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March, 2016

  • ma-modiWith most of the money pouring into start-ups across China and India drying up, investors are getting a lot more sharp edged and nickel nosed about where they put their money.

    China’s slowing economy earlier pushed several investors to India to reap rich dividends from her large population. However Chinese companies now too are second guessing putting their money into India and are rather cooling their heels even as the summer approaches. Several Chinese companies including Qufenqi, a student loan company owned by Alibaba which was looking at buying into an Indian student loan firm have back tracked and are no longer interested in the Indian market as of now.

    The only beacon on the horizon seems to be Jack Ma’s Alibaba who are keen to enter India’s burgeoning e-commerce market. India is roughly estimated to be 5 years behind that of China when it comes to the adoption and implementation of new technology. This gives Alibaba a huge head start in implementing strategy for a market similar in size and value to China, and also a great advantage in knowing where the market is headed.

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  • oil-demandA tectonic shift is taking place between India and China and its becoming obvious by the subtle changes in oil consumption. According to a report by The Oxford Institute for Energy Studies this month India’s oil demand grew by 300,000 barrels a day last year, double the average rate in the previous decade while China’s growth has slowed to 300,000 barrels from an average 500,000 barrels in the decade to 2013.

    The shift heralds not only a change in the domestic economy with China moving higher up the value chain, becoming more conscious of her environmental footprint and increasing her services sectors, but also signals clearly that she will no longer be swayed by oil politics. The oligarchy of oil, means that with a drop in demand and consequently in price, China was able to alter the economies of oil producing nations such as Saudi Arabia and Iraq which gave her a foothold in international politics.

    While the shift has been gradual, the change is substantial to highlight that oil producing nations will now play into India’s hands as she holds the reigns on higher oil consumption. Foreseeing this is also probably why Rosneft,’ Russia’s largest oil company, has decided to sell nearly half of the largest oil deposit in Eastern Siberia to Indian investors. The company has ceded 49.9 percent of “Vankorneft” shares to a consortium of Indian public sector oil majors. Of these, the Oil and Natural Gas Commission (ONGC) will get 26 percent of the shares, while 23.9 percent will go to Oil India Limited (OIL), Indian Oil Corporation (IOC) and Bharat Petroleum (BPL). ‘Vankorneft’ owns a deposit with 500 million tons of oil and condensate reserves and 182 billion cubic meters of gas, reports the Rosneft press service.

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  • 153917_600Two complementary, interesting trends are emerging from the warmer understanding between China and India and both nations fierce desire to constantly grow.

    Firstly, Chinese investors are eagerly watching the Indian market, coming to investigate investments and often pouring millions into Indian start ups as the Indian economy starts to trot at a slightly faster clip than the Chinese economy.

    The second interesting, emerging trend is that with the Chinese economy far ahead that of India, many entrepreneurs, venture capitalists and private equity players are visiting small to mid sized firms and start up conferences to understand and predict where the Indian market will be five to ten years from now.

    The mix of these two trends, is seeing a higher and more sophisticated level of transactions between the sweet and sour neighbours. While all of this is government agnostic, it is building stronger relationships between the two nations and filling a need gap in both economies. The Chinese have a new, energetic market to invest in and Indian start ups have an orb to see the future.

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  • India_Budget_2016India’s union Budget 2016-17 wasn’t centered around Chinese investments which are flocking into the nation and looking for a quick return on investments, but was rather focused around long term players. With India’s rural economy occupying centerstage, New Delhi’s aim is to spend on rural India, create jobs and boost the agrarian economy which in turn will reap rich dividends in the years to come.

    The belief that rural India will run India’s economy is a pluralist concept which bodes well for all governments catering to the vote bank, however it does little to spur the growth of an economy in the near term. Chinese investors and companies on the other hand are more interested in the new India, one that sizzles on software and is tethered to technology for which India’s union budget gave little leeway.

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