Talent Abroad: A Review of Greek Emigrants

 The sources provide a comprehensive overview of the scale and concentration of the Greek-born population residing abroad, particularly within OECD countries. This data is central to understanding the evolution of the Greek diaspora from historical migration waves to the more recent "brain drain" triggered by the sovereign debt crisis.

The Scale of Greek Emigration

The overall scale of Greek emigration is significant, both in absolute numbers and as a proportion of the national population.

• Total Population Abroad: In 2020/21, more than 800,000 Greek-born individuals resided in OECD countries. Including children under 15, the total reached approximately 811,000.
• Historical Growth: After a modest decline between 2000 and 2005, the stock of Greek emigrants grew steadily, with the most pronounced surge occurring during and after the 2008-2009 financial crisis. Between 2010/11 and 2020/21 alone, the population grew by 15%.
• High Emigration Rate: Greece’s emigration rate—the share of persons born in the country who reside abroad—stood at 7.2% in 2020/21. This is high compared to larger European economies like Germany (4.9%), Italy (4.4%), and France (3.0%), and is comparable to rates in Switzerland and the United Kingdom.
• Recent Rebalancing: While annual outflows peaked in 2012 at over 65,000, they have since declined to roughly 32,000 by 2021. Notably, 2023 marked a turning point where estimated inflows of returning Greek citizens (46,000) exceeded outflows (37,000) for the first time since the crisis.

Geographic and Regional Concentration

Greek emigrants are not evenly dispersed; they exhibit high levels of concentration at national, regional, and subnational levels.

• Primary Destination Countries: The diaspora is highly concentrated in a few nations, with 12 countries hosting 93% of all Greek emigrants in the OECD. Three-quarters are concentrated in just five countries: Germany, the United States, Australia, the United Kingdom, and Canada.
• Intra-European Shift: While traditional hubs like the U.S. and Australia remain sizeable, their Greek-born populations have consistently declined since 2000 due to the ageing of older cohorts and limited new arrivals. Conversely, mobility has reoriented toward Northern and Western Europe, with significant growth in the Netherlands, Norway, Ireland, and Switzerland.
• Urban Clustering: Within host countries, Greek communities are heavily concentrated in major metropolitan areas. For example:
  • Sweden: Half of all Greek-born residents live in the Stockholm region.
  • Canada: 87% are settled in Ontario and Quebec, the provinces containing Canada's largest cities.
  • Australia: Nearly 80% reside in Victoria (Melbourne) and New South Wales (Sydney).
  • United States: Large populations cluster in coastal, urbanised states like New York, Illinois (Chicago), and California.

Concentration of Talent and Professional Skills

The sources emphasize that recent Greek emigration is characterized by strong educational selectivity, leading to a concentration of talent abroad.

• Educational Attainment: More than two-thirds of Greek-born emigrants hold medium or high levels of education. Recent cohorts are even more qualified; nearly half (49%) of those who moved within the last five years hold high educational attainment.
• The Scientific Diaspora: There is a substantial and high-performing Greek-origin scientific diaspora. Of approximately 64,000 Greek-origin scientists mapped in 2021, 44% are affiliated with institutions abroad. This concentration is even starker among top-impact researchers: 80% of the global top 1% and 86% of the top 0.1% of highly cited Greek-origin scientists work outside of Greece.
• Medical Professionals: A notable professional concentration exists among health-care workers. The number of Greek-born doctors practicing in other OECD countries has tripled since 2000/01, making Greece a major net sender of medical talent to the EU, UK, and USA.

This high concentration of skilled talent abroad represents a "brain drain" that the Greek government is now attempting to address through policies aimed at "brain regain," such as the ReBrain Greece digital platform and targeted tax incentives.

The sources reveal that Greek emigration patterns are characterized by a high geographic concentration, which is currently undergoing a structural reorientation from traditional long-distance settlement countries toward Northern and Western Europe.

Concentration in Major Destination Hubs

Greek emigrants are highly concentrated in a small number of nations. In 2020/21, 93% of all Greek-born individuals in the OECD resided in just 12 countries. Three-quarters of the diaspora is located in only five countries: Germany, the United States, Australia, the United Kingdom, and Canada.

• Germany remains the dominant hub, hosting approximately 237,000 Greek emigrants. Although its dominance has slightly weakened as inflows moderated post-crisis, it continues to be the primary destination within the EU.
• The United States (139,000) and Australia (92,000) follow as the largest non-European destinations.

Shift Toward Intra-European Mobility

A major finding in the sources is the shift in Greek mobility toward Northern and Western European labor markets.

• Declining Traditional Hubs: Populations in the United States, Australia, and Canada have consistently declined since 2000/01. This is due to the aging of older migrant cohorts and limited new arrivals.
• Emerging Growth Corridors: Between 2010/11 and 2020/21, the Greek-born population tripled in countries like the Netherlands, Norway, and Ireland. Significant surges were also noted in Bulgaria (+1,948%), Luxembourg, and Switzerland.
• The United Kingdom: This destination stands out for strong growth, with its Greek-born population more than doubling over a decade (rising from 37,000 to nearly 87,000).

Demographic and Specialized Patterns

Destination patterns are closely linked to the age and professional profile of the emigrants:

• Age Divergence: Traditional long-distance destinations (Australia, Canada) are characterized by older populations, with 68–76% of Greek-born residents aged 65 and over. Conversely, European destinations like the Netherlands and the UK host younger, working-age cohorts and students.
• Educational and Scientific Hubs: The United Kingdom is the top destination for Greeks pursuing Bachelor’s and PhD degrees. For high-impact researchers and scientists, the United States remains the primary country of affiliation, hosting 33% of the Greek-origin scientific diaspora.
• Student Mobility: While the UK has traditionally led, Bulgaria and the Netherlands have emerged as major destinations for Master’s students.

Subnational and Urban Clustering

Within host countries, Greek emigrants exhibit a strong preference for major metropolitan areas.

• Sweden: Roughly half of all Greek-born residents live in the Stockholm region.
• Canada: 87% are settled in Ontario and Quebec, primarily in urban centers.
• Australia: Nearly 80% reside in Victoria (Melbourne) and New South Wales (Sydney).
• United States: Concentration is highest in states with large cities, such as New York, Illinois (Chicago), and California.

This geographic concentration is mirrored in return migration, as 60% of those returning to Greece settle in the metropolitan regions of Attica (Athens) or Central Macedonia (Thessaloniki).

The sources provide a detailed demographic profile of Greek emigrants, illustrating a diaspora that is ageing yet evolving, highly educated, and increasingly multigenerational. This profile is shaped by the interplay between historical migration waves and more recent mobility triggered by economic crises.

Gender Distribution

The Greek emigrant population in the OECD is slightly male-dominated.

• Gender Split: In 2020/21, men accounted for 52% (approximately 419,000) and women for 48% (approximately 392,000).
• Historical Stability: This gender gap has remained remarkably stable over two decades, with the female share staying at 48% since 2000/01.
• Comparison to Home: Interestingly, this pattern mirrors the United Kingdom's diaspora but contrasts with the population in Greece itself, which is slightly majority female (51%).

Age Structure and the "Ageing Diaspora"

The age profile reveals an ageing population, though recent trends suggest a modest uptick in youth mobility.

• General Breakdown: As of 2020/21, 34% of Greek-born emigrants were aged 65 and over, while 51% were between 25 and 64. Children (0–14) and young adults (15–24) each represented 8% of the stock.
• The Ageing Trend: The share of prime working-age emigrants (25–64) has declined from 70% in 2000/01 to 55% in 2020/21. Conversely, the 65+ cohort grew from 25% to 37% over the same period.
• Geographic Divergence: Age profiles vary sharply by destination. Traditional long-distance hubs like Australia and Canada are overwhelmingly older, with 68–76% of residents aged 65+. In contrast, European destinations like the Netherlands and the UK host much younger populations, where the 25–64 age group makes up 67–75% of the total.

Educational Selectivity and "Brain Drain"

A "defining feature" of modern Greek emigration is its strong educational selectivity.

• High Attainment: More than two-thirds of Greek-born emigrants hold medium or high levels of education.
• Cohort Shifts: Recent arrivals are significantly more qualified than earlier ones. Nearly half (49%) of those who moved within the last five years have high educational attainment, compared to only 25% of those who have lived abroad for more than a decade.
• Comparison to Natives: In most host countries, Greek emigrants are more likely to hold tertiary degrees than the native-born population.

Marital Status and Household Profile

The diaspora is predominantly a partnered population.

• Marriage Rates: Married individuals represent the largest share of both men (61%) and women (53%).
• Gendered Differences: Male emigrants are more likely to be single (26% vs. 18% for women), while women are far more likely to be widowed, divorced, or separated (28% vs. 13% for men), reflecting their older average age structure.

The Multi-Generational Dimension

The demographic footprint of "Greeks abroad" extends far beyond those born in Greece.

• Second Generation: In Canada, the second generation (individuals born there with at least one Greek-born parent) now exceeds the first generation (100,000 vs. 73,500).
• Ancestry-Based Diaspora: In the United States, while fewer than 120,000 residents are Greek-born, over 1.2 million individuals report Greek ancestry. Similarly, Australia hosts approximately 425,000 people of Greek descent compared to roughly 92,000 Greek-born residents.

This demographic maturity indicates that while the first generation is ageing in place in traditional hubs, newer, highly skilled cohorts are continuing to replenish the diaspora in Europe.

The sources highlight that a high level of educational attainment and strong labor market integration are the defining characteristics of the modern Greek diaspora. This profile is driven by a combination of domestic "push" factors, such as high graduate unemployment in Greece, and the strategic pursuit of better professional opportunities in international research and labor hubs.

Educational Profile and Selectivity

Greek emigration is characterized by strong educational selectivity, particularly among those who moved during and after the sovereign debt crisis.

• High Attainment: More than two-thirds of Greek-born emigrants hold medium or high levels of education. In countries like France and the United Kingdom, over 70% of Greek emigrants hold tertiary degrees.
• Recent Cohort Trends: Newer arrivals are significantly more qualified than earlier waves. Nearly half (49%) of those residing abroad for fewer than five years hold high educational attainment, compared to only 25% of those who have been abroad for more than a decade.
• The Scientific Diaspora: There is a vast pool of academic talent abroad, including more than 17,000 Greek PhD holders residing in OECD countries. Furthermore, 44% of Greek-origin scientists are affiliated with institutions abroad, including the vast majority of the community's top-performing researchers.

Student Mobility Patterns

International mobility is a structural feature of Greece’s higher education system, with outbound mobility rates consistently exceeding OECD averages.

• Domestic Drivers: While Greece has one of the highest tertiary enrollment rates in the OECD (51% of 20-24 year-olds), it also faces the highest graduate unemployment rate in the OECD (13%) and a high overqualification rate (37%) for those who remain.
• Shifting Destinations: The United Kingdom remains a top destination, especially for Bachelor’s and PhD students, though enrollment has declined post-Brexit. Conversely, Bulgaria and the Netherlands have emerged as major hubs, with the Netherlands' enrollment tripling since 2014, largely due to its expansion of English-taught programs.

Labor Market Outcomes Abroad

Greek emigrants generally achieve strong integration in foreign labor markets, often outperforming or mirroring native-born populations.

