health education. In the case of Covid-19, the focus was initially on urban areas, which saw maximum vaccination numbers in the early days of the rollout. Rural India called for a nuanced strategy that involved engagement with, and participation of, multiple stakeholders and influencers… Even as vaccination is voluntary, it is critical to incentivise beneficiaries. In that direction, the Maharashtra government’s decision to only allow fully vaccinated people to travel in Mumbai local trains, will ensure more people come forward to get vaccinated. Local governments should frame similar district and block-level specific models. The gender disparity in Covid vaccinations also needs to be addressed — except in a few states like Kerala, men dominate the vaccinated population. A potential third wave may target hitherto unaffected sections of the population, and it is important to spread the net wider.”

 

Indian Start-ups Seek Direct Overseas Listing Rights

 

Founders and CEOs of 22 leading start-ups and venture capital firms are reported to have jointly written to Prime Minister Narendra Modi, urging the government to allow direct overseas listing of Indian companies. The request comes at a time when several Indian start-ups have accelerated their plans to go public. The overseas listings are expected to present an opportunity for some of the world's leading exchanges to vie for India's rapidly growing start-up companies. Media publications focused on why overseas listings for Indian would provide a level-playing field with their foreign counterparts and why it would drive more investments towards Indian start-ups.

 

An op-ed in Money Control stated that while the enabling provision for Direct Overseas Listing is a significant step, an early release of practical guidelines may provide Indian companies an opportunity to participate in the ongoing ‘ IPO boom’ and a chance to raise capital from international investors at a time when global capital markets are flush with liquidity. “ In September, the Companies (Amendment) Act was passed enabling listing of Indian company on overseas market — detailed guidelines are awaited. Once these guidelines are issued, Indian companies may potentially be able to list in overseas capital markets — with attendant benefits such as access to a much larger pool of capital, broader investor base, higher valuations, increased brand awareness and assistance in future international expansion plans. While enabling offshore listing is a welcome move, detailed guidelines need to be issued to make offshore listing a reality, and there are various challenges that need to be considered and addressed from an Indian tax and regulatory perspective in the guidelines… At this point, the procedural aspects for enabling Direct Overseas Listing from the perspective of Indian exchange control are not clear. The rules governing utilisation/ bringing into India of the IPO proceeds by the company, and the proceeds of an Offer for Sale (OFS) by existing shareholders, especially Indian residents, need to be prescribed… This could not only enhance the exposure of Indian entrepreneurs to the international investing community, but also set the stage for positioning India at the forefront of the tech-driven global transformation of the business ecosystem currently underway. This would naturally provide a significant boost to the Indian economy.”

 

An article in Inc42 outlined how the current inability of unlisted companies to tap international markets for raising capital is an impediment to growth and most Indian start-ups do not have a level-playing field with their foreign counterparts. “ According to the letter, start-ups need access to international capital to level the playing field with foreign technology giants and be globally competitive. It said the total market cap of all the companies listed in India is about $3 Tn, while the comparable number for the US is $50 Tn… Many start-ups have set up holding companies in Singapore so they can list abroad more easily which, the group believes, can be prevented if Indian regulations were more helpful. “ Given this trend of fast-paced growth, many such mature companies are now keen to tap stock markets to raise further capital as it will allow them to fuel their domestic and international expansion, generate employment and make India more efficient and competitive,” the letter said… Earlier this year, the Ministry of Corporate Affairs clarified that Indian tech companies that choose to list on overseas stock exchanges would not be considered as listed companies in India. Previously, companies that raised funds from public investors on overseas exchanges were considered as listed companies in India as well, and subject to stringent rules and regulations mandated by the Securities and Exchange Board of India (SEBI). These include disclosures on a quarterly basis to the regulator on the financial performance as well as corporate governance.”

 

Economic Times covered how an option for Indian companies to list in foreign markets would encourage foreign investors to increase their investment allocations towards Indian start-ups and also allow these start-ups to utilize the capital raised from international markets to fuel their domestic and international expansion, generate employment, and make India more efficient and competitive. “ The heads of 22 top start-ups and venture capital firms have jointly written to Prime Minister Narendra Modi, urging the government to allow direct overseas listing of Indian companies. … “ We have reached out to PMO seeking clarity over direct listing of start-ups overseas. This could bring more capital in India and help in brand building of Indian start-ups in markets like the US,"… "Many start-ups have ‘flipped’ structures to set up companies in Singapore so they could list abroad. They won’t have to do it if this is allowed.” … “ Valuation of sectors like SaaS, Neurotech would be more abroad. What might work for a consumer company here might be different for another sector-focused start-up,” the founder of a start-up said… As foreign investors get more familiar with investing in Indian companies listed on foreign stock exchanges, they will also be encouraged to drive more investments to Indian start-ups.”

 

India’s Parliament Approves Bill to End Retrospective Taxation, Amend Tax Law

 

The India Parliament approved a bill scrapping a controversial law that taxed companies retrospectively, a move that could resolve at least 17 disputes of tax payments amounting to c.US$6.7bn and help boost investor confidence in the Indian economy. Media publications focused on how ending the retro tax would help attract foreign investment and strengthen the trust between the government and industry

 

An op-ed in Hindu Business Line lauded the government’s move to scrap the retrospective tax as a step in the right direction and the need of the hour, particularly from the point of Ease of Doing Business in India, especially at a time foreign investors have started withdrawing from China and are exploring other attractive destinations to set up their manufacturing units and operate their businesses. “ The government has acted pragmatically and laid to rest the ghost of the retrospective tax, though initially, there was thinking within the government to challenge the verdict by the Arbitration Council. The entire focus was mainly on long-term interests of the economy for which attracting investment is a prerequisite… from the viewpoint of showcasing India as an attractive destination for foreign and domestic investors and making India into a manufacturing hub, certainty in tax regime and transparency of tax laws are a key requisite… The government’s move on August 5, 2021, to scrap the retrospective tax law is certainly welcome and should be applauded, keeping in view the overall Ease of Doing Business and need to attract foreign investment… This government’s bold move would act as a booster at a time when the economy has just started reviving from the Covid-19 induced economic crisis.”

