Sep 16: Green Ambitions of Kutch, Gold Shines Bright

Good morning! Google’s Gemini AI has peeled its way to the top of India’s App Store charts, fueled by the absolutely bananas “Nano Banana” trend. The image-editing AI model has already churned out over 500 million edits—from 3D figurines to Instagram’s latest obsession, the ‘Banana AI Saree,’ which turns selfies into retro 90s Bollywood throwback portraits. With 23 million new users in just two weeks, the race for consumer AI is feeling a bit… bananas.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 6.5 mins.

The Indian stock market ended in the red on Monday, September 15, as investors remained on the sidelines ahead of the US Federal Reserve's policy meeting scheduled for this week.

Adani Sets The Pace: When Adani unveiled its colossal Khavda renewable energy park it was clear the company aimed to redefine India’s energy sector. Spread across 538 square kilometres (five times the size of Paris) the hybrid solar-and-wind facility is designed to deliver 30 GW of green power by 2029, with talk of pushing capacity even further to 50 GW. Electricity from Khavda was first routed into the national grid in February 2024, marking a milestone in India’s clean-energy journey. Already, 5.6 GW is operational, and Adani has expanded into manufacturing solar modules, wind turbines, and even piloting India’s first off-grid green hydrogen plant.

Reliance Joins the Race: Not to be left behind, Reliance announced an even more audacious plan at its annual general meeting in August 2024. On 5,50,000 acres of arid Kutch terrain (three times the size of Singapore) the group intends to build what could become the world’s largest single-site solar park. At peak, it claims it will deploy 55 MW of solar modules and 150 MWh of battery containers every day, a pace few projects globally can match. Anant Ambani declared the park could meet nearly 10 per cent of India’s electricity needs within a decade. Yet, Reliance has kept details like final capacity and timeline under wraps, leaving questions about how quickly such ambitions can translate into reality.

Why Kutch? The Gujarat government has enabled these mega projects by leasing vast tracts of wasteland at concessional rates. The attraction is obvious. Kutch receives over 300 days of sunshine a year, with solar radiation averaging 5.5–6.0 kWh per square metre. Strong, consistent winds make hybrid projects more reliable, while sparse population means minimal displacement. Ports like Mundra and Kandla offer logistical advantages for both imports and exports of equipment and power transmission. These massive bets are tied to India’s larger climate goals: 500 GW of renewable capacity by 2030 and net-zero emissions by 2070.

The Other Side of the Story: Yet, not all is rosy. Environmentalists caution that classifying salt deserts as “wastelands” ignores their ecological richness - flamingos, desert foxes, and migratory birds rely on this fragile habitat. With large projects exempt from environmental impact assessments, concerns mount about unchecked expansion. Locals, meanwhile, weigh disruption against opportunity.

Gold’s Power: For centuries, gold has been the go-to hedge when economies wobble. Inflation, sanctions, financial repression, these are the usual suspects behind price surges. Yet in 2025, as gold breaks a four-decade inflation-adjusted record, neither inflation nor geopolitics is truly to credit. The story lies elsewhere: in real returns and investor psychology.

Not The ‘80s All Over Again: At its January 1980 peak, gold hit $850 an ounce, equivalent to $3,524 today. Inflation was running at nearly 14% and capital controls were tightening after Jimmy Carter froze Iranian assets. Those conditions don’t apply today. Inflation peaked in mid-2022 at 9.1% and has since fallen, with expectations now hovering around 2.3%. Geopolitical shocks like Russia’s invasion of Ukraine and sanctions were largely priced in long before gold began its recent ascent.

The Cost of Holding Gold: Owning gold isn’t free. An exchange-traded fund (ETF) typically costs about 0.5% per year, while physical gold requires storage and insurance. Compare that to U.S. Treasury Inflation-Protected Securities (TIPS), which currently offer a 1.67% guaranteed return above inflation. Choosing gold over TIPS means giving up about $79 a year in potential income on each ounce. For much of 2018 to 2022, investors demanded compensation for bearing these costs. Then, curiously, the tide turned. By 2023, investors were willing to pay as much as $91 a year just for the privilege of holding gold.

