Newspaper Summary 050826

 Boom and bust S Korea’s AI meltdown underscores global fragility

A 44-per cent correction in South Korea’s benchmark Kospi index, over 50 per cent of which was made up by just 2 AI semiconductor stocks — Samsung and SK Hynix — from its peak of 9,386 on June 19 to a low of 5,263 on July 29, has permanently altered the lives, and economics, of millions of South Koreans. While India has so far managed well, given the lack of an AI bubble here and superior regulation, it is now time for investors and regulators to be on extra guard. The ramifications for financial flows and stability need to be reckoned with as well.

That the financials of AI were in ‘Jenga’ mode is well known. Even before the correction took a harsh turn in the second half of July, per a Goldman Sachs report, as of July 13 over 1.2 million leveraged retail trading accounts in South Korea had triggered margin calls. Apparently, this represented around 3.4 per cent of the adult population in South Korea. The numbers would have been higher by end of the month. Such was the meltdown that the finance minister of the country had to apologise for giving green light for launch of speculative products like single-stock leveraged ETFs that amplify returns on the upside and downside. While darling semiconductor stock SK Hynix fell by around 50 per cent between June 19 and July 30, the single-stock leveraged ETF indexed to it plunged over 80 per cent.

For now, the issue appears to have been contained, notwithstanding the spectacular blow up of a multi-billion-dollar AI theme focused US hedge fund — Situational Capital. However, market experts and regulators should be alert to concentration risk at various levels. For one, the AI theme has now become too big to fail. The US Big Techs and AI companies are estimated to invest over a trillion dollars in capex in CY26, much of it in the US and the trend is expected to continue for next few years. Two, the wealth effect of stock market boom in South Korea and the US had been doing the heavy lifting in driving the K-shaped economy where consumption has been driven just by the top half of the population. Three, within the stock market boom and wealth effect lurks a bubble — with the S&P 500 trading at over 25 times forward earnings, even higher than its PE of 20 times during the dot com bubble. The risk here is how surging tech shares could drag down other stocks, as a few AI companies that make up just 2 per cent of S&P 500 companies are expected to drive 33 per cent of the earnings growth.

Thus, a triple whammy lurks if the AI boom hits a speed bump — a slowdown in capex triggering a US economic slowdown, severe market correction from bubble valuations, and financial and trade shocks. If this materialises, then it will have collateral damage in rest of the world, including in India. India has so far managed well, given the absence of an AI bubble here — thanks to lack of AI stocks to invest, and superior regulation. It is important to have adequate risk guardrails for a bubble-break scenario.

Why GIFT City needs to enable dual listing GLOBAL COMPETENCE. It will attract foreign investors, and thereby position GIFT City as a favoured choice for cross-border equity access in Asia

By V Shunmugam

On July 14, 2026, the International Financial Services Centres Authority (IFSCA) released a consultation paper beyond that companies list equity shares on GIFT City exchanges without a traditional public offer. It cites Spotify, Slack, and Coinbase as successful precedents with a minimum post-listing market capitalisation of $50 million. But the more consequential question it raises is the lack of depth of institution-building. GIFT City still has no secondary market to list equity assets that foreign investors choose to buy and trade there at their leisure.

Examining the GIFT City markets ecosystem, the key figures are familiar but worth restating. As of March 2026, the assets of the International Banking Unit reached $111 billion, up from $88.51 billion in March 2025, a rise of about 25.4 per cent year-on-year. Asset Management Entities from 162 to 240, up by 48 per cent. Total registered funds or schemes totalled 360, managing a combined investment of $39.09 billion in commitments, compared to $15.68 billion a year earlier — an increase of roughly 148 per cent. However, the data on capital deployment reveals an underlying structure: $15.36 billion of investments in GIFT City were allocated into debt, totalling $16.95 billion. GIFT City is essentially a debt-market, unless it generates assets held by foreign investors and remains a corridor rather than a true market.

