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

Foreign institutional investors’ (FIIs) Significantly Increase Investment in June

FII’s invested US$2.9bn in Indian equities during June, resulting in Indian markets growing by 8% over the last month and outperforming both MSCI Emerging Markets (EM) and MSCI World indices.

US Shifting Military to India, Southeast Asia to Counter Chinese Army

Following the confrontation between the Chinese and Indian troops along the border, Secretary of State Mike Pompeo announced that the US will shift its defense commitments to India and other Southeast Asian countries in order to counter the emerging threat from China.

India, Australia Broaden Ties in Key Sectors

Following the interaction between Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison, India and Australia signed several agreements, spanning mining of critical elements, cybersecurity cooperation and defense.

Cabinet Forms Empowered Group of Secretaries to Attract Investments

In an effort to make India a more investor friendly nation and attract more companies, the Union Cabinet has formed an empowered group of secretaries chaired by cabinet secretary to encourage both foreign and domestic investments into India. 

Maharashtra To Onboard 10 Large Foreign Investors to Revive State Economy

The Maharashtra government is in process of signing agreements with 10 large foreign investors from different countries as part of its recent efforts to attract foreign direct investment in order to revive the state’s economy.

Government Considers Customs Duty Hike on Chinese Products

Amid ongoing border tensions with China, the Indian government is considering hiking customs duty on several Chinese products (total imports from China was US$62bn from April-February 2020), with a focus on cutting down imports of non-essential items.

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

Media coverage in India this month focused on the government’s three-phase plan to open up the country following a two month lockdown across the country, President Trump’s executive order to suspend H-1B visas for the rest of the year and the violent face-off between Indian and Chinese troops in the Galwan area of Ladakh, leading to 20 Indian Army personnel being killed.

 

Government Announces Plan to Unlock India in Phases Following Two Month Lockdown

 

The Union Home Ministry announced a three-phase plan aimed at lifting stringent restrictions imposed from mid-March onwards to stop the spread of the coronavirus disease. The first phase of the plan, called Unlock 1.0, also removed restrictions on inter- and intra-state travel. Through Unlock 1.0, the government aims to bring stalled businesses and activities back on track and revive the economy impacted by the lockdown prompted by the pandemic. Various media publications weighed in on the next steps to revive India’s economy and on the additional responsibilities needed to be taken on by the central and state governments in Unlock 1.0.

 

An op-ed in Livemint outlined that while the lockdown was necessary to get the rate of corona infection under control, returning the economy to its pre-covid levels would require a broad strategy along with some sector-specific responses. “The lockdown by fiat was easy, but now comes the hard part of putting the economy back together again… As the lockdown is lifted, the first challenge is to harmonize and synchronize the resumption of activity across states. With each state’s reopening calibrated differently, depending on covid severity, efforts at value generation will run into a web of controls that call for varied responses by economic agents. This spells greater complexity than it might seem… The RBI governor’s observations at the MPC meeting reflect the enormity of the task: “Even as the supply side is expected to ease gradually as the lockdown related restrictions are phased out, it is the demand side which will continue to weigh heavily on economic activity for some time to come.". At a more granular level, among the three major sectors of India’s gross domestic product pie—manufacturing, services and agriculture—the pandemic and reverse labour migration have refocused attention on agriculture The Centre’s interventions to re-awaken a bruised economy could get greater returns in agriculture.”

 

An article in India Today was critical of the government lifting the lockdown across the country including states with a high test positivity rate, at a time when Covid-19 cases were increasing exponentially across the country. “For past one week, India has been reporting close to 10,000 fresh Covid-19 cases every day. India is ramping up tests for Covid-19. And, India is reopening too at a time when it is surpassing other Covid-19 hotspot countries. While most other countries lifted their lockdowns when their Covid-19 numbers started reducing, India has chosen a different strategy… With this ground situation, India has chosen to lift its lockdown, leaving it to the citizenry to maintain physical distancing in crowded market places, malls, restaurants and religious congregations among others… The physical distancing norms were also in place during the entire duration of multi-phased lockdown. Still, Covid-19 numbers increased exponentially from a few hundred on March 25, when the nationwide lockdown was enforced, to over 2.55 lakh when unlock 1.0 kicked off on June 8.... Compared with other top Covid-19 hotspot countries, India's test positivity rate is low. It is only one-fourth of Brazil, which tops the table for test positivity rate at near 37 per cent. India is placed sixth after Mexico, Sweden, the US and the UK... In India, several states have very high positivity rates… And, all these places have now reopened except for in containment zones. This is when India is conducting much lower number of tests for its population size.”

