BRANDWAGON, P9 INTERNATIONAL, P12 BACK PAGE, P14 RUN-UP TO ELECTIONS BEIJING MEETING THE BIG PICTURE Outdoor ad spend by parties expected to cross `1,000 crore US, China need 'tough' conversations, Yellen tells Chinese premier Qiang Upskilling students to meet demand: Course correction for smaller colleges LUCKNOW, MONDAY, APRIL 8, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 17 NO. 105, 14 PAGES, `12.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E IN THE NEWS VISTARA CUTS 10% OF ITS DAILY FLIGHTS IN APRIL VISTARA SAID ON Sunday that it will be cancelling 10% of its daily flights in April to provide a much-needed buffer in pilot rosters. It typically operates 350 flights a day. ■ PAGE 4 CROP INSURANCE COVER EXPANDS 27% IN FY24 WITH A FEW STATES opting to rejoin the Pradhan Mantri Fasal Bima Yojana, the number of farmers covered touched a record 40 million last fiscal, up 27% on year, reports Sandip Das. ■ PAGE 2 LATERAL HIRINGS IN PUBLIC SECTOR BANKS SPUR DEBATE THE RECENT EXITS of senior officials from public sector banks, hired from the private sector, has sparked debate about the relevance of such lateral hiring, report Piyush Shukla & Sachin Kumar. ■ PAGE 6 NEWWIPRO CEO PALLIA SEEN TO BE A GOOD BET THE APPOINTMENT OF Srinivas Pallia as CEO of Wipro has been viewed positively by analysts, as he has been chosen from within the firm, reports Padmini Dhruvaraj. ■ PAGE 4 FE S P E C I A L S ■ EXPLAINER, P6 How India is bracing for more heat waves this summer Extreme heat conditions could result in power demand spikes and impact summer crops ■ PERSONAL FINANCE, P7 Invest in corporate bond funds for higher yields Hold these for 5 years or more to minimise impact of market fluctuations PRODUCTION LINK MAY BE REJIGGED PLIs set to get a mega makeover Focus on R&D, carve-out SCHEME OVERVIEW for MSMEs, inclusion of `3 trillion `40 trn more sectors on the cards Investment committed Incremental by firms under 14 PLIs `1.07 trn PRASANTA SAHU New Delhi, April 7 WITH COMPANIES GETTING just `6,0007,000 crore as production-linked incentives (PLIs) after investing `1.07 trillion in the last two years, the Narendra Modi government is looking to revamp the whole architecture of the scheme,to ensure that it performs better. According to sources, a key change that it seeks to bring about if returned to powerafter elections,istostaggerthereleaseoftheincentives in such a manner that significant amounts are received bythe beneficiaryfirms even as theymake reasonable levels of investments.Currently,firmsneedtowaitforincentives till the investments lead to incremental rise in output/sales. Additionally,thecriticismthatPLIsaretargeted at large firms may be addressed with a “carve-out” for MSMEs. Besides, the restructuring might also include new incentives for research & development forcreating a manufacturing ecosystem,and newPLIs forsectors thatwould need such incentives the most but are now left out,the sources added. The advancing of the funds disbursal would be a significant departure from the basic concept of PLIs,which,as the name suggests,allowincentives to be given to the firms only when specified production milestones are achieved by them.Incentives may now be bundled together as a package with a portion Investments made in two years `6,000-7,000 cr sales target by firms `8.69 trn Incremental sales achieved in two years Incentives disbursed in the last two years `2 trn Startup funding: Snow is melting, slowly but surely AYANTI BERA Bengaluru, April 7 E-COMMERCE PLATFORM MEESHO, quick commerce company Zepto and fintech firm Navi are all reportedlyin talks to raise around $300 million from investors. If these funding rounds materialise, they will be among theveryfewlarge rounds in the last one year. Does INSIDE this signal that the startup funding win- Seed stage ter is giving way to a funding on funding spring? the rise for Industry veterans AI startups agree things are getting back on track,but ■ PAGE 4 what is missing is the irrational exuberance one saw in the past when capital chased startups and cash burn became a fashionable business model. This means companies withasustainableapproachtogrowthand DEEPAK GUPTA, GENERAL PARTNER AT WEH VENTURES HARSHA KUMAR, PARTNER, LIGHTSPEED IF WE KEEP PUTTING $25 BN INTO THE MARKET EVERY YEAR FOR THREE YEARS, WE WILL HAVE SERIOUS PROBLEMS DOWN THE ROAD THE GOOD PART IS VALUATIONS TODAY ARE A REFLECTION OF WHERE A COMPANY IS IN TERMS OF REVENUE, PERFORMANCE profitable unit economics will get a preference over those with a “growth-at-allcost”approach. “The fundamental question is how much capital can ourmarketabsorb in the future,” said Deepak Gupta, general partner at WEH Ventures, an early-stage venture capital fund. Continued on Page 5 Small pizzerias grab bigger share Incentives committed by the govt by FY30 VIVEAT SUSAN PINTO Mumbai, April 7 to be released the time of investing itself, the sources said. Companies have invested around `1.07 trillion in two years through