IFSCA’s efforts to build a listed equity market have been slow to gain traction and the reason is structural. Currency risk aside, any financial ecosystem must faced a market already served by CME and the LSE — MF venues with decades of incumbency that regulation cannot wish away. GIFT City’s secondary market faces the same problem: market makers, clearing houses, custodians, depository participants, and broker-dealers — exist only as a response to retail and institutional interest. The regulation is present; the market participation is not.

THE COLD-START PROBLEM

The direct listing paper, as mentioned in the consultation paper, starts from the harder end. An unlisted company arriving at GIFT City has no prior market price discovery beyond its existing shareholder base. Foreign institutional allocators deploy through screens that require trading history, analyst coverage, and liquidity benchmarks. A company meeting a $50 million capitalisation threshold at listing may not pass any of those filters on day one. Direct listing of unlisted issuers is a building block; it could not be a foundation for a secondary equity market.

Instead, dual listing enables companies already traded on NYSE, Nasdaq, or LSE to also list at GIFT City using a fungible share or depository receipt. These companies’ price and liquidity are already determined in a robust primary market. Companies have already filed disclosures under IFRS or US GAAP. This approach doesn’t require newly formed risk-mitigation gears; instead, it allows existing holders of a known instrument to transact at GIFT City.

The evidence worldwide is clear. Alibaba’s secondary listing in Hong Kong in November 2019 raised $11.3 billion and achieved a first-day trading volume of $1.78 billion, accounting for over 10 per cent of HKEx’s total that day. By mid-2022, the average daily trading volume in Hong Kong was $0.7 billion, compared to $3.2 billion in the US. This represents about 22 per cent of global trading volume, offering Asian investors access to a familiar market for a stock they already owned. The London Stock Exchange’s International Secondary Listing category allows non-UK companies to access London markets without bearing full UK disclosure requirements — which is a model IFSCA could consider adopting.

COLLATERAL UPSIDE

A dual-listed equity market at GIFT City would benefit more than just the exchange. Custodians managing foreign-investor holdings require dollar-denominated infrastructure, daily MTM reporting, and standard margining. These enhancements would help upgrade the entire ecosystem from a licensed setup to a globally operational business. Depository participants would handle DVP (delivery versus payment) transactions, which are absent in derivatives-dominated ecosystems. Broker-dealers would establish research and market-making desks aligned with the Asia-Europe time zone. Meanwhile, legal and fintech firms specialising in cross-border settlements and smart order routing would find a strong business case, which they currently find either in Singapore or Dubai. Ecosystem participants need high-volume, commercially viable activity driven by consistent demand for services.

WHAT IFSCA MUST NOW DO

The IFSCA needs to design a regulatory framework that runs in parallel, beginning with an International Secondary Listings category. This category would include companies already listed on a recognised global exchange, along with simplified disclosure requirements. It should also include a fungible mechanism to prevent price divergence. The goal should be an 'access' model rather than a 'full prospectus' — should focus on governance, and require mandated continuous disclosure, corporate action reporting, and prime-brokerage standards, including cross-margining. In addition, seamless Central Securities Depository (CSD) connectivity, and integration with the clearing corporation, and regulatory cooperation/understanding on tax and AML/KYC issues must be established before any dual-listed stock is ready for trading.

GIFT City was envisioned as a gateway, not merely a tax-efficient pass-through. The recent listing announcement indicates IFSCA understands the core problem is being addressed. Enabling dual listings of globally recognised companies brings proven liquidity, enhances the ecosystem, and provides foreign investors with an equity asset class that is worth holding and trading in the Indian time-zone.

The intermediary community at GIFT IFSC must develop true global competence — not just be licensed but meet the high standards expected by global sovereign, wealth and pension managers. IFSCA should establish binding benchmarks for settlement timelines, reporting standards, and technology stacks. Ultimately, dual listing, globally capable intermediaries, and a regulatory regime will position GIFT City as a favoured choice for cross-border equity access in the Asian time-zone.

