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Good morning. News from Washington suggests an interim trade deal could be signed before July 8, the date on which Donald Trump’s “reciprocal” tariff of 26 per cent is scheduled to kick in. We’ll hopefully learn more once commerce minister Piyush Goyal and his team are back in New Delhi.
In today’s newsletter, we take a look at the woes of Asian Paints, which for a long time was the unchallenged leader in its industry. But first, we have an update on Apple’s plans in India.
Apple doubles down
Apple looks to be doubling down on its manufacturing plans in India, despite Donald Trump’s demands that the company reshore its production facilities to the US.
The tech company’s key contractor, Foxconn, is setting up a $1.5bn component plant near Chennai in Tamil Nadu to make display modules for iPhones, according to the FT’s latest scoop. Although Apple does manufacture outside China in places such as Vietnam and Malaysia, India has emerged as the biggest destination in its efforts to diversify its supply chain. Last month, the FT reported that all US-bound iPhones would eventually be made in India.
For Foxconn, now a leading manufacturer of electronics in India, this is the second big announcement of the month. Last week, the government approved the Taiwanese group’s Rs37bn ($450mn) chip assembly unit at Jewar in Uttar Pradesh, to be set up in collaboration with HCL Technologies. This is India’s sixth semiconductor plant and is expected to create 2,000 jobs. Overall, Foxconn is estimated to be employing some 80,000 people in India.
The Indian government’s efforts to attract large multinational companies to manufacture in India is certainly bearing fruit in the electronics and semiconductor segments, with the government committing an additional $2.7bn to the production-linked incentive scheme for the sector last month. But the scheme has not taken off in other industries such as textiles and pharmaceuticals. When the US president first started his barrage of tariff announcements, there was a hope that India could become a supply hub across various sectors.
Things have become both clearer and more unpredictable. With the US announcing trade deals with key partners like the UK and China, we have a better idea of the sectors where India might have an opportunity. At the same time, making decisions about capital investment based on Trump’s decisions is always a fraught process, since he is prone to changing his mind. Global trade seems to be now operating in 90-day cycles based on unpredictable levy reprieves. Instead, the non-electronics export sectors are looking to India’s own trade deals with large partners to see where the potential growth markets lie.
“China plus one” is a great strategy on paper. But for it to really work, we will need big companies to stand up to Trump’s threats. So far, only Apple seems to be holding its ground.
Join us next Wednesday for an subscriber-only webinar as FT experts discuss the US-China showdown.
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Asian Paints is blue
It has been a tough few quarters for Asian Paints, a market leader that had for several decades seemed untouchable. Its lacklustre performance has prompted Reliance to look for a buyer for its holdings in the paintmaker, with local media reporting that Mukesh Ambani had appointed Bank of America to manage the sale of a 4.9 per cent stake now worth nearly Rs110bn ($1.3bn).
Asian Paints is facing several challenges, including slowing demand, rising input costs and growing competition. The company reported a 45 per cent year-on-year decline in profits in its most recent quarterly results. Its biggest bugbear is Birla Opus, a fast-growing upstart owned by Kumar Mangalam Birla, which has grabbed some 7 per cent market share within a year as well as some personnel. On top of this, JSW Paints is reportedly closing in on a $1.4bn deal to buy 75 per cent of the Dutch group AkzoNobel’s holding in its India subsidiary, in what would make Sajjan Jindal’s company the fourth-biggest player in the market.
After reporting a bigger than expected erosion in profits, Amit Syngle, chief executive of Asian Paints, called the market conditions a “double whammy” of slowing demand and intense competition. The company is trying to seek new markets by pushing into rural areas, where consumption demand is growing at a faster clip, and taking on larger infrastructure projects.
A couple of analysts I spoke to suggested that Asian Paints had become complacent, after staying in a comfortable position as the market leader for so many years. Product innovation was sagging, it was mostly business as usual in its distribution network, and Birla Opus came in with better technology and easier ways to provide customers with the shades they wanted. To be clear, Asian Paints still has more than 50 per cent market share, but it is unlikely to hold on to that in the near term.
When I was in business school, more than a couple of decades ago, the success story of Asian Paints was an important case study in marketing. The next one is being written now. Whether it manages to weather this storm and re-emerge a winner, or eventually lose its market leadership, both will make for interesting analyses.
Go figure
With six matches to go before the qualifiers, the contours of this edition of the Indian Premier League are taking shape. Here are the current top three from the points table. Five-time winner Chennai Super Kings are having a disastrous season and are at the bottom.
Read, hear, watch
I am in the middle of reading Katie Kitamura’s A Separation, a story of a woman’s journey to Greece in search of her estranged husband who has gone missing. It’s a mystery novel, if you must reduce it to its plot, but it really is a quiet meditation on life and relationships and what it means to be an outsider. In both this novel and Kitamura’s other work, Intimacies, the protagonist is a translator, who has to interpret not just language but also societal and behavioural codes.
For the weekend, however, I am going to set it aside and dive right into the recent International Booker winner Heart Lamp, by Banu Mushtaq and translated by Deepa Bhasthi. The book is a collection of short stories and Mushtaq is the first author writing in Kannada to win the prize. I have had a copy for a few months now, and it’s quite a shame that I haven’t got around to reading it. Here’s our critic’s review, if you’re interested.
Buzzer round
Testifying during a court hearing, what did top Apple executive Eddy Cue say would probably become obsolete in 10 years’ time?
Send your answer to indiabrief@ft.com and check Tuesday’s newsletter to see if you were the first one to get it right.
Quick answer
On Tuesday, we asked: Do you secretly use AI for your work? Here are the results. Some 70 per cent of you do!
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