• Participation and Employment: Approximately 75% of Greek-born individuals in OECD countries participate in the labor market, compared to 72% of the native-born population in those same countries. Employment rates are highest for Greeks in the United Kingdom and Switzerland.
• Occupational Footprint: Greek workers are predominantly employed in medium and high-skilled occupations. One-quarter of Greek-born women abroad work as professionals (e.g., in health or education), while men are more concentrated in manual, technical, and managerial roles.
• The Medical Sector: A notable trend is the "tripling" of Greek-born doctors practicing in other OECD countries since 2000/01, making Greece a major net sender of medical talent.
• Overqualification: While overqualification is a risk for any migrant, Greek-born workers in Switzerland and France are actually less likely to be overqualified than the native-born population.

Education as a Factor in Return Migration

The sources indicate that education is the most critical determinant of success for those returning to Greece.

• Positively Selected Returnees: Recent returnees are disproportionately young and highly educated; 60% of those who returned between 2016 and 2021 held a tertiary degree, compared to just 23% of the non-migrant population.
• Faster Reintegration: Highly educated returnees, especially those with master’s or doctoral degrees, reintegrate into the Greek labor market more quickly and face lower unemployment risks than returnees with lower qualifications.
• Brain Circulation: Rather than a simple "loss," these patterns suggest a complex cycle of talent circulation. Return migrants are heavily concentrated in high-skill sectors like ICT, engineering, and health, bringing back valuable international networks and practices.

Return migration has recently re-emerged as a significant component of Greece's mobility cycle, shifting from a period of prolonged net outflows to a potential turning point for the country's human capital.

The Scale and Turning Point of Return

For much of the decade following the 2009 economic crisis, outflows of Greek citizens consistently exceeded inflows. However, estimated annual inflows of returning Greek citizens have risen steadily since 2021. The year 2023 marked a decisive shift, as estimated inflows (46,000) exceeded outflows (37,000) for the first time since the crisis began. This trend continued into 2024, with inflows reaching nearly 52,000.

Demographic and Educational Profile

Returnees are generally characterized by "positive selection," meaning they are more qualified and younger than the general population.

• Age: Return migration is concentrated among younger adults; 54% of those returning between 2016 and 2021 were aged 20–39.
• Education: Returnees are highly qualified, with 60% holding tertiary degrees, compared to only 23% of the non-migrant population in Greece. Recent return cohorts show an even higher concentration of master’s and doctoral degree holders.
• Gender: Men account for a slight majority of returnees (54%), which is consistent with the overall Greek emigrant profile.

Geographic Patterns of Return

The geography of return migration is defined by strong ties to Europe and a concentration in Greece’s urban centers.

• Origins Abroad: 83% of recent returnees previously resided in other European countries. Germany (22%) and the United Kingdom (20%) are the primary source countries, reflecting strong circular mobility within the EU.
• Settlement in Greece: Returnees overwhelmingly settle in major metropolitan areas: 42% in Attica (Athens) and 18% in Central Macedonia (Thessaloniki).
• Regional Ties: Roughly four in five returnees choose to resettle in their region of birth, particularly in Northern and Central Greece, leveraging existing family and social networks.

Labour Market Integration

While returnees bring back valuable international skills and networks, their reintegration into the Greek labour market is often a gradual process.

• Employment Rates: Reintegration takes time; the employment rate for those who just returned is 46%, but this rises to 72% for those who have been back for five years.
• Professional Concentration: Return migrants are heavily concentrated in high-skill roles. Nearly half (47%) work as professionals—specifically in health, science, engineering, and ICT—compared to just 18% of non-migrants.
• Entrepreneurship: Self-employment is actually less common among returnees (19%) than among those who never left (25%).

Motivations and Barriers

Decisions to return are driven by a mix of personal attachment and professional considerations, though significant structural barriers remain.

• Drivers: Repatriation is the dominant reason cited for return (over 50%), followed by employment-related motives (18–22%) and family reunification.
• Barriers: Survey data indicate that many Greeks abroad remain hesitant to return due to limited trust in Greek institutions, concerns about career advancement, and a perceived lack of meritocracy in the domestic labour market.
• Policy Incentives: The Greek government has introduced measures to facilitate return, such as the ReBrain Greece digital platform and a 50% income tax exemption for seven years for those who transfer their tax residence to Greece. Targeted reforms have also simplified the automatic recognition of medical qualifications for doctors trained in countries like the USA, UK, and Australia to address domestic health-care shortages.

In the context of the Review of Greek Emigrants, the sources identify international mobility as a structural feature of Greece's higher education and research systems. This mobility is driven by a paradox: Greece has one of the highest tertiary enrollment rates in the OECD (over 50% of 20-24 year-olds), yet it also faces the highest graduate unemployment rate in the OECD at 13%, and a significant overqualification rate of 37%.

International Student Mobility and Shifting Destinations

Greek student mobility remains consistently above EU and OECD averages. While the United Kingdom has historically been the primary destination, its dominance is weakening due to Brexit, which led to a sharp 57% decline in new EU enrollments following the loss of home-fee status.

• Degree Patterns: The United Kingdom remains the top choice for Bachelor’s and PhD candidates. However, Bulgaria and the Netherlands have emerged as major hubs for Master’s students, with the Netherlands’ enrollment tripling since 2014 due to its expansion of English-taught programs.
• Fields of Study: Many Greek students pursue medical and health sciences in countries like Bulgaria, where they represent 21% of all international students.

The Doctoral and Scientific Diaspora

The sources highlight a massive pool of Greek academic talent residing outside the country, often described as a "scientific diaspora".

• PhD Holders Abroad: More than 17,000 Greek-born doctorate holders reside in OECD countries, primarily in the United States, Germany, and the UK. Among new PhD holders graduating in Greece, about 1 in 7 intend to settle abroad immediately, with the highest intentions found in the natural sciences.
• Concentration of Top Talent: A mapping of 64,000 Greek-origin scientists found that 44% are affiliated with institutions abroad. This concentration is even more dramatic among elite researchers: 80% of the global top 1% and 86% of the top 0.1% of highly cited Greek-origin scientists work outside of Greece.
• Biomedical Dominance: Roughly one in three Greek-origin scientists abroad works in biomedical research, though fields like mathematics and economics are also strongly represented.

Barriers to Return and "Brain Circulation"

While a significant number of Greek academics abroad (59%) express interest in returning to Greece, they are deterred by several structural barriers:

• Financial Constraints: Concerns about low salaries relative to the international cost of living and limited research funding are the primary deterrents.
• Institutional Quality: Perceptions of weak meritocracy, bureaucracy, and poor governance in Greek universities discourage highly qualified researchers from returning.
• Geographic Divergence: Realized return for PhD holders is concentrated from Europe (84%), while those in North America are significantly less likely to return, suggesting more permanent settlement patterns in the U.S. and Canada.

Policy Initiatives for Engagement

The Greek government and various institutions have launched initiatives to transition from talent loss to "brain circulation":

• ReBrain Greece: A digital platform designed to match diaspora talent with high-skill job opportunities in the Greek private sector.
• Academic Support: The Hellenic Foundation for Research and Innovation (ELIDEK) and the Knowledge Bridges initiative provide grants and networking tools to support the reintegration of researchers.
• Structural Reforms: Recent legislation now allows for the operation of non-profit branches of foreign universities in Greece to internationalize the domestic system and attract diaspora academics back to teach.

This evidence suggests that while Greece continues to lose top-tier research talent, there is an emerging shift toward viewing the diaspora as a global knowledge network that can be engaged through circular mobility and strategic return incentives.

Greece’s policy framework for emigrants has undergone a strategic transformation, evolving from a traditional focus on cultural preservation and consular services to a more comprehensive approach aimed at mobilising diaspora talent and facilitating return migration. This shift recognizes the diaspora as a vital reservoir of human capital that can support national development through skills transfer, innovation, and investment.

Institutional Landscape and Governance

The institutional architecture is multi-layered, involving both state and non-state actors:

• Ministry of Foreign Affairs (MFA): Through the General Secretariat for Greeks Abroad (GGAE), the MFA is the primary body responsible for diaspora relations, overseeing cultural outreach and consular services.
• Inter-institutional Cooperation: Greece increasingly relies on Memoranda of Understanding (MoUs) to coordinate across agencies, such as a 2024 agreement between the MFA and the Public Employment Service (DYPA) to inform Greeks abroad about domestic job opportunities.
• Civic Participation: A major milestone was the 2019 legislation allowing Greeks abroad to vote from their country of residence, which was recently expanded to include postal voting for national elections.

The Strategic Plan for the Greek Diaspora (2024–2027)

A central pillar of the current framework is the MFA’s Strategic Plan for the Greek Diaspora, which provides an overarching roadmap for engagement. The plan focuses on six core objectives, including the digitisation of consular services, the creation of professional networks for academics and entrepreneurs, and strengthening ties with the younger generation through digital learning platforms and hosting programmes. While the strategy provides a directional framework, it currently lacks a detailed operational action plan with specific annual funding and monitoring mechanisms.

Key Policy Domains and Recent Initiatives

The framework includes several targeted instruments designed to encourage "brain circulation" and return:

• ReBrain Greece: This digital platform acts as a matching mechanism, connecting highly skilled diaspora professionals with specialized private-sector job vacancies in Greece.
• Tax Incentives: Law 4758/2020 offers a 50% income tax exemption for seven years to individuals who transfer their tax residence to Greece, provided they commit to staying for at least two years.
• Medical Professional Support: New legislation has introduced the automatic recognition of medical qualifications for Greek doctors trained in countries like the USA, UK, and Australia to ease their return to the domestic health-care system.
• Academic and Research Mobility: The framework supports circular mobility through the Visiting Professors Programme and funding from the Hellenic Foundation for Research and Innovation (ELIDEK), which has awarded grants specifically to help postdoctoral researchers reintegrate into Greek institutions.
• Educational Internationalisation: Recent reforms, such as Law 5094/2024, allow for the operation of non-profit branches of foreign universities, aiming to internationalise the higher education system and attract diaspora academics back to teach.

Challenges and Recommended Enhancements

Despite these advances, the sources identify several areas for strengthening the framework:

• Coordination: There is no permanent, standing inter-ministerial mechanism to align diaspora, labour market, and research policies.
• Service Integration: While digital platforms like diaspora.mfa.gr are being developed, there is a need for a unified digital entry point that consolidates administrative, employment, and family-related services for returnees.
• Evidence-Based Learning: The sources suggest establishing a central knowledge hub to consolidate research and conduct outcome-focused evaluations to assess the real-world impact of these policies on employment and innovation.

Empowering India: The Mutual Fund Voluntary Retirement Account

 The sources describe Demographic Urgency as the critical need for India to expand its pension systems immediately while its population is still relatively young, before a rapid transition into an aging society makes retirement security a national crisis. This urgency is framed within the context of India's goal to become a developed nation (Viksit Bharat) by 2047, which requires a foundation of financially prepared citizens.

Key factors contributing to this demographic urgency include:

1. Rapidly Aging Population

• Projections for 2050: While only 11% of India's population was above age 60 in 2023, this share is expected to nearly double to 21% by 2050.
• Absolute Numbers: By 2050, the number of Indians aged 60+ will reach 346 million, a figure higher than the entire current elderly population of Europe.
• Speed of Growth: The growth rate of the senior citizen population in India is projected to be significantly higher than the global average.