The writer is Partner, MC Cube.

Hurdles to innovation Governance and absorption capacity pose concerns

By Subash S. and Sunil Mani

India’s innovation story has become one of the country’s biggest successes. It has taken rapid strides in publication output and patents filed, with its ranking climbing to 31 from 138 in the Global Innovation Index.

Yet there is a paradox at the heart of this success story. India continues to produce impressive scientific and technological outputs while investing very little in R&D. Gross Expenditure on Research and Development (GERD) has remained stuck at around 0.64 per cent of GDP for almost a decade. More importantly, researchers are operating in a rigid institutional environment that makes R&D processes unnecessarily difficult.

Three studies — one, by NITI Aayog (2022), the National Academy of Sciences, India (NASI), and NITI Aayog, and the other by NITI Aayog’s report, Ease of Doing Research and Development in India — bring this problem into sharp focus. India’s challenge is not a shortage of scientific talent. It is a problem of turning that talent into sustained scientific and technological capability.

The Waiting Game

If there is one statistic that captures the problem, it is the time researchers spend waiting. According to the INSA-NASI-NITI Aayog survey, researchers wait an average of six to nine months simply to learn whether a grant proposal has been accepted.

Once approved, sanction letters can take another three months, or even longer, to arrive. Funds that lapse at the end of a financial year take five to six months to be restored. Final project payments may remain pending for more than a year. The cumulative result is that in a three-to five-year research project, administrative delays can consume well over two years.

The NITI Aayog report highlights how digitisation, yet digital portals and simplified processes have failed to change a bureaucratic culture in which officials are often rewarded for avoiding mistakes rather than for enabling innovation. The goal is not only process; it is incentives. The most ambitious recommendation of the NITI Aayog report is to increase India’s R&D spend from 0.6-0.7 per cent of GDP to 2 per cent within the next four to five years. India’s research challenge is not simply a shortage of money. It is equally a problem of governance and absorption capacity.

PRIVATE SECTOR MISSING

In most OECD economies, the private sector provides more than 70 per cent of national R&D expenditure. In India, the figure remains around 36 per cent. Yet the gap cannot be bridged merely through tax incentives and exhortation.

The challenge, therefore, is not persuading researchers to work with industry; it is creating an industrial ecosystem willing to invest in research in the first place. The NITI Aayog report reveals another uncomfortable reality: India increasingly resembles a two-speed research system.

At one end are elite institutions such as the IITs and the Indian Institute of Science, which dominate patenting, commercialisation, and advanced research output. At the other end are hundreds of state universities that account for the bulk of higher education enrolment but contribute relatively little to research. A more durable solution requires strengthening research in state universities.

One of the most underappreciated barriers to innovation lies in the incentives facing universities. Yet the deeper issue is that universities are rewarded primarily for publications rather than innovation. Although NIRF (National Institutional Ranking Framework) rankings weigh research, they put more weight on publications and citations than on technology commercialisation. The result is predictable: India produces research papers at scale but struggles to convert knowledge into commercially valuable technologies.

Subash S is Professor of Economics at IIT Madras; Sunil Mani is Visiting Professor Ahmedabad University.

STATISTALK. AI won’t steal India’s jobs. It’ll reshape them Compiled: Dharani Ganapathy | Graphic: Visveswaran V

Generative AI is set to transform India’s economy by boosting productivity across sectors, according to a Goldman Sachs report. The report estimates that AI will complement 42-48% of India’s non-agricultural workforce, while only 8-12% of jobs face substitution risk, pointing to augmentation rather than widespread job losses. In its baseline scenario, India’s annual labor productivity growth could increase by 0.4 percentage points, with the potential gains ranging from 0.1 to 0.8 percentage points. AI exposure is highest in knowledge-intensive services such as healthcare, education and financial services, while construction, mining and manufacturing remain relatively insulated due to their reliance on physical work.

