Good morning! I hope you enjoy reading our newsletters as much as we love writing them. On March 6, we informed you about The Signal’s merger with The Core, and promised to keep you updated about new developments as and when they happened. As a result of the integration and our increasing focus on original content, we’re shortening the length of our daily curated newsletter. This is as much an effort to optimally use editorial resources to produce deeply reported originals, which you can read on The Core, as reaffirming our promise of a quick morning read to prepare you for the day. I would love to hear what you think of this change. Please write to us on hello@thesignal.co

The Market Signal* 

Stocks & Economy: One consequence of the Supreme Court prising open the opaque ledger of electoral bonds is foreign investors will get a peek into the political nexus of companies they might be investing in. They usually find it hard to make sense of the Indian way of doing business but these revelations will help them connect some dots and give an idea of the cost at which projects are being set up. These factors could eventually impact valuations. 

Japanese stocks raced ahead in morning trade even as the rest of Asia opened mixed. The Bank of Japan begins a crucial two-day meeting today at the end of which it is expected to end its ultra long negative interest rate policy. 

The impact of the electoral bonds and announcement of the election schedule will likely begin to reflect on trade as more information and analyses emerge. The GIFT Nifty indicates a flat start for Indian equities. 

CORPORATE

Adani Ensnared In FCPA Probe

Gautam Adani is not out of the woods yet, it seems. The US has launched an investigation under its Foreign Corrupt Practices Act to ascertain whether any of the Adani Group companies, officials or Gautam Adani himself paid off government officials in India to bag contracts.

Just when…: The probe comes when the group had just recovered from the bruises inflicted by short seller Hindenburg Research’s January 2023 report that at one point wiped out $150 billion from its market cap. 

US investigators are also chasing Azure Power Global, an Adani Green Energy rival, after whistleblowers blew the lid on its practices in India. Both companies had won projects from the state-run Solar Energy Corporation of India. 

FCPA India roster: A slew of American corporations, including Oracle, Cognizant, Walmart, and Mondelez, have had to cough up millions under the FCPA after allegedly being caught bribing officials in India. 

🎧 The US is investigating Adani Group over bribery allegations. Also in today's episode: What’s behind Bitcoin's (latest) bull run? Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

POCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

Today, he speaks to Shankkar Aiyar, veteran economic journalist and author on what is the most important economic issue facing some 970 million voters as India goes to polls on April 19.

MANUFACTURING

Global Toy Industry’s New Playpen

When the government decides to set the rules, even underdogs win some games. Toy exports from India jumped 239% between FY15 and FY23. 

Walled industry: The main reasons are global toymakers looking for an alternative to China and India raising tariff walls. India decreed that toys unapproved by the Bureau of Indian Standards cannot be sold in the country. It also raised levies from 20% to 70%. As a result, imports fell 52%. 

Global toy makers’ supply chain diversification pushed brands, including, Hasbro, Mattel and Spin Master, to source from India. Manufacturers such as Italian Dream Plast and Microplast are now making here. Exports account for 60% of sales of local manufacturers such as Funskool. Companies such as Playgro Toys India are looking for more land to expand their capacity. 

The problem with growing behind tariff walls, however, is that if China bounces back, the business will evaporate.

PAYMENTS

E-Rupee Beta May Need Big Tweaks

It’s been more than a year since the Reserve Bank of India test-launched its central bank digital currency (CBDC), the E-Rupee.

Central banks the world over began to think of CBDCs during the pandemic when crypto currencies were riding the popularity wave. The craze was so high that private tokens were seen as a threat to global banking. 

The RBI joined the bandwagon in December 2022 even though India was a global leader in digital payments with the hugely successful Unified Payments Interface (UPI). Its digital payments index, which indicates adoption, shot up from 217.74 just before the E-Rupee was launched to 418.77 in September 2023. It hardly stood a chance against the array of payment apps, The Core’s ground reporting showed. 

The RBI will soon enable offline E-Rupee transactions to test its feasibility in areas with poor or no Internet connectivity. 

The Signal

Economic policy and instruments are difficult to design because there is no telling when human beings will behave rationally and when there will be no logic to their actions. The E-Rupee, however, is an innovation where user rationality is on full display. It’s not easy to dislodge a simple, ubiquitous, free payment instrument that already mimics cash payments minus the anonymity. But remember, banks are keen that the RBI allows them to recover their cost. If that happens, it will only be rational to expect users to switch from UPI to a free token. Add private sector innovation, and it might fly.

FYI

On hold: India’s free trade agreement with the UK will not happen until after the seven-phase general elections are over. 

Ocean patrol: Indian warship INS Kolkata took on 35 Somali pirates, who had hijacked Bulgarian ship MV Ruen, and forced them to surrender and free the 17 crew members they held hostage.

Meth platform? US investigators are probing whether social media platforms such as Facebook and Instagram are doubling up as drug dens.

Shock and awe: Former President Donald Trump has said that if he reaches the White House, he would double tariffs on cars made by Chinese companies in Mexico to 100%. 

Upvoted: Reuters reports that Reddit’s IPO is currently oversubscribed by up to five times, increasing the likelihood that the company will reach its targeted valuation of $6.5 billion.

THE DAILY DIGIT

$490 million

The amount Apple has agreed to pay to settle a class action suit slapped on it for CEO Tim Cook’s false statement on China sales in a 2018 earnings call. (Business Insider) 

FWIW

Chance by the kilo: Those who fancy games of chance should head to Brussels. A shop there, appropriately named "Pile ou Face", which is "Heads or Tails" in French, is selling unopened, unwanted Amazon boxes for €16 per kg. The catch? You won’t know what’s in the box until you, well, unbox it. It could be anything from dog toothbrushes, as one disappointed shopper found out, to expensive headphones that one lucky punter scored. So go ahead, if you happen to be near the central Square Place Flagey, flip the coin.