2. Failure of Traditional Support Systems

• Evolving Family Structures: Traditionally, Indian retirement was supported by the "fifth pillar" of family and informal networks (Pillar IV).
• Nuclearization: Increasing urbanization and the shrinking of average family sizes (from 4.5 in 2011 to 4.1 in 2024) mean this informal support is failing, making individual financial independence essential.

3. Regional Variations and Internal Urgency

The urgency is even more acute in specific regions. Some states are aging nearly 20 years ahead of the national average.

• Early Agers: Kerala already had an elderly population of 16.5% in 2021 (expected to top 20.9% by 2031), followed by Tamil Nadu and Himachal Pradesh.
• Younger States: In contrast, states like Bihar (7.7% elderly in 2021) still have a much younger demographic, though they too will eventually face this transition.

4. Limited Coverage and "The Opportunity Window"

• Low Current Coverage: Only 27.2% of the population aged 15-64 is covered by mandatory pension schemes, compared to the OECD average of 75.8%.
• Conducive Demography: The sources argue that India must expand its pension system now because the current demography—with 669 million people aged 25-59—is conducive for long-term pension planning and wealth creation through equities.

The Role of Mutual Funds

The sources propose that the mutual fund industry is best positioned to address this urgency by introducing a Mutual Fund - Voluntary Retirement Account (MF-VRA). This system would:

• Channel Savings: Move household savings into productive, long-term capital.
• Diversify Portfolios: Encourage higher allocation to equities (currently only 17% in Indian pension assets) to ensure the corpus can sustain decades of life after work.
• Leverage Reach: Build upon the industry's existing geographic penetration into underpenetrated states like Uttar Pradesh, Bihar, and Jharkhand.

The World Bank’s five-pillar framework serves as a fundamental benchmark for comparing and developing the pension industry in India. While India has transitioned from a three-pillar system to this more refined model, the sources indicate that the current system still lacks depth and coverage when compared to global standards.

The Five Pillars in the Indian Context

The framework is designed to address the needs of diverse populations and manage the financial requirements of old age through these specific levels:

• Pillar Zero (Non-contributory): This is a social safety net financed by the government to provide basic protection for those with low lifetime incomes. In India, this is represented by the National Social Assistance Program (NSAP), including schemes like the Indira Gandhi National Old Age Pension Scheme (IGNOAPS).
• Pillar I (Mandatory – Pay-as-you-go): A defined benefit framework funded by taxes or expenses to replace a portion of pre-retirement income. While this is subject to sustainability risks due to an aging population, India has moved toward a hybrid model with the introduction of the Unified Pension Scheme (UPS) in 2025 for central government employees.
• Pillar II (Mandatory – Organised Section): A mandatory defined contribution (DC) system typically targeting the organized sector. In India, this includes the Employee Provident Fund (EPF) and the Employees’ Pension Fund (EPS), but it currently lacks depth due to the relatively small share of the organized sector in the economy.
• Pillar III (Voluntary): This consists of voluntary savings such as the National Pension System (NPS), Public Provident Fund (PPF), and mutual fund retirement plans. This pillar is where the sources propose the most significant growth through mutual funds.
• Pillar IV (Non-financial/Informal): Traditionally the strongest pillar in India, this consists of family support. However, this pillar is failing as urbanization and the nuclearization of families increase; the average family size in India dropped from 4.5 in 2011 to 4.1 in 2024.

Limitations of the Current Indian System

The sources highlight that the lack of a robust system across these five pillars has negatively impacted major indicators:

• Low Coverage: Only 27.2% of India's population aged 15-64 is covered under mandatory pension schemes, compared to the OECD average of 75.8%.
• Asset Inadequacy: India’s pension assets are just 11% of GDP, whereas developed markets like the US and Australia range between 130-150%.
• Low Replacement Rates: India has one of the lowest gross pension replacement rates at 38.9%, significantly lower than Brazil (88%) or China (68%).
• Conservative Allocation: Only 17% of Indian pension assets are in equities, which limits wealth creation for a population that has 669 million people in the 25-59 age bracket.

The Role of Mutual Funds in Strengthening the Framework

To address these gaps, the sources advocate for a Mutual Fund - Voluntary Retirement Account (MF-VRA) to bolster Pillar III. Drawing inspiration from the US 401(k) model, this would be a voluntary, employer-linked product managed by mutual funds.

Why Mutual Funds are uniquely positioned:

• Professional Management: They can offer "Retirement Lifecycle Funds" that automatically adjust asset allocation (glide paths) from aggressive to conservative as an investor ages.
• Geographic Reach: The industry is rapidly expanding into B-30 (Beyond-30) cities, which saw a 22.69% CAGR in assets between 2019 and 2025.
• Infrastructure: The industry already possesses evolved governance, high technology adoption (with nearly 90% of transactions being digital), and a robust risk management framework defined by SEBI.

By integrating mutual funds more deeply into the voluntary pillar, India can channel household savings into productive long-term capital while providing citizens with the "Sahi choice" for a retirement of dignity and independence.

The sources identify four critical Current Pension Indicators where India significantly lags behind global benchmarks, creating a "lack of a robust pension system" that necessitates the involvement of mutual funds to secure the nation's retirement future.

1. Pension Coverage

This indicator measures how effectively a pension system is utilized by the pre-retirement population.

• India’s Standing: Only 27.2% of the population aged 15-64 and 54.9% of the active labour force are covered under mandatory pension schemes.
• Global Context: In contrast, the OECD countries average is 75.8% for the 15-64 age group and 95.1% for the active labour force.

2. Pension Assets (as a % of GDP)

This reflects the depth of retirement savings within the economy.

• India’s Standing: India’s pension assets were just 11% of GDP at the end of 2022.
• Global Context: The OECD average is 87%, while developed markets like the US and Canada see assets in the range of 130-150% of GDP. The sources note that these nations have a long history of mandatory or quasi-mandatory private pension systems and tax incentives that India currently lacks at scale.

3. Pension Replacement Rates

This calculates the efficacy of the pension system in replacing pre-retirement income to maintain a desired standard of living.

• India’s Standing: India has one of the lowest gross replacement rates at 38.9%.
• Global Context: This is significantly lower than the OECD average of over 50%, Brazil's 88%, and China’s 68%. The sources point out that the absence of a developed voluntary pension system in India fails to add to this replacement rate, whereas in the US, voluntary systems contribute an additional 34% to the overall replacement.

4. Asset Allocation

This indicator looks at where the pension corpus is invested, which is critical for generating long-term returns.

• India’s Standing: Only 17% of Indian pension assets are invested in equities, with the bulk in debt instruments.
• Global Context: Major OECD markets invest 30-45% in long-term assets like equities. Given India's demography—with 669 million people in the 25-59 age bracket—the sources argue there is a missed opportunity for wealth creation through greater equity allocation.

The Role of Mutual Funds

The sources propose the Mutual Fund - Voluntary Retirement Account (MF-VRA) as a solution to improve these indicators. This product would leverage the mutual fund industry's evolved governance and technology to:

• Increase Coverage: By offering a voluntary, portable, and flexible product accessible to freelancers and the gig economy, not just the organized sector.
• Enhance Asset Allocation: Through "Retirement Lifecycle Funds" that automatically rebalance between equities and debt based on the investor's age and risk tolerance.
• Boost National Savings: By channeling household savings into productive long-term capital, thereby increasing the size of pension assets relative to GDP.

The sources present the global pension landscape and the US 401(k) model as a successful blueprint for India to address its demographic challenges through the mutual fund industry. Developed nations increasingly rely on an additional layer of individual pension planning to supplement government social security and improve the sustainability of "pay-as-you-go" systems.

The Global Context and Multi-Pillar Systems

Globally, developed countries like Canada, Denmark, and the Netherlands have moved toward multi-pillar systems that combine mandatory government pensions with voluntary private savings. Key global trends noted in the sources include:

• Financial Incentives: Most OECD countries use the EET (Exempt-Exempt-Taxed) method, where contributions and investment returns are exempt from tax, while withdrawals are taxed.
• Asset Allocation: OECD pension markets typically invest 30–45% of assets in equities to ensure long-term wealth creation, whereas India currently allocates only 17% to equities.
• National Savings: Studies from the US and UK indicate that tax incentives for retirement products generally lead to a net increase in national savings rather than just a reallocation of existing wealth.

The US 401(k) Model: A Key Milestone

The sources highlight the US system as a primary inspiration for Indian reform. The US retirement market is built on a three-pillar model consisting of Social Security, Employer-Sponsored Plans (like the 401(k)), and Individual Retirement Accounts (IRAs).

• Evolution: A major shift occurred in 1981 when regulations allowed workers to make tax-deferred contributions to Defined Contribution (DC) plans. Subsequent reforms, such as the Pension Protection Act (PPA) of 2006, simplified workplace savings and introduced "catch-up contributions" for older workers.
• Scale and Participation: As of December 2024, the 401(k) system has grown to 70 million active participants managing $8.9 trillion in assets.
• Symbiosis with Mutual Funds: Mutual funds are the "funnel" for these assets; 90% of US households that own mutual funds use them to save for retirement. Approximately 65% of all 401(k) assets are invested through mutual funds, including target-date and index funds.

Application to India: The MF-VRA Proposal

Drawing directly from the "U.S. experience," the sources propose a Mutual Fund - Voluntary Retirement Account (MF-VRA) for India. This proposed model seeks to replicate the 401(k) success by offering:

• Employer-Linked Options: Incentivizing employers to co-contribute through tax benefits.
• Flexibility and Portability: Allowing accounts to be transferred across jobs and opened by freelancers or gig workers without employer involvement.
• Lifecycle Investing: Using "Retirement Lifecycle Funds" that automatically adjust asset allocation (from aggressive to conservative) as an investor ages, a feature that has been highly effective in the US.
• Tax Efficiency: Seeking tax deductions under Section 80C or similar provisions to encourage middle-to-high income earners to participate.

By replicating this model, the sources argue India can build a pool of "patient capital" that fuels national infrastructure while providing citizens with a retirement marked by dignity and independence.

The proposed Mutual Fund - Voluntary Retirement Account (MF-VRA) is a voluntary, employer-linked retirement product designed to provide structured financial security to a broader segment of the Indian population. Drawing inspiration from the US 401(k) model, it seeks to create a robust layer of individual pension planning within India’s multi-pillar pension framework.

Core Features of the Proposed MF-VRA

The scheme is designed to be a flexible and professionally managed alternative to traditional pension products:

• Voluntary Participation & Inclusivity: The MF-VRA is open to all individuals regardless of employment status, specifically allowing freelancers, self-employed individuals, and gig economy workers to save for retirement independently.
• Employer-Sponsored Options: Employers are encouraged to offer the MF-VRA as a benefit by co-contributing to employee accounts, supported by proposed government tax incentives like payroll tax exemptions.
• Lifecycle Investing: Accounts would be managed through dedicated "Retirement Lifecycle Funds" that automatically rebalance portfolios—shifting from aggressive equity-heavy allocations to conservative debt-heavy ones—as the investor ages.
• Portability and Flexibility: The accounts are fully portable across jobs, and investors can customize their risk-return profiles based on their specific goals and investment horizons.
• Tax Efficiency: The proposal seeks tax deductions under Section 80C or similar provisions, following the EET (Exempt-Exempt-Taxed) model common in OECD countries to encourage long-term participation.
• Withdrawal Rules: To ensure the corpus is used for its intended purpose, access would be restricted until retirement age (e.g., 60), with limited exceptions for hardships like medical emergencies.

