🇮🇳 India votes

PLUS: How will these elections affect India’s startup ecosystem?

Author

Ruchirr Sharma
June 05, 2024

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Good morning. India had an eventful Tuesday:

  • The NDA party secured majority of the seats.

  • However, BJP itself did not win the majority, acquiring only 240 seats. This requires allying with other members of the NDA to reach the 272 seats.

  • Despite this being technically a victory, it doesn't feel like one from the BJP's perspective, as they aimed for more than 400 seats this election season.

- Ruchrngd Sharma & Shatakshi Sharma  

🧵 In today’s issue:

  • 📊 Markets recap

  • 🇮🇳 India votes

  • 💰️ How will these elections affect India’s startup ecosystem?

  • 🗞️ Bite-sized summaries

    • AI is getting riskier

    • Fries to Phones?

    • Bulgari has high hopes for its India operations

  • 🧑‍🍳 What else is cookin’? (quick links)

  • 🍿 Entertainment, Entertainment, Entertainment

📊 Markets

🇮🇳 India

Data as of market close on 4/6/2024

  • Indian equity benchmark indices experienced their worst fall in over 4 years, dropping nearly 6% due to the unexpectedly strong performance of the INDIA bloc in the Lok Sabha elections. This led to concerns about potential impacts on reforms due to a possible reduced mandate for the BJP-led NDA. This sharp decline followed record highs on Monday, driven by exit polls predicting a significant victory for the NDA.

🌍️ International

Data as of market close on 4/6/2024

  • U.S. stocks closed slightly higher on Tuesday despite April's weak job openings data, fueling expectations for a Federal Reserve rate cut. This potential cut boosted major indexes, especially real estate and consumer staples sectors. However, stocks like Bath & Body Works and Axos Financial fell due to company-specific news.

🇮🇳 India votes

In an interesting election result, Prime Minister Narendra Modi's BJP party will fail to get a parliamentary majority in India for the first time in the 3 years they have run.

  • Vote counts indicate the BJP will secure around 240 seats out of 543 in the lower house, falling short of the 272 seats needed for an outright majority. 

  • Together with allies in the National Democratic Alliance, the BJP-led coalition is projected to win 292 seats.

Why is this a big deal? 

  • This was a major setback for Modi, who had aimed for the NDA to win 400 seats for a historic third straight term. 

  • While Modi claimed victory, saying the NDA would form government again, the opposition INDIA alliance led by Congress performed better than expected with 233 seats.

What does this mean? 

  • The result is seen as a blow to the forceful leader who dominated Indian politics for a decade. 

  • Failure to win a majority makes it harder to implement economic policies, with Modi now more reliant on allies. 

  • The biggest reason for this result? Analysts say Indian voters punished Modi's "overreaching" and "hubris."

Overall: 

  • Markets reacted negatively, with the Nifty 50 index plunging 6% after surging to record highs on Monday when exit polls projected an easy Modi win. 

  • Billionaire Gautam Adani's companies tied to Modi's development plans were among the biggest losers.

  • The partial results showed the BJP losing ground in its northern Hindi heartlands like Uttar Pradesh. 

  • Final results are expected by Wednesday after the staggered six-week polls that saw 642 million voters cast ballots.

Read more: NPR

Source: Entrackr

With India's election results unfolding without a clear majority for any party, the startup ecosystem is hoping for continued government support and policy continuity. 

Here’s what’s happening: 

  • Industry leaders like IndiaTech CEO Ramesh Kailasam and entrepreneurs like K. Ganesh emphasised the need to address regulatory clarity, GST issues, and challenges around angel tax, business shutdowns, and more.

  • Despite a hung parliament increasing coalition chances, investor Mohandas Pai felt policy fundamentals should remain stable given the same government's likely return with a reduced majority. 

  • The stock market reacted negatively initially, but Pai predicted it would recover based on strong economic factors.

  • Startup founders like Anupam Mittal of Shaadi.com commented on the surprising results and shifted focus to internal BJP dynamics. 

  • Others like GSF's Rajesh Sawhney welcomed N. Chandrababu Naidu's resurgence in Andhra Pradesh, expecting his tech-friendly vision to boost startups.

Overall: Before the elections, IndiaTech's letter to the PM outlined key demands: 

  • Helping startups re-domicile in India, 

  • A unified identity for gig workers,

  • GST reforms, 

  • FOCC relaxations, 

  • EV policy renewal, and more. 

Startup leaders like Deepinder Goyal have also praised the government's recent efforts at an outreach event.

As a new government takes shape, the startup community seeks consistent policymaking that enables the ecosystem's growth after a period of substantial investments, impact, and job creation.

Read more: Economic Times

🗞️ Bite-sized summaries

Source: ET

🤖 AI is getting riskier - A group of current and former employees from major AI companies like OpenAI, Google DeepMind, and Microsoft have issued an open letter warning about the risks posed by unregulated AI technology. The letter expresses concerns that the profit motives of AI firms hinder effective oversight and transparency about their systems' capabilities and limitations. It cautions that unchecked AI development could lead to serious consequences like spreading misinformation, losing control over AI systems, exacerbating inequalities, and even risks to human extinction.

🍟 Fries to Phones? - Flipkart, the Walmart-owned e-commerce giant, is discussing integrating with the government's Open Network for Digital Commerce (ONDC) to allow users to order food and beverages from restaurants and fast-food chains like Domino's and McDonald's through the Flipkart app. This move is significant as ONDC was initially launched to counter the dominance of Amazon and Flipkart in the e-commerce space. Food and beverages will be the starting point for Flipkart on ONDC, after which logistics services may follow. This partnership could help ONDC scale up its operations and reach millions of Flipkart's customers, while also enabling innovation in logistics, technology, and marketing for sellers on the network.

💎 Bulgari has high hopes for its India operations - Bulgari, the iconic Italian luxury brand owned by LVMH, exited the Indian market in 2011 after a 7-year partnership, citing slow progress in growing its core jewellery business sold exclusively through boutiques, despite strong growth in multi-brand wholesale watches. However, the brand re-entered India in 2014, recognizing the country's potential as the third-largest and fastest-growing Asian luxury market, projected to reach $85-90 billion by 2030. Though Bulgari has opened just two boutiques in Delhi and Mumbai so far, its CEO Jean-Christophe Babin remains optimistic about India's long-term prospects driven by economic development and a vibrant customer base interested in high-end jewellery.

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

🍿 Entertainment, Entertainment, Entertainment

Source: Forbes

And that’s all for today folks - have a lovely day and we’ll see you tomorrow.