Data Highlights from the Infographic

• Exposure to AI: The sectors with the highest degree of AI complementarity include Personal Services, IT & Business Services, Finance, and Education. Sectors like Agriculture, Manufacturing, and Construction show the highest percentage of "No automation".
• Productivity Boost: AI adoption over a 10-year period is expected to meaningfully lift India's productivity, primarily through the increased productivity of augmented workers and the productivity growth of re-employed substituted workers.
• Sector-wise Impact: AI is predicted to deliver the biggest annual boost to labor productivity growth in Education, Healthcare, and Finance.
• Knowledge Industries: These industries, including Education, Health & Social Work, and Finance, stand to gain the most, showing the highest share of employment exposure to AI.

Jet fuel demand in July slips to its lowest in over two years AIR POCKETS. Airline operations saw moderation, with carriers reducing domestic and global flight schedule

Rishi Ranjan Kala & Rohit Vaid / New Delhi

India’s consumption of aviation turbine fuel (ATF) fell steeply in July 2026 to its lowest level in more than two years as monsoon impacted air travel and carriers cut down on capacity across domestic and international routes.

According to the Petroleum Planning and Analysis Cell (PPAC), India’s jet fuel demand fell roughly 4 per cent m-o-m and 1.5 per cent y-o-y to 699,000 tonnes on a provisional basis in July 2026. This is the lowest since December 2023.

For comparison, India’s aviation turbine fuel (ATF) consumption averaged at around 762,000 tonnes in Q1FY27 and roughly 748,000 tonnes in entire FY26. The decline in ATF consumption last month comes against the backdrop of carriers reducing scheduled airline operations, with carriers reducing capacity across both domestic and international markets.

DOMESTIC FLIGHTS

According to aviation analytics company Cirium, airlines scheduled 82,437 domestic flights in July 2026, down by around 8.6 per cent m-o-m from 90,198 in July 2025. International schedules also declined by 6.7 per cent to 35,366 flights, compared to 37,910 flights in July 2025.

The reduction in scheduled operations was led by the Air India Group, which continued to rationalise its network during the month. Air India operated 11,386 domestic flights in July 2026, down by 3,171 flights from a year earlier, while Air India Express flew 2,130 fewer domestic services. Among other carriers, IndiGo scheduled 1,611 fewer flights, SpiceJet reduced operations by 918 flights and Akasa Air by 262 flights, compared with the corresponding month last year. Although some regional airlines expanded their operations, the increase was insufficient to offset the overall decline in scheduled capacity.

ADVERSE WEATHER

The lower number of scheduled flights translated into fewer aircraft movements and reduced flying hours, both of which directly influence fuel consumption. Besides, the month witnessed significant disruptions at several airports due to adverse weather, resulting in delays, diversions and cancellations of scheduled flights.

Airlines also continued to face financial pressure from amid operational constraints and higher airfare, further contributing to lower overall fuel demand.

India to grow world’s 1st gene edited rice this winter SETTING THE BALL ROLLING. ICAR is expected to sign an MoU this month with US-based Corteva, which holds the licence for CRISPR-Cas9 gene-editing tech

Prabhudatta Mishra / New Delhi

More than a year after its announcement, the cultivation of two gene-edited rice varieties is set to be planted in the upcoming rabi season for large-scale field trials. The Indian Council of Agricultural Research (ICAR) is likely to sign a memorandum of understanding (MoU) this month with the US-based Corteva, which holds the licence for the CRISPR-Cas9 gene-editing technology. Highly placed sources said that while the ICAR had received two of the three approvals, including one from the Ministry of Environment, it is likely to sign the MoU with Corteva; once the third one is received, the agreement will be signed.

The signing of the MoU will pave the way for the commercial release of “Pusa DST 1 rice”, developed by ICAR’s New Delhi-based Indian Agricultural Research Institute (IARI). Initially, the MoU will be signed with Corteva and the Broad Institute (based in the US), which has the patent over the CRISPR technology. The other gene-edited rice variety is “DRR Dhan 100”, which has been developed at the Hyderabad-based Indian Institute of Rice Research.

