Month: November 2020

Jawa Motorcycles

Shabbir Chunawalla

Jawa was created by Frantisek Janecek in Prague, Czech Republic. The first model of the Jawa bike was introduced on October 23, 1929. In India Jawa sale begins in 1960 under a license, but the company stops production in 1996. It had become a defunct brand both in the home country and India. Jiri Grele sold the brand in October 2016 to Classic Legends in India, a Mahindra group company. Jiri had one request for the new owner — please bring the brand to its homeland — the Czech Republic. After 90 years people there may be riding the Jawa motorcycle. In India, Jawa booking in India commence in November 2018. In December 2018, Classic Legends says that models sold out till September 2019.

In the Czech Republic, the old factory has been converted into a museum. In September 2020, Classic Legends shipped close to 750 models to the Czech Republic and this lot has been picked up by historians and photographers. It is a national pride for them.

After the production in India is enhanced, next batch of Jawa would be shipped to Czech Republic. The production will be stablilised in the first quarter of 2021.

5G

Shabbir Chunawalla

Indian National Digital Communication Policy 2018 realises the significance of 5G. It states the convergence of a cluster of technologies including 5G will accelerate and deepen digital engagement.

5G goes well with the concept of Industry 4.0. In the absence of 5G, there will be significant gaps in enabling Industry 4.0.

5G will go a long way in providing modern healthcare. It enables remote surgery, patient monitoring and tele-consultation. In agriculture with 5G, there would be better crop monitoring with sensors. Smart agriculture requires data analytics. Smart cities and smart phones also depend on IoT. Defence too benefits from AR and VR. 5G enables advanced defence training. Communications will prove beneficial in maintaining law and order. It helps in online education.

Spectrum pricing must be affordable. There are right-of-way (ROW) challenges. There should be data protection laws. Telecom should be treated as a key infrastructure.

Numberless Cards

Shabbir Chunawalla

Our payment systems are inclined towards digitisation. That requires secure technology. Numberless cards are a step in this direction. Such cards, even if they are lost, carry reduces risk of information leakage. Payments are authenticated by a PIN, having one time use. Some are authenticated differently. Such cards can be deactivated on the user’s app.

FamPay has launched India’s first numberless card — Fam Card . It is a version of debit card. It is meant for teenagers. Grab has launched Asia’s first numberless card — GrabPay Card. It is in collaboration with MasterCard. Apple too has its own numberless credit card. Curve is a new numberless credit card. Banco has launched its first number less credit card in Mexico. Such cards can be blocked through a secure app on your smart phone.

General Purpose Technology (GPT) Revolutions

Shabbir Chunawalla

GPTs are technologies that dramatically alter societies as well as economic dynamics. There were three GPT waves in past. The first is the invention of steam engine in the 1700s. The second is the generation, distribution and application of electric power that began in 1890s. The third is the rise of information technology (IT) which began in the 1970s. We missed the three GPTs and the western world pulled ahead. AI or artificial intelligence is the fourth GPT and it will be all pervasive in a decade or so. The US leads in terms of AI patents. China is trying to catch up. The EU has been doing rigorous research in AI. India must have a long term plan to avail of the benefits of AI. Another technology viz. Quantum Computing moves out of the labs to the real world ten years hence.

Inverted Duty Structure : IDS

Shabbir Chunawalla

India must correct its import duty structure on Key Industrial Raw Materials (KRMs) which include customs, anti-dumping or safeguard duties. Duties on KRMs must be low and on value added products (VAPs) high. However, in India the KRMs attract high duty and the VAPs low duty. This anomaly is called Inverted Duty Structure (IDS).

High import duty on KRMs closes global sourcing option for the user industry. Expensive KRMs make products expensive. Exports become uncompetitive. As there are low duties on VAPs, the user industry becomes vulnerable.

The cost of producing a KRM is high in India due to high prices of factors of production. Other countries with excess production capacity try to dump subsidised KRMs in India. KRM producers in India seek protection. The govt. responds by introducing antidumping duty. FTAs or free-trade-agreements increase the duty gap between a KRM and corresponding VAP by allowing custom duty free on most VAPs.

If duties are lowered on KRMs, cheap imports will replace large domestic industries.

We have to understand that all KRMs do not need protection from imports.

Corporates 2.0 Profit with a Purpose

Shabbir Chunawalla

Milton Friedman was of the opinion that the principal objective of a business enterprises is to generate economic returns to its owners. Later the purpose expanded from maximising returns to just shareholders to all the stakeholders — employees, customers, suppliers and communities. Business must deliver value to its customers. It must invest in its employees. It has to deal fairly and ethically with its suppliers. It must support the communities in which it works or operates. As shareholders provide the capital that allows the companies to invest, grow and innovate, it must generate long term value for them. Of late, the business is expected to work in sync with the governments and focus on goals such as hunger, health, gender sustainability and such other public goals. There should be development with a human face.

