Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Hope life is good.

Today we’re diving into -
- Indian government’s plans to woo EV-makers,
- Mass Indian travel for college in the States,
- And some breezy cool inflation numbers.

Our read time today is 4 minutes and 54 seconds - faster than Dubai Police nabbed tried to nab everyone’s crackers. 🧨

Let's dive in. 👇

Market Vibe Check

India tries wooing Tesla & other EV companies. ⚡

TLDR -
- Tesla & the govt. are negotiating on waiving import tax for “starter” Tesla vehicles.
- They can produce a car for sale below $10k, PERFECT for the Indian market.
- Government is also hunting for bids for a $1bn battery making project.

Bijlee bijlee…

Indian policymakers are going all-out to invite foreign electric vehicle companies to set up their backend in India.

1 - MASSIVE tax cuts on EV imports

Anyone who lives in India knows how much of a pain in the backside it is to import a vehicle at a decent price.

You have to shell out 100% import tax, then easily another 20-40% more in red tape depending on which car you’ve bought.

A 1Cr car can end up costing close to 2.5-3Cr, which hampers a lot of the “aspirational” upper-middle class spending.

Tesla has the manufacturing skill to produce a top-class EV which sells for under $10,000 - but India does not have the regulatory infrastructure to let them sell it at that price.

Elon Musk is meeting with Piyush Goyal to sort this out. Early talks show that the Indian government is gonna reduce taxes from 100% to 40% to try woo these EV makers.

They’re also looking to push for a 0% import tax for the next 5 years provided any foreign firms who avail of this also set up manufacturing plants in India.

Win-win.

2 - A $1 billion battery making program

The government is also hunting for businesses to bid for a $1bn subsidy which involves the production of EV batteries.

The folks that win this will be given the $1bn to cut their costs while producing a battery plant with a 20 gW/h capacity - boosting India’s current capacity of only 260 gW/h.

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India’s EV market is at a SUPER nascent stage. They only made up 1.3% of all passenger vehicles sold last year, and are also the fastest-growing segment.

There is a burgeoning middle class, who are not averse to spending $6k-8k for a quality EV. Any solid manufacturer which builds a brand amid the noise is gonna win BIG in this electric arms race.

Desi dhamaal returns to American college campuses. 🎓

TLDR -
- The number of Indian students studying abroad surged 50% last year.
- This is a very ripe market with very few providing quality at a very high price.
- India has cracked the coaching side (Aakash/Allen), now they need to crack the more holistic side.

Indian students going abroad is a multi-billion dollar market which just picked up some more steam.

This year, almost 50% more Indian students went abroad to study compared to the year before - which is a crazy number. (2022; 750k kids abroad, 2023; 1.05m kids abroad).

There are two major takeaways from this.

1 - The rise of a multibillion dollar industry

Anyone who can afford to send their kids abroad is a high-ticket-spender.

The cost of a year of undergrad studies in the US is anywhere from US$90-120k. Most families with this kind of spending money spend close to the same amount in GETTING their kids to these top unis, be it through test-prep agencies, college counselors, or lavish ECAs/nonprofits.

This leaves a massive gap in the market for someone who can provide these quality services at scale. There are always players who do this on a small 1-to-1 student level but very few businesses who use this inelastic demand to build a multimillion dollar company.

2 - The relative lack of “HYPSMs” in India

India also has a serious lack of quality educational institutions in comparison to it’s population.

Out of the IITs/IIMs, you will be very hard-pressed to find colleges in India that carry the same prestige and prospects that their equivalents in the US do.

Liberal arts institutions (Ashoka, Flame, KREA) were a trend that briefly popped up, but then slowed down just as quickly.

The middle & upper classes spend an outsized amount on education, because padhai-likhai is majority of India’s passport to success, and because brands matter.

Tame inflation gives RBI some more breathing room. 😤

Inflation in India slowed for the 3rd straight month in October - giving policymakers a little more wiggle room.

RBI has kept their rates unchanged for the last 4 meetings in a row, which means that their job of front-loading interest rate hikes has worked decently well.

Food prices, which make up about half of the inflation basket, rose 6.6% in October from a year earlier, a tad lower than 6.6% in September. Clothing and footwear costs rose 4.3%, while housing prices accelerated 3.8%. Fuel and electricity costs fell 0.4%.

Election season is coming up, and low prices are a BIG priority for Modi & Co.

Time will tell…

In other news… ☕

More hedge funds hop onto the “short oil” trade (BBG)

Electric taxis hit the skies of Lower Manhattan (TC)

Dubai air show = Middle Eastern carriers ink BILLIONS in deals (FT)

Exxon starts lithium production to cash in on a new trend (CNBC)

Nvidia drops a new top-end, AI-focused chip (Mint)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai