With the state in practical and virtual lockdown, Home Minister Amit Shah announced scrapping of Article 370, which granted special status to Jammu and Kashmir. There has been euphoria amongst supporters of the move and outrage amongst those against the move, who have called it the death nail in Democracy of India.
It’s a move that has made not only Indians but the entire world sit up and take notice. Pakistan has severed bilateral trade with India. The rupee dropped 77 paise to the dollar soon after the move was announced. But how does scrapping of Article 370 affect India Inc.? We look at the impact the move has had and what could be the fallout in the long run.
What is Article 370?
As Maharaja of Kashmir Hari Singh signed Instrument of Ascension to India, Sheikh Abdullah was appointed the Prime Minister of the interim government in the state. In 1949, Sheikh Abdullah joined the Indian Constituent Assembly and worked out a special status for Kashmir. That’s how Article 370 came into being and has remained mired in controversy since.
According to its provisions, Indian parliament needs approval of J&K government before applying new laws. However, defense, communications, foreign affairs and finance were excluded from this provision. For seven decades, it has meant that fundamental rights of citizens of J&K, law of citizenship, and ownership of property vary from those in rest of the country.
The fallout on business and India Inc.
Now that Article 370 has been scrapped, citizens of others states in the country can buy property in J&K. This is seen as the most immediate and obvious outcome, which has pleased the real estate market no end. Abhishek Lodha, MD & CEO, Lodha Group said to The Hindu, “We may have short term problems but in the medium term it will solve Kashmir issue with economic and social growth.”
Only the people of the state can truly authenticate the veracity of that belief. But many industry big guns have been supportive of the move. Some have spoken of natural resources of the state that remain untapped. Others talk about how the move boosts ease of doing business. Harsh Goenka, Chairman RPG Enterprises, from the family of early investors in the state believes the decision will spur investment, boost employment but only when unrest settles down.

The new Netflix documentary ‘The Great Hack’ has been a revelation in many ways. While many of us were aware that our personal information and privacy are stake with the advent of social media and technologies into every aspect of our lives; seeing it play out on screen has been spine chilling. “World’s most valuable resource is no longer oil, but data,” one of the protagonists declares in the documentary. So it’s not surprising that the new generation wars are fought over technology, and India finds itself right in the middle of a major one brewing today.
What’s happening?
“China is now blackmailing India into using Huawei for its 5G infrastructure – they know no bounds!” said US Congressman Jim Banks yesterday. Today’s headline shows us the key players in this “game of bans”, which began in May when the US put the Chinese Technology giant on its blacklist. The Eastern powerhouse has backed its brand, which is world’s biggest manufacturer of equipment gear for next generation 5G cellular network. It has escalated the geopolitical war that now sees India in the thick of it.
Huawei and the US
The US has banned the #1 telecom equipment company in the world on the basis of national security concerns. They have vehemently stated that the state run company would push China’s spy embedded technology into America. Since then, the US has been asking its allies all over the world to ban Huawei. Secretary of State Mike Pompeo went to the extent of saying, “if a country adopts Huawei technology, the US won’t be able to share information with them.” So where does it leave India, seen as a strong ally and a business partner by the US?
Huawei and India
India is gearing up for 5G network installation but there has been no decision on whether Huawei will be invited to be a part of it. While earlier, China had stated that it hoped India would invite Huawei for 5G trials, passing time has seen it tighten the screws. In a meeting between diplomats of the two countries, Chinese officials have stated that if India blocks Huawei under US pressure, there will reverse sanctions on Indian companies doing business in China. That puts top names like TCS, Infosys, Mahindra and Mahindra, who have presence in China in jeopardy.
As things stand, India has received six proposals for 5G technology trials including Huawei. A high level committee found no proof of Huawei using malware to collect data. Whether India goes with its mighty neighbor or stands by the US remains to be seen. But for now, it’s at the center of a technology war that it did not start.
– Authored by a student of Jaipuria Institute of Management

“Tens of thousands losing jobs as Indian auto industry’s crisis deepens,” screamed as headline of Business Today. If that doesn’t set the alarm bells ringing, then it’s definitely time for everyone involved in the sector to put on their seat belts and hold on tight. The road, according to experts, is about to get more turbulent and with no revival in sight.
Dr. Krishnamurthy Subramanian, India’s chief economic advisor recently dismissed the talk of crisis by saying it was just one part of the economy and the rest of the manufacturing sector is flourishing. He may have wanted to paint a rosy picture, but the reality is far from it and the current state of auto industry is bound to affect our economy and unemployment rate in the long run.
Auto industry: The giant of the manufacturing sector in India
The auto industry makes up for 7.5% of India’s GDP and a massive 49% of the manufacturing sector. But it has an even larger multiplier impact on the economy. More than 8 million people are directly employed in the industry through manufacturing and services. When you consider the drivers, petrol pump employees, finance agencies, the number is a staggering 40 million plus.
The grim reality
There have been reports that more than 3,50,000 employees have been laid off by automobile companies, manufacturers of auto parts, and dealers, in the past four months. There are more cuts imminent with big names like Yamaha Motors, Valeo and Subros. Honda Motor Co, Tata Motors and Mahindra & Mahindra have temporarily stopped production due to lack of demand.
What started the downturn?
Experts say the malaise started in September last year. The industry was looking at the usually fruitful festive season when IRDA announced that buyers would have to buy insurance for 3-5 years. Increase in fuel prices plus added axle loading norms for commercial vehicles compounded the misery. IL&FS defaults were the blow that sent the sector spiraling downwards.
Is there hope?
The unemployment rate in the country stood at 7.51% in July, which is a significant jump from 5.66% in July 2018. Head honchos in the sector have demanded tax cuts and hope for easier access to financing to stall the slump, if not immediate revival. India’s two major auto hubs Gurgoan, Haryana and Pune, Maharashtra are both looking at the bottom of the barrel.
As on 20 August 2019 in a breather, the government decided to go slow on the e-vehicle push for the next few months arguing that it has to be sympathetic to the downturn that has gripped the auto industry.
 
– Authored by a student of Jaipuria Institute of Management