Context of Retirement and Mutual Funds in India

The sources argue that the MF-VRA is a necessary response to India's demographic urgency, where the elderly population is expected to reach 346 million by 2050. This shift occurs as traditional informal support systems, such as family care, are declining due to increasing urbanization and the nuclearization of families.

The mutual fund industry is positioned as the ideal vehicle for this scheme due to several factors:

• Low Current Indicators: India’s mandatory pension coverage is only 27.2%, and pension assets are just 11% of GDP, compared to 130-150% in developed markets.
• Infrastructure and Governance: The industry already operates under a robust regulatory framework with monthly portfolio disclosures, standardized risk-o-meters, and high transparency.
• Technology and Reach: With nearly 90% of transactions being digital and rapid asset growth in B-30 (Beyond-30) cities, the industry has the scale to reach traditionally underpenetrated regions.

Stakeholder Roadmap for Implementation

For the MF-VRA to succeed, the sources define specific roles for the financial ecosystem:

• Regulators (SEBI & CBDT): Must define the product structure and introduce the necessary tax incentives to make the scheme attractive to middle-to-high income earners.
• Fund Houses: Responsible for creating the lifecycle funds and enabling systematic withdrawal plans (SWP) for retirement income.
• Government Ministries: Must establish portability provisions to allow seamless transfers between the MF-VRA, EPFO, and NPS.
• Distributors and Fintechs: Tasked with building user-friendly onboarding tools and driving investor awareness to shift the focus toward long-term financial goals.

Ultimately, the MF-VRA is envisioned as a "win-win" that safeguards personal independence while channeling household savings into productive long-term capital to fuel India's "Viksit Bharat" journey.

The sources describe the strategic benefits of integrating mutual funds into India's retirement landscape as a "win-win" for all participants in the financial ecosystem. By creating a structured voluntary retirement system like the proposed MF-VRA, India can convert a looming demographic challenge into a driver of national progress.

The strategic benefits are categorized by their impact on different stakeholders:

1. Benefits for the Government and Economy

• Reduced Fiscal Burden: Expanding private pension coverage reduces the long-term pressure on the government exchequer to provide social security as the population ages.
• Economic Growth: These schemes channel household savings into productive, long-term capital that can fund national infrastructure, businesses, and innovation.
• Increased Penetration: It aids government initiatives to deepen financial inclusion and improve the overall social security system in the country.

2. Benefits for Financial Markets

• Capital Supply and Stability: Retirement money acts as "patient capital," providing long-term stability to the markets and acting as a hedge against short-term speculative capital.
• Enhanced Governance: When savings are routed through professional managers like mutual funds, it boosts corporate governance and information disclosure across the market.
• Market Depth: It stimulates financial innovation to meet the diverse needs of a massive population, increasing the overall breadth and efficiency of the financial system.

3. Benefits for Asset Management Companies (AMCs) and Intermediaries

• Industry Scale: Channelling retirement money can help the Indian mutual fund industry build massive scale, similar to the US market where retirement assets account for 47% of total industry assets.
• Operational Efficiency: Long-term, consistent flows allow for better deployment strategies and improved cost structures.
• Value Proposition: For intermediaries, it offers an enhanced value proposition for their clients and provides long-term stability in terms of incentives.

4. Strategic Benefits for Individual Investors

• Wealth Creation: Investors can harness long-term allocation to productive assets like equities, which is essential for building a corpus that can sustain decades of life after work.
• Supplementing Income: It provides a necessary additional layer of individual planning to supplement mandatory government schemes, which currently offer low replacement rates in India.
• Financial Independence: Ultimately, these benefits empower citizens to enjoy a retirement marked by dignity, independence, and peace of mind, supporting the national vision of a Viksit Bharat by 2047.

The implementation of a Mutual Fund - Voluntary Retirement Account (MF-VRA) in India requires a highly coordinated effort among various stakeholders in the financial ecosystem. The sources outline a detailed roadmap for success, categorized into Regulatory Enablers and Operational Design requirements.

1. Requirements for Regulatory Enablers

The government and regulators must provide the legal and fiscal framework to make the scheme viable and attractive:

• SEBI (Securities and Exchange Board of India): Tasked with defining the core product structure, reporting standards, and mandatory disclosures to ensure clarity and consistency across the industry.
• CBDT (Central Board of Direct Taxes): Must introduce a specific tax deduction section for the MF-VRA to incentivize participation, particularly for middle-to-high income earners who are sensitive to upfront tax relief.
• Ministry of Labour & Finance: Responsible for establishing portability provisions between the MF-VRA, EPFO, and NPS to allow individuals to continue their retirement savings seamlessly even if they change jobs or relocate.

2. Operational Design Requirements

The industry must build the products and tools to manage and distribute these accounts effectively:

• Fund Houses (AMCs): Required to create "Retirement Lifecycle Funds" that feature automatic glide paths—shifting from aggressive equity allocations to conservative debt ones as the investor ages. They must also enable robust systematic investment and withdrawal (SWP) options for a steady income stream in retirement.
• Employers: Encouraged to voluntarily offer a co-contribution model, similar to the US 401(k), and partner with retirement aggregators to facilitate efficient management of employee contributions.
• Distributors and Fintechs: Tasked with designing user-friendly onboarding and goal-tracking tools. They are also responsible for driving investor awareness and shifting the public focus toward long-term financial planning.

3. Leveraging Existing Infrastructure

The sources argue that the implementation is feasible because the mutual fund industry already has a solid foundation to build upon:

• Scale and Reach: The industry manages over Rs 75 lakh crore in assets across 24 crore folios, with a rapidly growing presence in B-30 (Beyond-30) cities.
• Technology and Governance: Nearly 90% of mutual fund transactions are already digital, and the industry operates under a robust regulatory framework that includes monthly portfolio disclosures and standardized risk management.
• Awareness Pedestal: The success of the "#Mutual Fund Sahi Hai" campaign, which added 19 crore folios between 2017 and 2025, provides a proven platform to launch a national pension-awareness program.

Ultimately, these requirements are framed as a "win-win" for the nation, as they channel household savings into long-term capital while providing citizens with a retirement marked by dignity and independence in the journey toward Viksit Bharat.

Newspaper Summary - 050726

     Top IT stocks stare at great valuation reset PREMIUM PUZZLE. While Indian IT valuation premium currently ranges from 40-80% over Accenture, the earnings growth outlook lacks the same optimism

Kumar Shankar Roy & Hari Viswanath

Welcome to the new guessing game in town, that is, ‘Are IT stocks cheap?’. The debate has been raging for the last six months and each time it appears cheap enough, another blow knocks it lower. A few weeks back it was Accenture’s disappointing outlook that triggered a correction. Last week it was KPIT Tech’s negative pre-announcement that saw the stock crash around 25 per cent.

After a 30 per cent correction in the Nifty IT index over the past year, the sector’s valuation multiples have compressed sharply. On trailing earnings, the index is now around 18 times, a level that looks modest compared with its own multi-year averages. On the face of it that sounds like a classic valuation reset. The more uncomfortable question is whether this reset is full, or halfway through.

Look at the Big Four. TCS, Infosys and Wipro now trade around 14-15 times trailing earnings, while HCL Technologies is slightly higher at 18 times Price-to-Earnings (P/E). These numbers look sober when compared with the post-Covid boom excesses (broadly 30-40x).

That phase has clearly ended. TCS’ P/E has more than halved from a peak of about 42 times to around 15. Ditto for Infosys, which has slipped from about 38 times to 15. Wipro has moved from about 32 times to 14. HCLTech, too, is down from its peak (32x). So, yes, the market has done some cleaning up. The problem is that the cupboard may not yet be fully ship-shape.

This is not a sudden change in stance. bl.portfolio has been cautious on Indian IT for about three years, arguing that the sector’s post-Covid valuation premium was running ahead of earnings reality. In our February 8 edition, after the latest AI scare hit IT stocks, we had noted that investors should not view corrections as a buy-the-dip opportunity.

The historical comparison is revealing. TCS, Infosys and Wipro are now below their pre-Covid P/E levels. That gives bulls a decent argument; the froth has gone, businesses remain cash-rich, payout yields are attractive, and any improvement in demand can trigger a sharp rebound.

Bears have an equally simple question: If these companies are no longer growing like premium compounders, why should they be considered cheap?

INCONVENIENT FACTS In our article titled ‘Accenture sets the tone for IT stocks’ (bl.portfolio of April 28, 2024), we had explained why Indian IT stocks’ valuation cannot decouple from the valuation of global IT stocks like Accenture.

Today, Accenture, trading at 10x the trailing P/E, becomes the inconvenient global mirror. A gold standard in IT services and consulting globally, its valuation, earnings expectations and demand commentary matter. In the pre-Covid decade, Accenture used to trade at a premium to TCS (which, in turn, used to trade at a premium to Infosys, HCL Tech and Wipro). Bear in mind that Accenture has significantly outperformed its peers, clocking a 10 per cent USD EPS CAGR for the FY16-26 period, comfortably outpacing the growth rates of HCL Tech, Infosys and TCS (all 6 per cent CAGR), and Wipro (3 per cent CAGR). Even after factoring for currency benefit, the EPS CAGR for Indian peers at 7-9 per cent CAGR is below Accenture.

While Accenture’s margins are lower than TCS, its larger scale and higher revenue share from high-end business used to garner it a premium over Indian IT. Post Covid, the valuation math has changed. Today, the valuation premium of Wipro, Infosys, TCS and HCL Tech at 39 per cent, 46 per cent, 53 per cent and 84 per cent, respectively, appears unjustifiable. This implies whenever IT stocks rebound, Accenture is likely to outperform Indian peers.

The basic issue is simpler: Are Indian IT companies expected to grow materially faster than Accenture? For Accenture, one-year forward consensus PAT growth is about 6 per cent. For TCS, Infosys, and Wipro, the corresponding numbers are 8 per cent, 4.7 per cent, and 9.5 per cent aided by currency depreciation. Now, the premium question becomes less emotional and more arithmetic.

The other inconvenient fact is growth. Stocks are cheap when one looks at the information in the rear-view mirror or against their own historical valuation, but are they cheap when one looks at data in front? With the industry in the midst of a once-in-a-generation AI disruption, the future growth rate is entirely unpredictable, making any valuation exercise, for now, largely speculative. While a case can be made on the payout ratios with trailing dividend yield, say, for companies like TCS at 5.2 per cent, there may be a situation in future where if companies need to deliver on growth they will have to invest, impacting dividends.

In this context, mid-cap IT offers a sharper warning. Even after correction, several names still trade at premium valuations. Persistent, Coforge and Mphasis trade in a 30-40x trailing PE band. KPIT Tech’s more than 15 per cent single-day fall on July 1 showed what happens when the market starts questioning the extra-growth story. The stock is still trading near 25x. Others like Tata Elxsi trade at 35x even after a 41 per cent correction over the last one year.

Has the market already priced in the pain, or is it merely rediscovering that even great companies need growth to deserve great multiples? That is the $250-billion-dollar (Nifty IT total m-cap) question right now.

FPIs turn net buyers, pump in ₹16,461 cr this week

Anupama Ghosh Mumbai

Foreign portfolio investors (FPIs) turned net buyers in Indian markets during the week ended July 3, pumping in a net ₹16,461.84 crore across equity, debt and hybrid instruments over all five trading sessions, according to data from the National Securities Depository Limited (NSDL). The week, which began with the final two sessions of June before transitioning into July, saw net inflows on each trading day.