Investors also should not be obsessed with quarterly results but look long term and beyond numbers. Instead of a shareholder governance committee, we now have a stakeholder engagement committee. This shift from shareholder to stakeholder is easier said than done. CEOs have different opinions. If there is accountability to everyone, it means accountability to none.

Repurposing business has to take into account the social environment in which it operates.

Towards Better Capitalism

The old theory of business is to earn profits, but has been criticised. The new theory of business is to make it sustainable or make it socially responsible. Many new ideas such as Conscious Capitalism or Inclusive Capitalism have been invented. Many organisations have adopted these ideas. It could be called Stakeholder Capitalism.

There are five key ideas which serve as building blocks of the new theory of business. The usual dichotomies of business are given up. Instead the word AND replaces these dichotomies.

The first idea is that a business is based on both profits AND purpose. It is not either-or but both. A business survies on the basis of hard work, an inspiring vision.

The second idea is to serve the interests of both the shareholders AND stakeholders. Apart from shareholders, the business must create value for the suppliers, the employees, the customers, the society as a whole and its communities.

The third idea is to treat business as societal institution AND a market institution. Social trends and issues are important. At the same time market forces are important. We have to consider the physical environment. Business can contribute to many social issues.

The fourth idea is to have human face while pursuing economic interests. Business is both about humanity AND economics. Business has to be sensitive to natural calamities.

The fifth idea is to put Ethics AND Business on par. These are not contradictory terms.

To sum up, business must have purpose, stakeholders, societal impact, humanity and ethics. These are the five ANDs of Stakeholder Capitalism. R. Edward Freeman is the father of the Stakeholder theory. His son Ben Freeman adds the other components — profit and purpose, humanity and economics, business and ethics can go hand-in-hand.

RCT : Randomised Controlled Trials

Shabbir Chunawalla

RCT is also known as Field Trials. Economics is an inexact science of social behaviour. Each theory or study can be subject to biases, critiques and prejudices.

RCTS are conducted to measure comparative effects of a cause, that is a policy intervention randomly administered to a select group (treatment group) while keeping the behaviour or status of a compared group (control group) constant . It is a methodology of difference in differences — DID regression method. Other methods used in field experiments are propensity score matching and regression discontinuity design.

RCT findings in a certain region or for a certain population could not be extended to other regions or populations. There are contextual differences. Randomising the intervention raises ethical and social issues. Besides, RCTS are expensive. Correlation with other factors can affect the outcome. Treatment or intervention is independent — that is the assumption in RCT. It is called orthogonality condition. It must be satisfied, and not only assumed.

DD Diamond Jubilee

Shabbir Chunawalla

DD turned 60 in September 2019. It was its Diamond Jubilee. DD reached its acme in the 1980s and continued to attract audiences in the 1990s. Despite being a default choice as it was the only channel, it encouraged creativity, innovation and experimentation.

With the advent of satellite TV in the 1990s, talent shifted to it. Programming became a ballgame. Reality shows appeared one by one. All programmes were conceptually and texturally different. DD was not in a position to compete. It enjoyed a monopoly over news for decades as the public broadcaster. In the 2000s, it ceded space to other channels even in news transmission. Thus DD just became an instrument to air government’s viewpoint.

Even today DD has 67 studios, 1400 transmitters, 32000 employees, 7 national channels, eight state specific networks and seven regional state channels.

It has DD Free Dish as its DTH channel. No private broadcaster comes close to DD in terms of reach and infrastructure. DD could be made autonomous and can be left to compete with the private channels. It could become a world-class public broadcaster on the lines of BBC.

Triple Helix Model of Innovation

Shabbir Chunawalla

This model was developed in 1990s by Henry Etzkowitz and Loet Leydesdorff. It refers to constant interactions among academia, industry and governments. It aims at encouraging innovation for development. Here industry, university and government join hands.

Triple helix covers creative destruction, a concept coined by Joseph Schumpeter in 1942. It means killing older innovations by introducing new innovations. Creativity can produce destructive consequences and cannot be avoided.

Triple helix is best illustrated by the Silicon Valley. Here the government provides the infrastructure and flexible financing and tax incentives (in California). New tech companies flourish in this cluster. The academia provides the manpower and research inputs. All three benefit. It gives rise to consumerism, benefits the economy and makes the world electronic savvy, reducing dependence on paper.

Satellite Internet

Shabbir Chunawalla

Bharti expects to launch satellite internet services in India by early 2022 using the OneWeb satellite constellation. It expects co-operation from ISRO. OneWeb will have 648 low-earth orbit (LEO) constellation of satellites, 1200 kms apart, covering every inch of the globe. It has joined hands with the UK government to acquire OneWeb company backed by Japan’s Softbank. The company has gone bankrupt. The Bharti-led consortium would revive the company. The trials are expected in Europe.

There are areas in India where fibre connectivity or terrestrial radio connectivity are challenging, e.g. Andaman & Nicobar islands, deserts of Rajasthan, forests in MP. Satellite connectivity will be helpful here to provide broadband Internet access.