What Changed? It wasn’t inflation or war. Instead, it was the fall in real interest rates. As yields on safe, inflation-protected assets declined, the opportunity cost of holding gold dropped. Investors effectively bid up gold, not because it suddenly solved economic risks, but because the alternative, earning shrinking real returns elsewhere, looked less appealing. For investors, the message is: don’t confuse glitter with fundamentals. To understand markets today, look not at inflation headlines, but at TIPS yields and equity valuations. Gold may be breaking records, but the real story lies in what its shine says about the underlying fear of weak growth.

Snub Signal: India is negotiating with Russia to purchase additional S-400 air-defence systems, following their "game-changer" performance in a recent military exercise. This comes as the final two of the five regiments from the $5.5 billion 2018 deal are scheduled to be delivered by 2026–27. Russian Foreign Minister Sergei Lavrov praised India for its resilience in the face of US pressure on Russian oil trade.

AI For Bharat: According to a Niti Aayog report, the adoption of Artificial Intelligence could add $500-600 billion to India’s GDP by 2035 by increasing productivity. The report, titled 'AI for Viksit Bharat: The Opportunity for Accelerated Economic Growth,' projects the financial services and manufacturing sectors to benefit the most. Specifically, AI could contribute $50-55 billion in financial services and $85–100 billion in manufacturing.

Andhra shrimp crisis: According to Andhra Pradesh Chief Minister N. Chandrababu Naidu, US tariffs have led to a loss of approximately ₹25,000 crore for the state's shrimp industry, resulting in the cancellation of 50% of its export orders. Andhra Pradesh accounts for 80% of India's shrimp exports, valued at around ₹21,246 crore annually. The total tariff burden on the industry is almost 60%, including a 25% reciprocal tariff, a 25% punitive duty, a 5.76% countervailing duty, and a 3.96% anti-dumping duty.

Data centre boost: The draft National Data Centre Policy proposes a 20-year tax holiday for developers who meet targets on capacity, power efficiency, and job creation. Subject to Finance Ministry approval, it also offers GST input tax credit on capital assets.

US-India trade talks: The US chief negotiator, Brendan Lynch, is in India for trade talks, continuing negotiations for a Bilateral Trade Agreement (BTA) that started in March 2025. The discussions are focused on a "just, balanced, and mutually beneficial" deal. The talks are taking place despite recent US tariffs, including a 50% duty on all Indian goods, on top of a 10% baseline duty, which were implemented in two phases.

A Video Game Turns Real: At Fort Bliss, Texas, US soldiers recently strapped on VR goggles, gripped joysticks, and flew buzzing quadcopters through obstacle courses. It felt like a video game, but on modern battlefields - from Ukraine to the Middle East - drones costing under $1,000 are destroying tanks worth millions. For the US Army, still treating drones as experimental, this is no game.

Behind In The Drone Race: Russia’s invasion of Ukraine accelerated the global evolution of drone warfare. Ukraine showed that cheap, expendable quadcopters could outmatch traditional firepower. Yet, while America excels at building billion-dollar fighter jets and precision missiles, its soldiers were largely untrained in drone tactics. That gap has jolted the Pentagon into a scramble, from 3D-printing drones to creating “FPV gyms” where troops practice flying through windows, tires, and even cardboard replicas of enemy tanks.

Lessons From Ukraine: Kyiv has turned drones into its sharpest spear. Ukrainian commanders estimate 80% of their successful strikes involve drones, and production has soared into the millions. President Volodymyr Zelensky has pitched Washington a $50 billion plan to co-produce 10 million systems annually, positioning Ukraine not just as a recipient of US aid but as a supplier. Even Ukraine’s drone-strike videos have become valuable training data for artificial intelligence, courted by allies and defense firms alike and Washington is taking notes.

America’s Manufacturing Hurdle: But scaling up is proving tougher. Unlike Ukraine, the US can’t rely on Chinese-made parts for security reasons. Domestic alternatives are far pricier - sometimes 100 times more. Startups like Neros are racing to fill the gap, delivering thousands of FPV attack drones, but the numbers pale against Ukraine’s millions or China’s tens of millions annually. For the United States, the challenge is no longer technological invention but rapid adaptation.