FPIs recorded their highest single-session investment of the week on June 29 at ₹5,986.33 crore, followed by ₹4,334.95 crore on June 30. In July, net inflows stood at ₹552.98 crore. This performance contrasts with the broader trend in June, when FPIs remained net sellers in equities. During the month, they pulled out ₹49,340.45 crore from equities through stock exchanges and the primary market combined.

However, debt markets attracted robust flows, with FPIs investing ₹30,620.28 crore under the General Limit, ₹21,652.09 crore through the Fully Accessible Route (FAR), and ₹3,246.04 crore under the Voluntary Retention Route (VRR). Overall, June ended with a net FPI inflow of ₹4,668.86 crore across all asset classes.

STEEP YTD OUTFLOWS “The highlight of the June FPI activity is the significant tapering of FPI selling and their buying for a few sessions,” noted analysts. Despite the recent buying, FPIs remain heavy net sellers in 2026. As of July 3, cumulative net outflows across all asset classes stood at ₹2,12,872.28 crore. Equities bore the brunt of the selling, with net outflows of ₹2,74,272.90 crore through the secondary and primary markets combined.

“The total FPI selling for 2026 till the end of June stands at ₹2,94,387 crore through stock exchanges,” [analyst] Vijayakumar said. “Since FPIs invested ₹20,114 crore through the primary market, the net FPI outflow this year through June-end stood at ₹2,74,272 crore”.

CRUDE, RE AND RAINS Market participants are now tracking a mix of domestic and global factors. “A crash in crude prices to below $72/barrel and the large inflows expected from FCNR(B) deposits will significantly reduce India’s balance of payments deficit,” he said. “This will help the rupee stabilise and even appreciate, which, in turn, will prevent large FPI selling”.

Analysts also expect institutional flows to remain sensitive to the progress of the monsoon, given its implications for rural demand and inflation, as well as the unfolding Q1FY27 earnings season. Global cues, including developments in US-Iran negotiations, crude oil prices and the minutes of the US Federal Reserve’s June policy meeting will also shape investor sentiment.

Clouded under El Nino skies

RAIN OR SHINE? With the El Nino event confirmed by several global weather agencies, the fear seems real now. Here’s a look at how it could impact agriculture, allied sectors and markets, should there be a weak monsoon this year.

Nalinakanthi V & Nagaragopal

Come May, one event that is most-awaited and tracked by India Inc and investors is the onset of the South-West monsoon and its progression. The 2026 South-West monsoon season has opened on a weak note, with the country recording a 40 per cent deficient rainfall in June. However, the IMD expects monsoon to progress, beginning this week. One word that is frequently making the headlines is El Nino. And with several global weather agencies having confirmed the event, the fear seems real now. But is El Nino something investors should really worry about?

For those who are unfamiliar with the Spanish word, it basically denotes the adverse changes (rapid increase) in the sea-surface temperature (SST) over central and eastern Pacific region. This affects the trade wind formation and movement, eventually resulting in below-normal rainfall in Australia and South-East Asian regions such as Indonesia and also has an impact on India’s monsoon rainfall. But an El Nino event does not necessarily spell doom. Much depends on its timing. If conditions intensify only after September, the impact on India is likely to be limited, as the South-West monsoon accounts for nearly two-thirds of the country's annual rainfall.

The intensity of the El Nino event is very crucial. The Nino 3.4 Index, in addition to trade winds, atmospheric response and sub-surface ocean temperatures, is the basis for ascertaining the event. If the SST value is above 0.5 for five consecutive three-month overlapping seasons, then it’s a weak El Nino. An SST value between 0.5 and 1.5 implies a moderate El Nino; while any value above 1.5 indicates a stronger event. We have had two El Nino episodes in the last three decades — 2015 and 2023. But in 2015, which is considered moderate El Nino, the overall rainfall deficit was 12.7 of the Long period Average (LPA). Interestingly, in 2009, which was a drought year, the SST values during the season were under 0.5, indicating a no El Nino year. Likewise, 2014, too, was not an El Nino year.

It is clear that El Nino is not the only reason for a poor monsoon. Indian Ocean Dipole (IOD) is a climate phenomenon caused by variations in sea temperatures in the Indian Ocean. Its positive, negative and neutral phases can influence the Indian monsoon. A positive IOD brings good rainfall to India, while a negative IOD results in lower seasonal rainfall. Other factors include Madden Julien Oscillation (MJO), more of a short-term phenomenon lasting for about 60 days, unlike an IOD or El Nino, which last for several months.

CURRENT STATUS As per SST data published by the IMD, the SST value was -0.1 for the March-May period, which is an increase from -0.9 in the December-February period. However, as per the latest data released by Columbia Climate school, the SST anomaly measured using Nino 3.4 Index, which was at 0.48 degree Celsius in March-May period, has increased swiftly to 0.94 degree Celsius by May and further increased to 1.7 by June 17. This indicates a strong possibility of a moderate-to-severe El Nino event this season. Multiple agencies, including National Oceanic and Atmospheric Administration, have confirmed the El Nino event.

The IOD, which was positive to neutral at the start of the year, is now showing a swing towards negative zone — with the May IOD at -0.39 in the IMD website. MJO is possibly not presenting clear indications yet. However, the IMD has indicated widespread rainfall this week, supported by formation of a ‘low’. While the rainfall progress in July remains extremely crucial, the Indian government has launched an emergency plan to protect crops in 315 districts with irrigation infrastructure gaps and significant deficiency in rainfall and the farming community is preparing itself for the worst. The government is helping the farming community to navigate this phase by shifting to crops, such as millets and pulses, which can thrive on less water, use of climate-resistant and short-duration crops, etc.

FOODGRAIN PRODUCTION The impact of a weak monsoon is visible, either through flattish output or a marginal decline in output during the years when the monsoon has been below normal. For instance, in 2009-10, which followed the 2009 drought year, foodgrain production slipped 7 per cent. In the following years — 2014 and 2015 — production was lower by 4.9 per cent and 0.2 per cent, respectively. Similarly, in 2019, when the rainfall was a tad lower, the growth in foodgrain production was flat. As foodgrain production is highly sensitive to monsoon rainfall, this needs to be closely monitored. Meaningful improvement in rainfall will be crucial to keeping food inflation under check. Levels of farm income and food inflation are two important variables that have a bearing on economy and interest rates and thereby on the markets.

However, India has, over the last three decades, managed to increase the area under irrigation — from 33.6 per cent in 1990-91 to 39 per cent by 2001 and 59 per cent by 2023. States such as Punjab and Tamil Nadu have seen significant improvement in the irrigation penetration, while Maharashtra continues to be significantly dependent on the monsoon, making it more vulnerable, given that the State is a key producer of sugarcane and cotton.

SECTORS THAT NEED TO BE WATCHED While conventional wisdom suggests that agri and allied sectors may be the first casualty of a weak monsoon, historical data show resilience. For instance, fertilizer sales have remained strong even during weak monsoon years. During the drought year of 2009, fertilizer consumption grew 6.4 per cent year-on-year. Similarly, in 2014 and 2015, fertilizer sales grew 4.5 per cent and 4.3 per cent, respectively. This is largely because purchases typically happen ahead of the season and high government subsidies on urea and complex fertilizers support consumption. Stocks such as Chambal Fertilisers and Chemicals, and Coromandel International have delivered healthy gains irrespective of monsoon concerns.

However, the significant jump in input costs for the sector due to the US-Iran war could result in an increase in working capital needs and impact profitability. Sulphur has risen from $350 per tonne in 2025 to almost $850 per tonne in 2026. The cost of anhydrous ammonia and global gas prices have also witnessed sharp rises.

Agrochemicals traditionally see some correlation to monsoon rainfall because only the purchase of preventive sprays happens ahead of the monsoon. The industry witnessed growth stagnation in 2014 and 2015 but staged a strong recovery after 2015. Input price hikes due to the US-Iran war may play spoilsport in the short term.

BENEFICIARIES Some sectors cheer a weak monsoon. Construction and building materials sectors share an inverse relationship with the South-West monsoon. A poor monsoon means uninterrupted construction activity and stronger demand for materials such as cement, steel, and paints. Mining also benefits, as activity typically remains lull during heavy rainfall. Power generation (coal and solar), which can be disrupted by monsoons, may see higher output if rainfall is lower than expected.

FARM INCOME Sectors riding the rural consumption wave, like two-wheeler producers and farm equipment makers, see tepid sales in years of lower agricultural output. FMCG companies with a significant share of revenues from rural markets also show a strong correlation with monsoon rainfall, though with a lag effect. For example, Hindustan Unilever reported flat revenues and an operating profit decline in FY16 after two consecutive weak monsoons. P&G Hygiene and Healthcare, Dabur, and Marico also saw revenue growth stagnate or mirror weak growth in these periods.

MONSOON AND INFLATION A weak monsoon affects food and beverage (F&B) consumer price inflation (CPI) with a one-year lag. After the weak 2023 monsoon, F&B monthly CPI shot up to a new high of over 10 per cent in 2024 and remained high until 2025. Sugar is another critical product; any reduction in cane acreage or yield due to a weak monsoon could risk domestic availability and India’s ambitious ethanol blending programme (EBP).

MONSOON AND MARKET India’s equity indices have historically remained unaffected by monsoon vagaries. The Nifty 50 Index has shown resilience, delivering positive returns during weak monsoon years like 2002, 2004, 2009, and 2023. The index composition, with significant weightage for banks, financial services, IT, oil & gas, and metals, is a key reason for this.

Overall, history indicates the impact of a weak El Nino monsoon is not broad-based and only affects a few sectors. However, current risks include inflation from reduced agri produce and consumption risks from falling rural incomes. Geopolitical situations, crude price volatility, and the weakening Indian rupee also need tracking by investors.

Bulls charge up

INDEX OUTLOOK. An inverted head and shoulder pattern on the charts of Nifty and Sensex reinforce the bullish case

By Gurumurthy K

Nifty 50 and Sensex have risen breaking above their intermediate resistance in line with our expectation. That keeps our overall bullish view intact. Both the indices were up about 0.9 per cent each last week. An inverted head and shoulder pattern is being formed on the daily chart, which strengthens the bullish case for both the Sensex and Nifty to go much higher in the coming weeks.

Nifty Bank index, on the other hand, has been stuck inside a narrow range for the third consecutive week. The index fell within the range and was down 0.4 per cent for the week. However, the bias remains positive, and the index is expected to make a bullish breakout of this range going forward. Among the sectors, the BSE Realty index surged the most last week, rising 7.8 per cent.

FPIs BUY

Foreign Portfolio Investors (FPIs) were net buyers of Indian equities for the third consecutive week, purchasing about $463 million last week. If FPIs accelerate their purchases in the coming weeks, it could further aid the Sensex and Nifty in moving higher.

NIFTY 50 (24,270.85)

• Short-term view: Nifty has broken above the resistance at 24,200. This move confirms a bullish inverted head and shoulder pattern on the daily chart. Immediate supports are at 24,200, 24,000, and 23,900. Nifty can rise to 24,750-24,800 from here, with a pattern target of 25,300. Only a decline below 23,900 would turn the near-term picture negative.
• Medium-term view: Nifty is moving within a broad 22,000-26,500 range and is expected to test the upper end in a couple of months. The long-term bias is positive, suggesting a potential breakout above 26,500 toward 28,000 or even 30,000.