 

Another op-ed in The Indian Express by the former executive director of the IMF writing in his personal capacity covered end to the retro tax strongly signifies that the strengthening of reformist trends by the current central government and is a pointer towards more capital reforms, including some major reforms in the capital market. “ The repeal of the retrospective tax was long overdue, and strongly signifies that the reformist trend in Modi 2.0 is not only continuing, but also strengthening. The institution of the tax in 2012 — it meant that the state could impose a tax on an activity ex-post, that is, the government could change the goalpost according to its fancy — was a stunner… This march towards an internationally competitive economy needed the stamp of a tax litigation friendly regime — an empty dream with the retro-tax still a possibility. Why should investors, domestic and foreign, trust that India will no longer indulge in the unthinkable? … Another financial market reform, and one directly influenced by this goodbye to the retro tax, is that Indian sovereign (and corporate) bonds can become part of global bond indices. The cost of borrowing for governments and corporates will come down as individuals across the world invest in the now high nominal (and real) Indian yields.”

 

Finally, an op-ed in Print covered that while scrapping retrospective taxation is a welcome first step in the right direction, the Government needs to continue implementing such reforms for other legal issues awaiting large global corporations that have committed billions of dollars into India in order to keep the economy open, transparent and rules-based. “India’s government has finally taken a decisive step toward ending “ tax terror,” fulfilling a pledge it had made during the 2014 campaign that first brought Prime Minister Narendra Modi to power. Is this a fresh start, the beginning of an open, predictable, and fair relationship between New Delhi and global capital? It’ll require a lot more evidence to answer that question in the affirmative… Retrospective taxes are just one facet of arbitrary state action. Multinationals that have committed billions of dollars, drawn by the potential of India’s 1.4 billion-people market, have many other legal minefields awaiting them. Walmart Inc. is battling a draft consumer protection regulation that threatens to undermine the business model of Flipkart, the local e-commerce site it bought for $16 billion in 2018. Facebook Inc.’s WhatsApp service has taken the Indian government to court over rules that it says will destroy end-to-end message encryption… But the political executive will also need to strive for a fairer playing field. Getting rid of retrospective taxation is a welcome first step.”

Key insights and forecasts that show us what is to come

Climate Change Is the Biggest Threat to Indian Ocean Security.

Given the threat of an existential crisis in Indian Ocean region due to global warming, the Indian Ocean Rim Association needs to be revived to take the initiative on protecting the region’s interests amid the unfolding climate crisis.

Pathways Forward for Humanitarian Assistance in Afghanistan.

The United States, in tandem with like-minded allies and partners, should ensure that humanitarian assistance in Afghanistan goes undisrupted amid ongoing issues such as food insecurity, drought conditions and the mounting impacts of the Covid-19 pandemic.

US, China Should Cooperate on Afghanistan, Tsinghua University.

Both China and US should be pragmatic about cooperation on Afghanistan and should continue to use diplomatic channels, including the possible G20 summit, to maintain communication and avoid turning the issue from a point of potential cooperation into competition.

The Biden Administration’s Anti-Corruption Initiative.

As the Biden administration formulates its strategy to address corruption in countries where the problem is systemic, it should learn from the mistakes as well as the successes of the past.

Governments Should Consider Establishing a Multilateral Food Systems Stability Board (FSSB)

The Covid-19 pandemic, rising rates of global poverty, persistent conflict, and the escalating climate crises that together contribute to increasing hunger as well as food and nutrition insecurity, have created the urgent need for a United Nations-led FSSB.

EU’s Technological Sovereignty in the Decades to Come.

The EU should streamline its goals, interests, and values in a plethora of defense and tech-related programs, harness the current transformative wave of innovation, and mitigate potential disruptions and human rights harms to become more technologically sovereign in the decades to come.

A Proposal for Long-Term Covid-19 Control.

A multimodal strategy for long-term Covid-19 control is required, one that sets up multiple barriers of protection including universal vaccination, prophylactic drugs, rigorous mitigation, and international cooperation to not only contain and eliminate Covid-19 as a major life-threatening disease, but also return to a new social and economic life.

India Must Champion the Cause of Afghan Refugees More Inclusively.

Having taken over the presidency of the United Nations Security Council (UNSC), India needs to demonstrate timely leadership on this unfolding Afghanistan crisis by shedding its ad hoc approach to refugee crises and immediately laying out a refugee law, introducing objectivity and inclusivity into its policy.

The Key Events Driving Global Instability & Opportunity

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

Manufacturing activity in India rebounded to a three-month high in July rising to 55.3 after contracting to 48.1 in the previous month. Output rose at a robust pace, with over one-third of companies noting a monthly expansion in production, amid a rebound in new business and the easing of some local Covid-19 restrictions. Both exports and imports grew by 9% and 11% respectively over the same period last year. No further rate cut was announced by the RBI during this month.

 

China’s PMI eased to 50.4 in July from 50.9 in June due to higher raw material costs, equipment maintenance and extreme weather, adding to concerns of a slowdown in the world's second-biggest economy. For July, China’s exports increased by 0.4% but imports fell by 1.6% as compared to the same period last year.