 

Finally, an op-ed in The Indian Express laid out why the focus during Unlock 1.0 must be on various immediate and short-term measures to reinvigorate the economy, thus ensuring an inclusive and sustainable growth path in the coming months. “With economic activity coming to a standstill following the lockdown, output and production collapsed, leading to significant loss of livelihood. Therefore, rebuilding and restoring lives and livelihood should be the foremost priority as the economy reopens.… Immediate and short-term measures to address greater formalisation of the economy must be stepped up through labour and regulatory reforms, which in turn would help in creating greater employment and encourage small enterprises to move towards the formal sector... Investments in rural health and infrastructure along with strengthening rural digital programmes and platforms could pave the way for a robust rural ecosystem. Industries along with state governments can be encouraged to set up facilities in rural areas, which in turn will generate jobs and strengthen the rural sector’s share in the GDP... Education will play a key role in ramping up India’s healthcare as also in building a productive economy. This is the right time for India to boost its e-education and e-healthcare systems with the help of digital tools for delivering quality and low-cost healthcare alongside traditional modes of delivery.”

 

President Trump Suspends H-1B Visas for Rest of 2020

 

United States President Donald Trump signed an executive order suspending the temporary work visas, including H-1B, for foreigners until the end of the year. The latest Trump order freezes new H1-B and H-4 visas, which is used by Indian IT professionals and their families, as well as L visas for intracompany transfers and most J visas for work- and study-abroad programs, through the end of the year in order to bar the entry of immigrants in US. Various media publications have weighed in on the impact of the suspension of the H1-B visas on the Indian IT industry.

 

An article in The Economic Times covered how the big Indian IT services companies would be relatively unaffected by the suspension of H1-B visas since they have been well prepared for this eventuality and had begun stepping up their hiring in the US, as well as beefing up their offshore capabilities aided by cloud technology and remote work technologies over the previous couple of years. “The Trump administration’s suspension of H-1B visas and other temporary work permits intended to protect American workers facing higher unemployment may not have a major impact on Indian technology service companies, suggest analysts. Indian technology majors like TCS, Infosys, Wipro, Tech Mahindra and HCL Technologies have been reducing their dependence on visas in the last few years by hiring more people locally... Offshore revenues of technology service providers have been growing and the pandemic is expected to increase the growth rate in the coming quarters. Emkay Global Financial analysts Manik Taneja and Monit Vyas said, ““We are seeing once again a shift toward greater offshore delivery as compared to ‘onshorization’ in play through a better part of the CY10-20 decade” ... Analysts also said that the unemployment percentage in technology jobs is low. “We note that though overall unemployment in US is high, unemployment in computer related jobs is low at 2.5%. Also new H1B visas issued this year who were likely to enter USA (from October 2020 onwards) would be very minimal for Tier 1 IT vendors,” he said. Technology industry body Nasscom has said that the demand for high-tech skills remain strong among employers in the US labour market, even amidst the ongoing Covid-19 crisis.”

 

An op-ed in Livemint focused on why the H-1B visa ban could hurt American technology leadership, stating that if the US stifles the talent stream originating from countries such as India from working for its technology companies, it would lose its innovation edge to China in the coming decade. “The role of Silicon Valley in the evolution of the new tech world is foremost and unique. But Silicon Valley is a creation of immigrants. Two-third of the top US tech companies were founded by immigrants. Almost half the chief executive officers of leading tech companies were not born in the US. With the move to suspend H-IB visas, the US administration is hitting at the heart of American technology leadership... startups in the US will be further challenged and stretched for talent. These startups are the engines of innovation and rely on talent. They are fostered in the unique culture of Silicon Valley where failure is cherished and risk-taking encouraged. However, they can’t afford to match the salaries paid by big tech for top talent. This move by Donald Trump will hurt these startups the most, thus blunting the innovation edge of the US economy…, Chinese big tech companies ranging from Alibaba to Tencent and Xiaomi to Huawei are now challenging US technology companies across geographies and technology domains. For years, Chinese companies (aided by the state) poached American IP and reverse-engineered American technology products to create cheaper alternatives. But it now has the hardware and software prowess to create cutting-edge and innovative products. Especially in AI, the Chinese are ahead of US tech companies.”