NIFTY BANK (57,938.50)

• Short-term view: The index remains in a narrow range (56,800–58,800). A bullish breakout above 58,800 could take the index to 60,500 and 61,500. Conversely, breaking below 56,800 could lead to a fall to 56,000.
• Medium-term outlook: The broader outlook is bullish. A break above the 61,000-61,500 resistance region would open the way for a rise to 65,000 and eventually 68,000-69,000. Important supports are at 53,500 and 50,000.

SENSEX (77,763.91)

The resistance at 77,400 has been broken, keeping the bullish target of 78,800-79,000 intact. A strong rise above 79,000 will confirm the inverted head and shoulder pattern, targeting 81,000-81,500 in the coming weeks. Supports are at 77,400, 76,700, and 76,000. Decisively breaching 81,500 could clear the path toward 86,000 in the medium term and 90,000-94,000 in the long term.

NIFTY MIDCAP 150 (22,884.35)

The index has recovered from its low of 22,539. Supports are at 22,750 and 22,600, with resistance in the 23,200-23,300 region. A breakout above 23,300 could trigger a rally to 26,000-26,500 in the medium term and 28,000-28,500 in the long term.

NIFTY SMALLCAP 250 (17,996.25)

Support at 17,550 held firm as expected. The index is now testing the crucial resistance level of 18,300. A decisive breach of 18,300 could take the index to 22,500-23,000 in the medium term and 24,000-25,000 in the long term.

SHORT-TERM TARGETS

• Nifty 50: 24,750-24,800
• Sensex: 81,000-81,500
• Nifty Bank: 60,500-61,500

Crucial juncture

US MARKET OUTLOOK. The Dow Jones close to an important resistance

By Gurumurthy K

The Dow Jones Industrial Average, S&P 500, and the NASDAQ Composite Index have risen well last week. The Dow Jones has come close to its crucial resistance. The recovery in the S&P 500 and NASDAQ Composite looks shallow. Broadly, we prefer to remain cautious rather than being overly bullish on the US equities at the moment.

Here is an analysis on how the US markets can perform in the coming week:

DOW JONES (52,900.07)

The Dow Jones surged to a record high of 52,903.85 last week and has closed on a strong note. However, a crucial resistance is at 53,150, which will need a close watch this week. Failure to breach this hurdle and a subsequent fall below 52,000 will be bearish, indicating a top in place. In that case, the Dow Jones can fall back to 50,000-49,000 in the coming weeks. A sustained rise above 53,150 is needed to keep the upmove going; if that happens, then a rise to 55,000 is possible. We prefer to remain cautious rather than being overly bullish at the moment.

S&P 500 (7,483.25)

The S&P 500 index has risen back well and recovered almost all the loss made in the previous week. But the price action indicates the absence of strong buyers above 7,500. So, we will have to wait and watch the movement for a few days to get clarity. Even if the index goes above 7,500, it has to breach 7,600 decisively to gain bullish momentum.

NASDAQ COMPOSITE (25,832.67)

The resistance at 26,250 mentioned last week has held very well. The NASDAQ Composite index touched a high of 26,261 and has come down from there. Near-term support is at 25,600. A break below it can drag the index down to 25,000 again, potentially keeping the downside open to see 24,200-24,000 eventually in the coming weeks. The index has to rise past 26,250 in order to get some breather; only then is a rise to 27,000-27,500 possible.

DOLLAR INDEX (100.88)

Doubts have been raised that the US Federal Reserve will not be in a hurry to increase the interest rates immediately. On the charts, the picture remains positive. Supports for the dollar index are at 100.60 and 100.40, which are likely to limit the downside. We expect the dollar index to rise above 101 decisively and go up to 103 initially. That will also keep our medium-term bullish view intact to see 105-106 on the upside. The index has to decline below 100.40 to turn the short-term picture negative, which could lead to a fall to 99.50.

TREASURY YIELD

The US 10Yr Treasury Yield (4.49 per cent) has risen back sharply from its low of 4.36 per cent last week. Key resistances are at 4.5 per cent and 4.55 per cent. A decisive break above 4.55 per cent is needed to boost the bullish momentum.

The long game in IPO investing

FUND CALL. Edelweiss Recently Listed IPO Fund looks beyond listing gains, aiming to identify newly listed companies with the potential to become long-term market leaders

Dhuraivel Gunasekaran bl. research bureau

Investing in newly-listed companies can give investors early access to businesses with the potential for strong long-term growth. However, capturing these opportunities is not easy for retail investors. Identifying fundamentally-sound companies, securing allotment in often oversubscribed IPOs and staying invested through the inevitable volatility can be challenging.

The Edelweiss Recently Listed IPO Fund (ERLIF) seeks to address these challenges by investing in a curated portfolio of recently-listed companies through disciplined stock selection and long-term portfolio construction. Launched as the close-ended Edelweiss Maiden Opportunities Fund - Series 1 in 2018, the scheme was converted into an open-ended fund and renamed in June 2021. Over the last seven years, it has delivered a compounded annual growth rate (CAGR) of 19 per cent compared with 14 per cent for the Nifty 500 Total Return Index.

LONG-TERM INVESTMENT

Instead of seeking quick listing gains, the fund focuses on identifying businesses with the potential to emerge as long-term market leaders during their three-five year post-listing growth journey.

The fund’s investment universe is restricted to the 100 most-recently listed companies in India. Regulations require at least 80 per cent of the portfolio to remain invested in this universe, while the balance can be allocated to older IPOs that continue to offer attractive growth prospects. Over the last five years, the portfolio has typically held 42-58 stocks. It builds positions through anchor allocations, during the IPO process, immediately after listing or even several quarters later if valuations become attractive and business execution remains strong.

SCREENING FRAMEWORK

Not every IPO qualifies for investment. The fund excludes SME IPOs, pre-IPO investments, companies with a market capitalisation below ₹1,000 crore and IPOs with issue sizes below ₹500 crore. These filters seek to improve portfolio quality while reducing liquidity risk. Research begins once a company files its draft red herring prospectus (DRHP). The evaluation process includes management interactions, customer and supplier meetings, plant visits, financial analysis and valuation assessment.

The fund follows a selective approach rather than investing in every IPO. It invested in 55 of the 104 IPOs launched in 2025 and in eight of the 21 IPOs launched so far this year. Historically, its participation rate has ranged between 35 per cent and 55 per cent. Even if the primary market remains inactive for an extended period, the fund’s strategy is unlikely to be affected, as its investment universe comprises the 100 most-recently listed companies rather than only fresh IPOs.

About 60-70 per cent of the portfolio is allocated to secular growth businesses that benefit from long-term structural trends, possess competitive advantages and are expected to sustain earnings growth over extended periods. The remaining portfolio largely comprises cyclical businesses, where valuations become the key determinant. Since industry cycles can reverse quickly, the fund invests only when valuations provide an adequate margin of safety.

IPO companies often command premium valuations as investors price in their future growth potential. Reflecting this, the fund’s portfolio traded at a P/E of 59 times as of May 2026, well above the flexi-cap fund category average of 38 times. While valuation remains a key consideration, the fund balances it with business quality and long-term growth prospects rather than pursuing low valuations alone.

MID-, SMALL-CAP BIAS

The portfolio has a natural bias towards mid- and small-cap companies, reflecting the composition of India’s IPO market. Over the last five years, the fund’s average allocation to large-, mid- and small-cap stocks stood at 12 per cent, 20 per cent and 56 per cent respectively. Most investee companies typically have market capitalisations between ₹5,000 crore and ₹30,000 crore.

PORTFOLIO COMPOSITION

One distinguishing feature of the fund is its exposure to emerging sectors and business models. IPO cycles often mirror the changing structure of the economy. Depending on the listing pipeline, the portfolio may gain exposure to financial services, insurance, defence, pharmaceuticals, contract manufacturing, digital platforms and other fast-growing industries that remain underrepresented in traditional diversified funds.

Sector exposure is capped at 25 per cent. As of May 2026, pharmaceuticals (11 per cent), retailing (9 per cent) and capital markets (9 per cent) were the largest sector exposures. However, the sector mix changes significantly as new companies enter the investable universe and existing holdings are exited based on valuations and business prospects.

A bl.portfolio analysis of the fund’s portfolio since inception shows that investments in Polycab India, Dixon Technologies, Affle 3i, Laurus Labs and IRCTC generated multibagger returns. In contrast, investments in Ellenbarrie Industrial Gases, Shankara Building Products, DAM Capital Advisors, Quess Corp, Spandana Sphoorty Financial and FSN E-Commerce Ventures (Nykaa) destroyed investor wealth. This illustrates the fund’s high-risk, high-reward nature.

EXIT STRATEGY

Stocks are exited under three broad scenarios:

• When a better IPO opportunity emerges than the existing stocks.
• When a company achieves its growth potential earlier than expected and valuations leave limited upside.
• When it materially deviates from its IPO strategy or the original investment thesis no longer holds.

PERFORMANCE

The fund has delivered strong long-term performance. Since inception, its five-year rolling return has averaged 18.5 per cent CAGR compared with 17.5 per cent for the Nifty 500 TRI. Rolling returns ranged between 9 per cent and 26 per cent. On a three-year rolling basis, the fund generated an average CAGR of 19.3 per cent against 17.8 per cent for the Nifty 500 TRI. The regular plan carries an expense ratio of 1.9 per cent, while the direct plan’s expense ratio is 0.83 per cent.

TAKEAWAY

Apart from the Edelweiss IPO Fund, there are two recently-launched passive funds from Mirae Asset and Motilal Oswal, which track the BSE Select IPO Index. These have a limited track record of around one year.

The Edelweiss Recently Listed IPO Fund offers investors an opportunity to participate in the three-five year post-listing growth phase of newly-listed companies rather than pursuing short-term listing gains. However, the fund can underperform during market corrections or risk-off phases, as recently-listed companies tend to witness sharper valuation corrections than the broader market. Given its thematic mandate and significant exposure to mid- and small-cap companies, the fund is best suited as a satellite allocation. Investors looking for dedicated exposure can consider the fund through the systematic investment route with an investment horizon of at least five years.

Newspaper Summary - 040726

 

Google loses appeal against €4.1 b European Union anti-trust penalty

COSTLY DEFEAT. European Court of Justice upholds 2022 ruling to fine US giant for abusing Android’s market power Bloomberg TECH CURBS. Judgment reinforces stricter antitrust enforcement against platform dominance under EU digital regulations REUTERS

Google lost its long-running fight against a €4.1 billion ($4.7 billion) European Union antitrust fine after the bloc’s top judges said regulators were right to punish the US giant for abusing Android’s market power.

The European Court of Justice ruled on Thursday that Google’s earlier defeat against a European Commission penalty should stand. The decision is legally binding and marks a significant win for the Brussels-based regulator, which has been fighting Google through EU courts since the fine was first levied in 2018.

ABUSE OF POSITION

“The appeal brought by Google and its parent company Alphabet against the judgment of the General Court is dismissed, thereby confirming the penalty imposed for Google Search’s abuse of a dominant position in the context of the Android operating system,” the court said in a statement.

