Nadella’s micro-gift to India

good morning. Last week, we talked about India’s GDP slowdown, with official estimates putting GDP at 6.4%, the slowest year since the pandemic. We will spend the coming weeks assessing the impact this will have on the investment and consumption environment and what the Government’s budget proposals will look like to boost growth. Today’s newsletter also covers the defense sector bull run in Indian equities. But before that, Microsoft’s chief executive is on a whirlwind tour of India, leaving behind a trail of gifts. Good news, but could it be any better?

Seeing a gift horse in its mouth

Microsoft CEO Satya Nadella visited India earlier this week and dropped off presents like a belated Santa Claus. Local news reports have revealed the company’s planned $3 billion investment in India over the next two years. Most of the funding will go toward developing artificial intelligence and cloud services on Azure, Microsoft’s cloud computing platform, and part of it will go toward training 10 million Indians in AI skills by 2030. You can also guess. Nadella explained that this is the biggest expansion Microsoft has ever made. India.

Nadella is excited about the level of development activity going on in India. Approximately 17 million Indian developers use GitHub. GitHub is a platform that allows developers to create, store, and share code, and was acquired by Microsoft in 2018. He predicts that Indians will be the largest community on GitHub by 2028. Indian developers are working on over 30,500 generatives. AI project.

These numbers are interesting, but not staggering. The global AI arms race is clearly being fought between the US and China at the moment. U.S. technology companies are hoping that the incoming Donald Trump administration will not impose any regulatory drag on AI development to stay ahead of China. These groups include Microsoft itself, whose president, Brad Smith, wrote an impassioned blog post on the subject earlier this week.

While some Indian companies are doing some interesting work in AI, they are currently far from making any major advances in technology or product development that would make them world-leading companies. Microsoft’s $3 billion investment in India should also be considered as part of the company’s global plans. The company plans to spend $80 billion on data center development around the world this year, more than half of which will be invested in the United States.

My view may seem negative about India to some, especially those who think Mr. Nadella should take this opportunity to reap the praise he has heaped on the country. I think my view is that of a concerned parent who encourages their child to prepare before an exam. When it comes to investing in our technological future, it pays to be ambitious and ambitious at this point rather than sit back and be complacent. All I do is look at Microsoft’s gift horse in my mouth and realize it’s too small.

Do you know an Indian company doing groundbreaking work in AI? Let us know at indiabrief@ft.com.

Other news you need to know

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Manmohan Singh was “one of the greatest people I have ever known,” writes the FT’s Martin Wolff in a tribute to the former prime minister.

Will AI save online dating?

Over the weekend, we recommend this review of House of Huawei by Eva Dou, an authoritative account of the secretive Chinese technology company.

Apple’s $1 billion offer was not enough to lift Indonesia’s ban on the iPhone 16.

China is allocating $11 billion to subsidies for rice cookers and microwave ovens to boost consumption.

defensive side

The ‘Make in India’ initiative is literally bearing fruit in the arms and arms industry. Stocks of companies involved in defense production are soaring. This trend has also caught on in the Indian mutual fund industry, with four major asset management companies launching funds specifically focused on investing in this space. Companies such as Hindustan Aeronautics, missile maker Bharat Dynamics and Mazagon Dock Shipyard, the country’s largest naval shipyard, are seeing a swell in orders as the Modi government encourages the military to shop locally. . As a result, stocks significantly outperformed the index.

While state-owned companies remain the largest manufacturers of defense equipment, large Indian conglomerates such as Adani Group, Larsen & Toubro and Tata Group have started or expanded investments in the sector in recent years. . India, which has been the world’s largest importer for more than two decades, hopes to eventually become an exporter in the arms business.

These are great developments not only for Indian manufacturing but also for the defense industry. I’m not that enthusiastic about defense funding. The major companies in this sector are government-owned and there is little free float in the market. As major fund houses buy and sell this limited float, large price swings can occur, and no one knows whether individual investors are aware of these risks.

Launching funds around sector themes and quickly raking in new capital is an old habit in the asset management business, something I remember writing about 20 years ago when I was a young reporter covering the industry. are. Sometimes it leads to finger movement from the regulator, but after that it works normally. The more things change, the more they stay the same.

go figures

As the software load on cars increases, US automakers are facing an increase in the number of software-related vehicle recalls.

read, listen, see

I’m reading “Character Limit: How Elon Musk Broke Twitter” (I love the direct and to-the-point title) by journalists Kate Conger and Ryan Mack . I first heard about this book through the podcast “Elon’s Spies.” This book provides a fascinating and sometimes frightening insight into how the world’s richest people operate. This book is especially chilling at a time when he is challenging the global political order and routinely insulting world leaders.

I also enjoy JioCinema’s ‘Why Women Kill’ series. This is a comical and clever depiction of 30 years of marriage. Warning: The men in the show don’t end up looking very good.

buzzer round

According to Donald Trump, who runs the Panama Canal?

Send your answers to indiabrief@ft.com and check out Tuesday’s newsletter to see if you were the first to get it right.

short answer

Which Indian IT major do you think will perform best this quarter? Here’s how to vote: TCS, whose results arrived yesterday, seems to be the clear favorite. To discover the Nostradamus among us, we will have to wait for HCL Tech on Monday and Infosys next Thursday.

Thank you for reading. India Business Briefing is edited by Tee Zhuo. Send your feedback, suggestions (and gossip) to indiabrief@ft.com.