December 2023 underall PLI schemes,orabout 40% of the `3 trillion committed.The trend is barely par for the course, with big lags in investments in manysectors such as high-efficiencysolarPV modules,automobiles,ACC batteries and textiles that were supposed to lead the pack. Continued on Page 5 THE PIZZA MARKET in India appears to be mirroring a trend visible in the fastmoving consumer goods (FMCG) industry, as food inflation and the need for more options drives consumers towards cheaper and new alternatives. Small and regional pizza players are eating into the share of bigger rivals, data sourced from the industry indicate. This comes at a timewhen players such as Jubilant FoodWorks, the master franchisee of Domino’s in India, are responding with a brandrefresh,morecombooffersandnew pizzatoppings.Theriseoffoodaggregators such as Swiggy and Zomato, say experts, has also contributed to the growth of smallerpizzabrandsoverthelastfewyears. Conversationswithanalystsandindustry executives indicate that local pizzerias and regional chains nowconstitute nearly 30% of the `8,300-crore pizza market in India. Five years ago, this number was under 15%. Moreover, local chains may continue gaining share as the market remains competitive,experts said. GROWING LARGE Pizza market size in India `8,300 cr ■ Price, new toppings, need for more options among factors for growth Market share of local chains: 30% against 15% five years ago Continued on Page 11 Overhaul of treaties soon to woo foreign investors MUKESH JAGOTA New Delhi, April 7 THE FINE PRINT TO CREATEAmore investor-friendlyclimate, the government has decided to revisit its approach to bilateral investment treaties (BITs). The move is triggered by the fact that the BIT text adopted by India after comprehensive review in 2016 has found few takers among key trading partners. According to official sources, the prime minister’s office has given the task of reviewing the 2016 BIT model to the ministry of commerce and industry. The ministry will kick-startwider consultations on the subject, withameetingwithlawyersandotherexperts on Monday,a senior official said. While the 2016 model sought to plug the loopholes in the previous text, especially on the taxation front, the ministry has been asked to examine the concerns of investors. Expertscitelongerperiodmandatedunder the current text for dispute resolution through locally available means,before seeking international arbitration, as one of the turn-offsforglobalinvestors. Also,theBITtext does not provide redress on matters of taxation,whichcouldputinvestmentsinjeopardy. Only seven BITs have been signed on the basis of the 2016 text,while NewDelhi is seekingsuchpactswithatleastanotherthreedozen ■ Only 7 BITs have been signed on the basis of 2016 model text; govt is seeking pacts with at least three dozen more countries ■ Longer period for local dispute resolution before seeking international arbitration a turn-off for global investors ■ PMO asks commerce ministry to review text; ministry will kick-start consultations with a meeting today countries. Its contours have also become an impediment in free trade agreement negotiations in recent months,includingwith the UK. BIT are designed to give protection to investorsfromsignatorycountriesineachothers’jurisdictions,andtypicallyincludeamechanismforsettlingdisputesbetweeninvestors. Continued on Page 5 LOOKING BEYOND NVIDIA Wall Street on the hunt for AI winners in emerging markets SRINIVASAN SIVABALAN April 7 SOME OF THE world’s biggest money managers are searching for the next wave of artificial intelligence winners beyond the US. At a time when the global euphoria about AI has propelled a three-fold surge inNvidiaanda50%jumpinakeyUSindex for semiconductor manufacturers in less than a year, investors are pointing toward emerging markets for better value and a bigger pool of options. The asset management arm of Goldman Sachs Group said it is looking specificallyforstakes in the manufacturers ofAI supply-chaincomponents,suchascooling systems and power supplies. JPMorgan Asset Management favours traditional manufacturersofelectronicsthataremorphing into AI leaders, while investment managers at Morgan Stanley are betting on players where AI is reshaping business A SEAT AT THE AI TABLE, AT HALF THE PRICE Emerging-market AI valuations are much lower than in the US (X) Emerging-Market AI valuations US AI valuations Nvidia Microsoft Micron Tech. Meta Platforms TSMC Samsung Electronics Hon Hai SK hynix 0 5 10 15 20 25 30 35 Source: Bloomberg; Note: Price-earnings ratio (blended-forward 12 month) models in non-tech sectors. “We seeAI as a growth driverin emerging markets,”said Jitania Kandhari,deputy chief investment officer at Morgan Stanley Investment Management.“While we have previouslyinvested in directAI bene- ficiaries like semiconductors, going forward itwill be keyto look forcompanies in different industries that are adoptingAI to enhance earnings.” Continued on Page 11 Lucknow