The decision is a constraint on the Android business model — which has provided free software in exchange for conditions imposed on mobile phone manufacturers. Such contracts provoked the ire of the Commission in 2018, when the watchdog accused Alphabet Inc’s Google of three separate types of illegal behaviour that helped cement the dominance of its search engine, accompanying the order with the then-record fine. The decision also paves the way for a wave of potential lawsuits from victims of Google’s behaviour.

Google said the ruling “fails to recognise our significant investment to ensure Android remains open, interoperable and free. In any event, we adapted our agreements to comply with the initial decision back in 2018, and we remain focused on continued innovation and openness for our users, partners and developers”.

FairSearch, a group of complainants that brought the case to the commission in 2013, called the ruling “an important victory in Europe’s highest court against Google’s anti-competitive conduct in mobile markets”.

PLAY STORE

Commission spokesman Ricardo Cardoso said the regulator would “carefully assess” the details of the court win. In its decision to fine Google, the Commission said:

• It was illegally forcing handset makers to pre-install the Google Search app and the Chrome browser as a condition for licensing its Play Store.
• Google made payments to some large manufacturers and operators on condition that they exclusively pre-installed the Google Search app.
• Google prevented manufacturers wishing to pre-install apps from running alternative versions of Android not approved by Google.

In a September 2022 ruling at the EU’s lower General Court, judges upheld the vast majority of the commission’s arguments, but cut the fine from €4.3 billion after finding that regulators hadn’t provided enough evidence for specific abuses.

The Android case was a key element in erstwhile EU competition chief Margrethe Vestager’s effort to crack down on the growing power of Silicon Valley. Since Vestager was replaced by Spanish official Teresa Ribera in 2024, Google has continued to face EU scrutiny — including under the bloc’s powerful Digital Markets Act (DMA), introduced to prevent Big Tech from leveraging market power before traditional antitrust rules kick in.

Earlier this year, Google was told to lift technical barriers to rival AI search assistants on Android and provide key data to other search engine providers. Separately, it faces penalties under the DMA over allegations it unfairly favours in-house services and for preventing app developers from steering consumers to offers outside of its Play Store. It’s also being probed over concerns it unfairly demotes certain news results.

Health-conscious consumers beat the heat with dairy beverages

Brands are reporting soaring sales of buttermilk, lassi, flavoured milk and protein drinks Meenakshi Verma Ambwani New Delhi Protein-rich beverages are gaining popularity as consumers prioritise nutrition and refreshing summer drink options

Amidst a scorching summer, packaged dairy-based beverages like buttermilk, lassi, haldi doodh and flavoured milk are seeing high double-digit growth. This surge in demand comes as health-conscious consumers increasingly prioritise wellness and look for functional ways to boost their daily protein intake.

SALES SOAR

Jayen Mehta, MD, GCMMF (Amul), told businessline: “We have a large portfolio [of dairy drinks] and it has been a very good season. Category growth has been higher. For instance, buttermilk sales rose 60 per cent month-on-month in June, while the Amul protein range has been growing at 100 per cent”.

Jayatheertha Chary, Managing Director, Mother Dairy, pointed out that factors such as rising temperatures and a wider distribution network across channels had been supporting the growing demand for dairy-based beverages. “Our dairy beverages portfolio witnessed strong double-digit growth this summer, led by robust demand across categories. For instance, flavoured milk registered growth of over 50 per cent, while our Probiotic Chaach category rose upwards of 40 per cent, reflecting strong consumer preference for refreshing, value-added dairy beverages,” he added.

PRICE ADVANTAGE

For Parle Agro, its dairy brand Smoodh has delivered another strong year of growth. Nadia Chauhan, CMO, Parle Agro, said, “While the extended summer has certainly provided a favourable consumption environment, the brand’s momentum has been driven by far more fundamental factors”. She added that the brand’s focus on the ₹10 price point had been instrumental in accelerating its growth by making it more accessible.

Akshali Shah, ED, Parag Milk Foods, noted that the momentum for dairy-based beverages is being driven by consumers prioritizing nutrition alongside refreshing options.

LPG consumption falls 8% in first half of 2026 as West Asia conflict hits supply

Rishi Ranjan Kala New Delhi

Liquefied petroleum gas (LPG) consumption declined by 8 per cent y-o-y to around 14.74 million tonnes (mt) during the first half of the current calendar year as the West Asia conflict and the resultant closure of the Strait of Hormuz (SoH) completely blocked off supply of the key cooking fuel.

According to the Petroleum Planning and Analysis Cell (PPAC), India’s LPG usage from January through June stood at 14.74 mt on a provisional basis, compared to 15.95 mt a year-ago.

USAGE DOWN

The decline in consumption is entirely due to lower availability of the commodity, as a large part of the imports comes via vessels transiting the Strait of Hormuz (SoH). During June, LPG usage declined by almost 17 per cent y-o-y to 2.18 mt on a provisional basis.

However, consumption on a monthly basis rose by a little over 2 per cent as more LPG cargoes made it to Indian ports, particularly from the US, which emerged as a major supplier. This commodity is the main cooking medium for more than 33.50 crore households, including over 10.50 crore beneficiaries who receive subsidised LPG under PM Ujjwala Yojna.

LPG consumption during May stood at roughly 2.13 mt, which is the lowest in the last 62 months, or more than five years. Lower usage was previously recorded in May 2019 (1.79 mt) and April 2019 (1.9 mt).

LPG consumption generally declines during the summers. As of early June 2026, India was consuming around 72,000 tonnes per day (TPD) of LPG. A back of the envelope calculation shows that the country’s average usage stood at roughly 90,991 TPD in FY26, 85,830 TPD in FY25 and 81,271 TPD in FY24.

However, analysts, traders and refiners indicate that supplies will now get back on track with the signing of a memorandum of understanding between the US and Iran and the 60-day sanctions reprieve for Tehran. This is already reflecting in a higher number of vessels loaded with crude oil, LNG and LPG transiting the Strait of Hormuz.

Gold gains after weak US payrolls report

Gold extended its gains, climbing more than 2 per cent on Thursday, after weaker than expected US non-farm payrolls data reduced expectations of Federal Reserve interest rate hikes this year. Spot gold was up 2.4 per cent at $4,126.97 per ounce, as of 1300 GMT. US gold futures inched up 1.4 per cent to $4,139.20. Silver rose 4 per cent to $61.53.

REUTERS

Japan’s key agenda

Sridhar Krishnaswami TRUST QUOTIENT. Japan sees India as a reliable partner Reset policies to reduce China’s clout in the region

Even before landing in New Delhi, the Prime Minister of Japan, Sanae Takaichi, made it clear that she attached importance to the “strengthening of the strategic relationship between our countries. I wish to deepen cooperation in the field of security and strengthen our capacity to navigate the uncertain international landscape.”

In a few words, the Japanese leader captured the essence of today’s international system, not because of the implications the US-Iran war had for the world but in a genuine apprehension of the valid lessons not properly understood.

ECONOMIC COOPERATION

Surely the visiting Prime Minister’s agenda had a heavy economic component especially for a deeper economic cooperation between the two nations in the realms of energy, technology and defence and from a Tokyo perspective, to look beyond East Asia.

India as an “indispensable partner for Japan” did not mean that China was being given a short shrift or “dumped”, but that in reducing the burden of exposure and in keeping the Indo-Pacific open and free, India was a reliable partner.

China is Japan’s largest trading partner with a two-way trade of around $325 billion, predominantly of high-tech components, machines and consumer items. Japan consistently runs a deficit of about $40 billion.

India, on the other hand, accounts for less than 2 per cent of Japan’s total global trade; the two-way total accounting for about $27.5 billion with Japan’s exports at $21.5 billion versus India’s at a little over $6 billion. But Tokyo has been one of India’s top investors spread over automobiles, electronics, infrastructure, logistics and finance.

Now, with changes in Japan’s defence and forward posturing, it is expected that the two countries will quickly widen and deepen the points of interest especially in collaborative high technologies with dual applications.

There are nearly 1,500 Japanese companies in India operating in a very different environment compared to the restrictive eras of the past.

Prime Minister Takaichi correctly pointed out the uncertain landscape of the Indo-Pacific, especially with the US looking to humour, and stabilise relations with, Beijing. But even before this, Tokyo was becoming increasingly apprehensive of Washington’s commitment to Asia.

And this has intensified after President Donald Trump’s recent visit to China and his putting on hold a $10 billion arms package for Taiwan; making it a bargaining chip with China, and effectively giving it a veto.

CHINA FACTOR

More than the uncertainty of American commitment, Japan’s primary concern is that of China, with North Korea and Russia playing their dutiful role of add-ons.

Beijing has been consistently turning the economic heat on Tokyo, putting the squeeze on exports of rare earths or materials of dual use. But if Japan has received a big wake-up call, it is over the US-Iran war and in the closure of the Strait of Hormuz.

While other nations in the Indo-Pacific may be reluctant to admit, it is an open secret that China’s aggressive posturing in the South China Sea and laying claim to all of the Spratlys have raised anxiety levels, especially in the event of a potential military showdown and shutting off a pivotal waterway.

Prime Minister Takaichi will understand why India cannot be roped into any grand alliance against China. And Beijing knows what is making Japan and most of East and South East Asia uncomfortable.

The Takaichi government is on its way to remake Japan’s strategic and foreign policies. And guilt trips of Imperial Japan, World War II and Yasukuni Shrine by Beijing are unlikely to make a difference.

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The writer is a senior journalist who has reported from Washington DC on North America and United Nations

Food sovereignty: Lessons from France and India

Rohini Rangachari Karnik FARMING. For future generations For ensuring that future generation of farmers don’t leave farming, state support and credit access are crucial

France is Europe’s largest agricultural producer, accounting for around 18 per cent of the European Union’s total agricultural output. Worryingly, half of France’s farmers are set to exit farming by 2030. Similarly, in India, where about 60 per cent of the arable land is used for agriculture, the youth are leaving agriculture for cities. Both countries face a shared challenge: how do they ensure generational renewal in agriculture and what does this mean for their respective notions of sovereignty?.

The issue of generational renewal of agriculture facing France and India is not only one of production or supply. It is also a question of control: who decides what agricultural commodities are grown, how these are grown and on what terms. It is useful to distinguish food security from agricultural sovereignty. Food security is about reliable access to sufficient, safe and affordable food; agricultural sovereignty is about a country’s ability to control the inputs, institutions and decisions that shape its agricultural future.

In economic terms, the latter is the ability of a nation to control its core production inputs, pricing exposure and long-term soil capital without structural external dependency. Agriculture sovereignty, more recently known as food sovereignty, rests on six principles — right to food for people, valuing food providers, localising food systems, putting control locally, building knowledge and skills and working with nature. Food sovereignty defends the interests and inclusion of the next generation in agriculture.

Recognising the need for placing food sovereignty at the heart of the political priorities of French agricultural laws, in 2024 France proposed a draft Orientation law on ‘agricultural sovereignty and generational renewal in agriculture’. This law explicitly links sovereignty to training, EU co-financing, fosters education across agriculture, encourages environmental practices, and invests in human resources in keeping with Europe’s aim to double the share of young and new farmers by 2040.

India had its own expression of the food sovereignty movement during recent farm law protests against three farm laws passed by the Centre in which farmers demanded control over markets, inputs and land. The three laws, primarily marketing reforms, were aimed at deregulating food price control, liberalising the control of food stocks and trade, and giving private enterprise more freedom to contract with farmers directly. One fear of the farmers was that the minimum support price would get dismantled leaving farmers to bargain directly with a few large corporations. The farmer protests to retain market, input and seed control in India stand in sharp contrast to France’s top-down model of generational renewal, where state policy and explicit financial support, plays an important role in driving entry and retention in farming.