 

Finally, an article in Business Standard outlined how different business groups in the US were critical of the decision, highlighting that the administration was making a flawed assumption that these companies did not already look at the U.S. labour market, which most of them do before they get involved in a complicated process of trying to bring in foreign workers. “Businesses including major tech companies and the U. S. Chamber of Commerce said the visa suspension would stifle the economic recovery after the damage done by the pandemic. Critics of the measure say Trump is using the pandemic to enact his longstanding goal to limit immigration into the United States. The immediate effects of the proclamation will likely be limited, as U. S. consulates around the world remain closed for most routine visa processing... Republican Trump is running for re-election on Nov. 3 and has made his tough immigration stance a central pitch to voters, although the coronavirus, faltering economy and nationwide protests over police brutality have overshadowed that issue. The president has faced pressure to restrict work visas from groups that seek lower levels of immigration, as well as some Republican lawmakers…. Mitch Wexler, a managing partner at law firm Fragomen, said the order would hurt his social media and wireless communications clients and other tech companies. Employers "wouldn't pay a lot of money to file these applications and hire lawyers like me if they could hire an American for these positions," he said.”

 

20 Indian Army Personnel Killed Following Violent Face-off Between Indian and Chinese Troops

 

Following a month-long border standoff in Eastern Ladakh, 20 Indian Army personnel were killed during a violent clash with Chinese troops in the Galwan area of Ladakh on June 15th, leading to a major escalation of tensions between India and China. Despite the two nuclear-armed neighbours in the mountainous border terrain sharing uneasy ties over decades, this is first time in 45 years that either side has reported casualties during a face-off. Media publications focused on the implications of this border clash on India-China relations in the coming years.

 

An op-ed in The Hindustan Times outlined that despite the public grief and anger at the loss of 20 Indian Army personnel and the Government needing to deliver a message that it will not accept any compromise of its security interests, India need to focus its diplomatic energies on its relationship with the United States and other democratic countries in the Indo-Pacific region, as well as on reviving the economy following the coronavirus pandemic. “Besides the China factor, there are domestic economic, social and political realities that impinge on India’s current external engagements which merit hard-headed examination... Indian foreign policy managers will necessarily have to take into account the present and anticipate future global perceptions about India. They will also have to assess the resources available for the implementation of foreign policy objectives… What the international community will now observe are the corrective measures, and how quickly they are put in place to mitigate the impact on health and revive the economy... In this troubling background, Indian decision-makers will have to primarily focus on the core aspects of engagements. This must necessarily begin with South Asia where China is chipping away at Indian interests. India’s attempts at greater integration of this region need to be invigorated... Other core areas that need attention are the upgradation of the relationship with the United States, cultivating affinities with democratic countries in the Indo-Pacific region, and maintaining a balanced approach towards West Asia.”

 

Another op-ed in Livemint detailed that while China’s transgressions have also become an all-purpose foreign policy tool to put pressure on Indian political leaders over the years, the Modi government should try to be more unpredictable and differently rational on various political and economic policies, until Beijing concludes that these are not in China’s interests either. “Like in South East Asia, Beijing reckons that political and economic compulsions will cause New Delhi to accept China’s incremental territorial expansion. In other words, it may think it has figured Indian leaders and governments out... Every time tensions flare up in the Himalayas, New Delhi wonders if their timing is signal of Chinese displeasure of something it did or did not do, and begins to think of where it can yield… New Delhi must also expand the canvas on which the relationship with China plays out. An Act East policy and membership of the Quad are building blocks to India shaping the balance of power in East Asia, where China faces Japan, Vietnam, Australia, Indonesia, Singapore and the US… Finally, for the most part, the reason why China manages to bully its way through disputes is not because of its military power, but because of economic interdependencies. India will do itself and the world a service if it were to weaken economic dependence on China. The interests of the US, the European Union, Japan, South East Asia and even Russia converge on this point.”