SEED MULTIPLICATION

On May 4, 2025, Union Agriculture Minister Shivraj Singh Chouhan had announced the breakthrough of ICAR’s research. For the first time, two rice varieties had been developed using gene editing technology. Sources said that IARI had already kept about 2 tonnes of Pusa DST 1 rice, which is sufficient for starting seed multiplication in the upcoming rabi season, with trials starting around November.

Pusa DST 1 rice is derived from MTU1010, which is suitable for the rabi season in the southern States. Since MTU1010 is sensitive to several abiotic stresses, including drought and salinity, scientists edited the SDN1 salt or drought tolerant (DST) gene. It was tested in multicentre field trials during 2023 and 2024. Pusa DST 1 rice exhibited an average yield of 2,493, 3,508 and 3,731 kg/ha (under three salinity stress levels) against MTU 1010’s 1,912 kg/ha under coastal salinity stress, 3,199 kg/ha under inland salinity stress and 3,254 kg/ha under alkalinity conditions. ICAR recommends Pusa DST 1 rice to be grown in several states, including Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra, Jharkhand, Bihar, Uttar Pradesh and West Bengal.

AI-DESIGNED ENZYMES

Before the MoU was signed with ICAR, Corteva signed a technology-sharing agreement. Announcing the partnership, the International Crops Research Institute for the Semi-Arid Tropics (Icrisat) on August 3 said it had secured long-term access to CRISPR-Cas9 in order to accelerate research on one of the world’s most fundamental subsistence technologies, across smallholder farmers in India.

Scientists said there is no issue while using the patented technology because according to the Intellectual Property (IP) guidelines of ICAR, commercialisation of new research using the technology is prohibited, unless the patent holders or its licensee agrees to it. On the other hand, the ICAR scientists, led by Kutubuddin Ali Molla, showed that through gene editing, they could accurately edit plant genes without any foreign DNA, base editing and prime editing in crops.

    Monoculture impacting Punjab’s soil health, says study Our Bureau Mangaluru

A study by the Punjab Agricultural University has highlighted how the intensive rice-wheat monoculture in the State is associated with soil degradation.

In a written reply in Lok Sabha on Tuesday, the Union Minister of State for Agriculture and Farmers’ Welfare Bhagirath Choudhary said that through several years of intensive tillage, the absence of a diversified crop-rotation system, and continuous monocropping had contributed to soil degradation.

Puddling during rice transplanting, while reducing seepage, reduces porosity and increases sub-surface soil compaction, affecting soil health and productivity, besides impacting management practices. However, these effects are temporary and do not significantly result in scientifically recommended practices such as crop rotation, inclusion of legumes, balanced fertiliser application, integrated nutrient management, use of organic manure and crop residue incorporation, he said.

The area under rice in Punjab increased from 19.69 lakh hectares (lh) in 2021-22 to 31.18 lh in 2023-24. While wheat acreage remained largely stable at 35.25 lh and 34.58 lh, respectively.

During the same period, the share of maize, pulses and oilseeds in the State's cropped area declined from 8.6 per cent to 6.2 per cent. In contrast, horticultural crops, including fruits and vegetables, increased their share from 6.3 per cent to 7.2 per cent, reflecting a gradual modest diversification as the rice-wheat system continues to dominate, Choudhary said.

WATER GUZZLERS

Replying to a separate question on the cultivation of water-intensive crops in water-stressed regions, Choudhary said that rice, sugarcane, cotton and jute together occupy about 32.54 million hectares, nearly one-third of India's total cropped area.

Recognising the need to promote crops as per the local water availability, the Indian Council of Agricultural Research (ICAR) assessed the cultivation of major water-intensive crops against rainfall and water resources.

The study concluded that about 2.89 million hectares of rice was grown in districts receiving less than 650 mm of annual rainfall, accounting for 5.67 per cent of the country’s total rice area of about 51 million hectares.