FRANCE’S EXPERIENCES

In France the state lowers financial and bureaucratic barriers for young farmers, as many leave agriculture early due to costs and low incomes. In India, generational renewal as a policy is less explicit, left vulnerable to the needs of small and marginal landholders, high debt, small landholdings, and rural-urban migration.

France uses the EU’s CAP Strategic Plan, which includes direct payments, eco-schemes and transition support for sustainable farming and generational renewal. India’s main tools for agriculture include the Minimum Support Price, input subsidies, PM-KISAN, the Kisan Credit Card scheme, crop insurance, soil-health and irrigation schemes, and market reforms, amongst others. These are major schemes aimed at enhancing productivity, income support and sustainable practices, but with little direct relevance tackling the issue of generational renewal in agriculture.

France’s model shows how legislation and finance can institutionalise generational renewal. The path forward lies in a purposeful synthesis: Indian policy could integrate France’s institutional tools — youth-support schemes, land-access instruments and targeted credit — while France could adopt India’s low-cost agro-ecological community led models that give importance to smallholders and seed sovereignty.

Only by combining state capacity with a sensitivity to movement-driven demands can both countries ensure that the next generation of farmers not only enters agriculture, but does so in terms that are economically viable, ecologically sustainable and politically empowering.

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The writer teaches French at the Alliance française de Delhi

Carlsberg files confidential IPO papers, to raise ₹7,100 cr

Suresh P Iyengar Mumbai

Danish brewer Carlsberg A/S learnt to have filed papers confidentiality with the market regulator SEBI for tapping the primary market. One of the largest brewers in India, Carlsberg will join the growing multinationals tapping the vibrant Indian market.

The confidential route allows companies to keep their IPO filings private until it is cleared by SEBI, which allows the company to withhold sensitive trade information from public glare. Some large Indian companies such as Jio Platforms and NSE also took the confidential route for filings with SEBI.

OFFER FOR SALE

The IPO of Carlsberg will largely be an offer for sale with the promoters offloading part of their stake to raise about $750 million (₹7,100 crore), sources said. With the equity markets set to rebound in the second half of this year, the company may attempt to complete the IPO by this year, he added.

Earlier, share sale of multinational companies such as Hyundai Motor and LG Electronics saw good response despite higher valuations. Carlsberg India, which entered India in 2007, commands a market share of 22 per cent.

Visa unveils payment passkey in India

Press Trust of India Mumbai

Digital payment authentication must move beyond passwords and one-time passwords (OTPs) as AI-driven commerce gathers pace, a top Visa official said on Thursday. “Authentication cannot remain dependent on passwords or one-time codes designed for an earlier digital era. It must become secured by design, invisible to the consumer, and resilient against increasingly sophisticated fraud,” Suresh Sethi, Group Country Manager for India and South Asia for Visa, said.

The payments major launched its ‘payment passkey’ solution in India. This enables consumers to authenticate online card payments using capabilities already built into their mobile devices, and helps satisfy the two-factor authentication requirement in India.

Inflation risks in the US have come down

Enda Curran Catarina Saraiva KEVIN WARSH. US Fed chief keen on delivering price stability BLOOMBERG

Federal Reserve Chairman Kevin Warsh said price risks have come down in recent weeks, while repeating his determination to bring inflation back to the US central bank’s 2 per cent target.

“Expectations of inflation over the first four weeks of this period have come down, inflation risks have come down,” Warsh said Wednesday at the European Central Bank’s annual Forum on Central Banking in Sintra, Portugal. He doubled down on a message from his first press conference as Fed chairman last month that the central bank will deliver price stability.

“We’re going to deliver price stability in the US, that’s what this committee has signed up to do, and our objective is to do that,” he said. “Tactics, the strategy and the rest, that’s still to come,” Warsh said.

Warsh also emphasised the Fed’s autonomy in determining the proper policy course — in the face of consistent calls by President Donald Trump for slashing interest rates. “We’ve been an independent central bank for a very long time. We’re going to be an independent central bank at this moment and you’re going to see no changes on that,” he said in a panel discussion at the ECB conference.

‘NEW COURSE’

Warsh repeated that he isn’t going to offer “forward guidance” with regard to upcoming interest-rate policy, marking a step-change at the US central bank. Asked specifically whether a rate hike is on the table at this month’s meeting, Warsh said the panel moderator was “trying to get me to break this rule” on foreswearing forward guidance. “She’s going to fail.”

“We’re going to chart a new course,” Warsh said. “I want us to have a good family fight when we meet in four weeks,” he said, referring to the next policy decision.

In his initial press conference last month, Warsh said that Fed policymakers had agreed that forward guidance “was not well-suited to the current policy conjuncture.” “At my press conference, I said we’re not going to give forward guidance because we’re meeting in six weeks,” Warsh said on a panel alongside other prominent central bank leaders. “I have an update for you,” he added — noting the July 28-29 meeting is now just four weeks away.

TASK FORCES

While Fed officials held interest rates steady last month, they did signal growing support for hikes this year amid inflation running at its fastest since 2023. Updated forecasts for the Fed’s benchmark rate showed half of 18 officials projected a rate increase this year, though Warsh declined to offer a forecast himself.

FEDERAL FUNDS RATE

The rate-setting Federal Open Market Committee voted unanimously last month to hold its benchmark federal funds rate target in a range of 3.5 per cent to 3.75 per cent. Investors are now pricing in at least one 25 basis point rate rise by year-end.

As for whether the Fed will more permanently refrain from forward guidance, Warsh in June announced the creation of five task forces, one of which will examine communications. The others cover the balance sheet, the Fed’s use of data, productivity and jobs, and the central bank’s inflation frameworks.

Speaking on the panel, Warsh said that it’s likely there’ll be news next week on task-force membership. Participants will include outside experts, and some individuals from outside the US, he said.

Air India slashes fuel surcharge for Australia, North America, Europe flights

Press Trust of India New Delhi

Air India has cut fuel surcharge for flights to North America, Australia, Europe, and the UK as oil prices eased in recent weeks, according to sources.

The airline announced the fuel surcharge on April 7 amid a surge in oil and jet fuel prices due to the West Asia conflict. The higher costs and airspace curbs had pushed up operational expenses for the airline.

FUEL SURCHARGES

Fuel surcharge for North America and Australia flights have been cut to $200 from $280 per ticket and that for Europe and the UK services have been reduced to $125 from $205, the sources said on Thursday.

The revised fuel surcharges are effective from July 1, the sources said. Fuel surcharges for other international flights and domestic services of the airline remain unchanged.

Fuel surcharges for North America, Australia, Europe, and the UK flights had come into force from April 10. On April 7, the Air India Group announced fuel surcharges ranging from $24 to $280 for international flights except certain routes, and ₹299 to ₹899 for domestic flights.

The changing dynamic in China-India economic ties

China has introduced tighter controls on tech exports, outbound investment and sensitive industrial know-how, while strengthening supply chain rules.

While India is cautiously reopening to Chinese investment, China is becoming more restrictive about tech transfers and overseas investment.

PARAN BALAKRISHNAN THE WIDER ANGLE.

It’s the first significant Chinese auto investment in India since 2017. The colourfully named Horse Powertrain, a joint-venture backed by China’s Geely, will invest up to $370 million to manufacture hybrid powertrains in Chennai. After years of near-freeze, Chinese participation in India’s auto sector may finally be restarting.

For a very different China-India auto story, turn to the June 8 edition of China’s English-language Global Times. Days earlier, Tata Motors announced it would use Chinese automaker Chery’s platform for its premium Avinya EV, fuelling speculation the partnership could deepen. The state-run Global Times quickly shut that down. Chery stressed the agreement was limited to “vehicle-related parts supply, including providing auto components”. It denied any plans for direct investment or technology transfer in India.

The two announcements capture the changing dynamic in China-India economic ties. India is cautiously reopening to Chinese investment just as China is becoming more restrictive about technology transfers and overseas investment.

The turning point came in 2020. After the Galwan Valley clash, India effectively slammed the brakes on Chinese investment, requiring government approval for investments from neighbouring countries. Many proposals were delayed indefinitely or abandoned. Four years later, policymakers have concluded that sectors such as EVs, batteries and advanced manufacturing cannot become globally competitive without some access to Chinese technology and capital.

In March, India signalled a more pragmatic approach, allowing Chinese companies to take minority stakes in Indian firms in select sectors. The shift is modest but marks the first meaningful easing of restrictions since 2020.

Unfortunately for Indian companies, this policy change has come just as Beijing has tightened controls over its own companies, helping explain why Chery distanced itself from suggestions of deeper cooperation with Tata.

China’s tougher stance is not aimed primarily at India. It reflects Beijing’s response to growing US and other Western restrictions on Chinese investment and technology exports. China has introduced tighter controls on technology exports, outbound investment and sensitive industrial know-how, while strengthening supply chain rules to discourage manufacturers from relocating production overseas.

From Beijing’s perspective, India occupies an ambiguous position. On one hand, it’s not central to China’s global economic strategy. “They aren’t losing any sleep over it,” says Santosh Pai, partner at Dentons Link Legal.

Yet India is now the world’s third-largest automobile market and one of the fastest-growing EV markets. Companies like Chery would clearly like a foothold. Even so, Chinese policy is shaped by broader global strategy rather than India alone.

The auto sector isn’t unique. Across industries, Chinese and Indian companies are quietly exploring structures that can satisfy both countries’ regulators. “There’s been more activity in the last six months than in the last six years,” says Pai. Whether these proposals clear approval hurdles in New Delhi and Beijing remains uncertain.

OVERPLAYED ITS HAND?

Pai also believes Beijing risks tying its own companies in knots. “China may have overplayed its hand. They’ve put out legislation after legislation in the last three years to put every global Chinese company into shackles. Will it be overkill? At the end of five years, if none of the Chinese companies is going to be global, then it’s backfiring on them”.

The solar industry illustrates the same tensions. India has become one of the world’s largest solar markets, with companies like Adani building giant projects. But after India imposed higher duties and restrictions on Chinese solar imports, Chinese manufacturers shifted production to Southeast Asia rather than investing in India, allowing them to keep serving India while avoiding trade barriers.

India paid a price. Instead of attracting manufacturing investment, it continued importing large volumes of solar equipment. While the Adanis have since localised much of their production, key materials such as polysilicon, ingots and wafers are still imported. The automotive industry presents an even tougher challenge. Indian manufacturers still source a large share of critical parts from China, reflecting its dominance of EV supply chains. As one industry analyst puts it: “Chinese companies will be fighting with companies that are sourcing almost everything from China”.

That dependence should decline as domestic manufacturing expands, but keeping pace with China’s rapid technological advances remains difficult. Chinese firms continue to lead in batteries, software and vehicle platforms. BYD’s latest Blade Battery, for example, offers a range of over 1,000 kilometres and charging in minutes.

Despite political tensions and regulatory hurdles, many Chinese companies remain eager to enter India, seeing it as one of the biggest long-term growth markets across automobiles, renewable energy, electronics and advanced manufacturing.

The question is whether commercial logic will ultimately outweigh geopolitical caution. The coming months will test whether the two countries are willing to let business opportunities trump political differences.