Musk’s Big Tesla Bet: Summary: Elon Musk has made a massive move, buying billions of dollars in Tesla shares, a show of confidence in the company’s future. The purchase comes amid a period of volatility for Tesla stock, suggesting Musk believes the current dip is temporary. It also signals to investors that he stands firmly behind Tesla’s long-term potential. While market reactions will unfold over time, this bold buy clearly aims to stabilize sentiment and reinforce his ownership stake. 

UK-US Deals Headline Trump’s State Visit: During his second state visit to Britain (Sept 16-18, 2025), President Donald Trump and Prime Minister Keir Starmer are set to unveil major partnerships in technology and civil nuclear energy. The UK is pushing to finalize lower tariffs on steel and aluminium with the U.S., and multi-billion-dollar deals will target small nuclear projects, possibly powering AI data centers. Additionally, substantial U.S. investment into Britain, including from firms like Nvidia, PayPal, and Blackstone, is expected to be announced, strengthening defence, energy, and technology ties.  

Intel Cuts 2025 Expense Guidance: Intel has lowered its projected adjusted operating expenses for full‐year 2025 to $16.8 billion, down from $17 billion, following the sale of a majority stake in its programmable chip unit, Altera. The divestment to Silver Lake values Altera at about $8.75 billion, significantly less than Intel’s 2015 acquisition price. Despite these changes, Intel’s operating expense target for 2026 remains unchanged at $16 billion.

Novartis Inks $5.7B Deal: Swiss pharmaceutical giant Novartis has struck a licensing agreement worth up to $5.7 billion with Monte Rosa Therapeutics to develop treatments for immune-related diseases. Monte Rosa will receive $120 million upfront, plus milestone payments and royalties. The stock of Monte Rosa surged about 50% following the announcement.

Labubu Hype Fades, Pop Mart Shares Drop Sharply: Pop Mart’s stock tumbled nearly 9% in Hong Kong (its biggest drop since April) after JPMorgan downgraded the toy maker and cut its target price by 25%, citing overvaluation and cooling demand. Despite a ~180% year-to-date gain, investors are growing wary as resale prices of its popular Labubu collectibles fall and the novelty wanes.

Trump Calls for Biannual Earnings Reports: Donald Trump has proposed that publicly traded companies should switch from quarterly earnings reports to reporting every six months instead. He argues this change would ease the burdens of frequent disclosure requirements and reduce volatility in the market. Critics, however, warn that reducing reporting frequency could lower transparency and make it harder for investors to track business performance.

Cash On Scan: A new "cash on scan" proposal aims to make cash withdrawals easier using smartphones and UPI. The plan, from the NPCI, needs RBI approval to allow people to withdraw cash by scanning a QR code at millions of business correspondents, providing a simpler alternative to ATMs.

Car Sales Dip: Indian car sales fell for the fourth straight month in August, down 8.8% to 321,840 units, as manufacturers waited for a GST rate revision. While car sales declined, three-wheeler sales hit a record, and two-wheeler sales saw a 7.1% increase. Manufacturers are optimistic that the GST cut will boost sales during the upcoming festive season.

L&T bullet train: Larsen & Toubro (L&T) has won a large order for the Mumbai-Ahmedabad bullet train project, worth between ₹2,500-₹5,000 crore. The company will construct 156 km of high-speed track, using Japanese Shinkansen J-Slab technology. This is L&T's second track-work contract on the project, meaning the company is now responsible for over 50% of the total track-work.

AI and GDP growth: According to a Niti Aayog report, the increased adoption of Artificial Intelligence (AI) could add $500-600 billion to India's GDP by 2035. This growth will be driven by improved productivity in sectors like financial services and manufacturing. The report, titled 'AI for Viksit Bharat,' notes that while new jobs will be created, some clerical and low-skill jobs may be displaced.

Handshake row amid India vs Pak: The Pakistan Cricket Board (PCB) has demanded the removal of match referee Andy Pycroft from the Asia Cup. The PCB alleges that Pycroft violated the ICC Code of Conduct after the Indian team refused to shake hands with Pakistani players following a match, which they claim was an instruction from the referee. India's captain stated it was a "team call" and that some things are more important than sportsmanship.

THAT’S ALL FOR TODAY!

Got thoughts? We love to hear it. Just reply to this email. 

Was this email forwarded to you? Subscribe via ✉️ thedesidispatch.com

Not on the WhatsApp community yet? Join it here

Thank you and keep reading!🚀