 

Finally, an op-ed in Indian Express highlighted how India’s China policy has historically been flawed and an acknowledgment of China’s dramatic rise in the last decade and recognizing the scale of the challenge that it presents were the first steps towards crafting a new policy to restore internal political coherence, accelerate economic modernisation and expand India’s national power. “The enduring tragedy of India’s China policy… is rooted in persistent political fantasies, refusal to learn from past mistakes, and the belief that the US and the West are at the source of India’s problems with China… That defined a template that in the end neither normalised the relationship nor resolved the boundary dispute. If India thought economic cooperation will improve mutual trust and create conditions for resolving political differences with China, it has been in for a rude shock… That brings us to the perennial illusion in Delhi about Asian and anti-Western solidarity with China. Despite the failure of the repeated efforts to construct such unity with China — in the interwar years, the decade after independence, and the post Cold War years… India has consistently misread China’s interests and ambitions. The longer India takes to shed that strategic lassitude, the greater will be its China trouble. Delhi needs to come to terms with the fact that a gigantic power has risen on its door step. India must also recognise that China, like the great powers before it, wants to redeem its territorial claims, has the ambition to bend the neighbourhood to its will, reshape the global order to suit its interests.”

Key insights and forecasts that show us what is to come

China’s Peaceful Rise Vanishes in Thin Air

China clashing with India across the disputed Line of Actual Control (LAC) clearly marks a shift in the longstanding status quo at the border as China hopes to show the world, especially the US, that it is now the region's preponderant power and other Asian countries should fall into line.

India Needs to Draw the Line with China: The Geopolitics of the Sino-Indian Skirmish

Following the Galwan Valley attack, India needs to shore up its defenses on its border, develop closer relations to other like-minded countries led by the US and embrace multilateral trade agreements that forces its firms to become more competitive.

China is Losing India

Growing competition between India and China and concern about China’s behavior following clashes at the border will in large part drive US-Indian relations and result in India joining US-led efforts to balance against China.

India-U.S. Defense Relationship Grows Amid Rising Tensions with China

Following the recent India-China border clashes, the India-U.S. strategic partnership will likely be further strengthened as both countries watch China’s increasingly belligerent posture in the Indo-Pacific Region with concern.

The Self-Reliant India Campaign Is Not About Protectionism

The campaign for Self-Reliant India focuses on various types of financial support and an easing of rules, aimed particularly at companies that have been deeply affected by financial distress, rather than turning the economy inwards and cutting it off from the international markets.

China Driving Away Innermost Circle of US Allies After Winning Them Over

Australia, UK, Canada, and New Zealand, once eager to assert a little independence from the US, now have their own reasons for confronting China, but all of them are, in effect, falling in line with US’s China policy.

China’s Approach to Global Governance Risks Divide

Having reemerged as a major power in the last couple of decades, China appears to be deepening divides with other countries, making it harder for states to collaboratively address major international challenges.

Defense Can Aid India’s Manufacturing Rise

The reform measures taken by the Government of India in the defense sector have the potential to bring advanced technologies to India, encourage the growth of defense corridors and create new jobs in the sector, thus enabling India to emerge as a global defense manufacturing hub.

How China Plans to Make BRI Essential in Covid-Hit South Asia

As China ramps up the Health Silk Road to do more at a time of changing geopolitical and geo-economic realities, its immediate and global objective is to control the narrative about its role in the coronavirus pandemic and portray itself as a global health leader.

Innovation, Investment in Human Capital Key to Indian Recovery

Similar to how  Japan put its youth at the forefront of its recovery after the war, India’s government should use its vibrant tech ecosystem to impart manufacturing skills to millions of digitally native youth, which will eliminate the need for expensive investment in equipment.

The Key Events Driving Global Instability & Opportunity

Big Picture TEST Metrics for the US, India and China, July 2020

India’s PMI contracted for a second straight month to 30.8 in May following a historic dip in April, indicating the challenges that businesses might face during the economic recovery post the crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain. On the trade front, both exports and imports saw a steep decline by 34% and 49% respectively over the same period last year due to weak demand from international markets adding to the deteriorating sales trend, with new business from abroad plunging further in May. As the economy eases itself out of the lockdown in June, manufacturing is expected to recover with a lag since retail units would prefer to run down inventory until there is firmer sense on steady state demand.

 

The official China manufacturing PMI for the month fell slightly to 50.6 in May from 50.8 in April, largely driven by weaker external demand, as several nations continued to enforce strict measures to stop the spread of the Covid-19 pandemic, leading to contraction in new export orders at a historically sharp rate. On the trade front, exports and imports decreased by 2.9% and 24% respectively over the same period last year.