Sep 27: Small Town Wealth Surge, Reliance-Meta’s ₹855Crore AI Deal

The Chinese Cyberspace Administration (CAC) has reportedly launched a two-month drive to scrub away “pessimistic sentiments” online. What are these sentiments you ask? Jokes about “useless studying”, livestream rants about inequality or promoting the “lie flat” lifestyle - a response to a growing disillusionment to economic challenges. The plan is to hold content creators and social media companies accountable, “rectify negative emotions” and “create a more civilized online environment.” Apparently people have been moving back to parents’ homes and describing themselves as “full-time children”. We may just lose a whole genre of memes.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 7 mins.

The Indian stock market closed significantly lower on Friday, marking the sixth consecutive session of declines. The massive selloff was fuelled by fresh Trump tariffs on the pharma sector and relentless selling by Foreign Portfolio Investors (FPIs), which severely hurt investor sentiment.

India’s Wealth Boom: India’s wealth story is changing. While metro cities like Mumbai, Delhi, and Bengaluru remain financial hubs, small-town India is emerging as a powerhouse of disposable cash. From Panipat to Rajkot, households are suddenly flush with money, thanks to booming local businesses, soaring land values, and the spread of industrial hubs. The rise of non-metro crorepatis is shifting the country’s wealth map, signaling a decentralisation of financial power.

Small-Town Swimming In Cash, But What Next? Many first-generation rich in smaller towns are unsure how to deploy their newfound wealth. Traditionally, they relied on gold, land, or fixed deposits. Today, there is growing interest in structured portfolios, wealth management services, and professional financial advice tailored to local sensibilities. Financial firms are taking note. Wealth managers are expanding to smaller towns combining digital platforms with on-ground advisors who speak local languages and understand small-town dynamics. Yet, risks remain: financial literacy is low, trust in formal institutions is limited, and mis-selling or risky bets can affect inexperienced investors. The wealth story is decentralising, but the path forward requires guidance and awareness.

Big Picture - India’s Household Wealth: On the macro level, India’s household financial assets grew 14.5% in 2024, the fastest growth in eight years. Securities, including equities and mutual funds, surged nearly 28.7%, while bank deposits still account for 54% of total household financial assets. After adjusting for inflation, real growth stands at 9.4%, indicating stronger purchasing power. However, the structure remains conservative: equities form only 13% of portfolios, limiting potential returns. Wealth concentration is high, with the top 10% controlling around 65% of total assets, up from 58% two decades ago. Insurance and pensions have also contributed to growth, while liabilities have risen modestly. The combination of rising wealth, cautious investment habits, and concentration illustrate the opportunities and challenges of India’s financial arena. Moving forward, expanding access to higher-return instruments and enhancing financial literacy will be crucial to sustaining inclusive growth as India’s wealth continues to expand. 

Strategic Partnership For AI Innovation: Reliance Industries has consistently been in the news - first for the anticipated Jio IPO, then for the joint venture aimed at creating what could become South Asia’s largest food park, and now, in a significant move to bolster artificial intelligence (AI) capabilities in India. Reliance Industries Limited (RIL) and Meta Platforms have announced a joint venture aimed at developing enterprise-focused AI solutions. The European Union has approved the partnership, which involves an investment of ₹855 crore (approximately $100 million). Reliance holds a 70% stake, while Meta retains a 30% share in the venture.

Leveraging AI: The collaboration seeks to harness Meta's open-source Llama models and Reliance's extensive enterprise reach to deliver AI tools across various sectors. The joint venture will focus on two primary offerings: an enterprise AI platform-as-a-service, enabling organizations to customize and deploy generative AI models, and a suite of pre-configured solutions tailored for industries such as sales, marketing, IT operations, customer service, and finance.

Meta's Technical Expertise Meets Reliance's Infrastructure: Meta will contribute its technical expertise in building Llama-based models, while Reliance will leverage its digital infrastructure and access to thousands of Indian enterprises and small businesses. The solutions are designed for deployment across cloud, on-premises, and hybrid infrastructures, with an emphasis on lowering the total cost of ownership.

Impact On Indian Enterprises: This partnership aims to democratize AI access for Indian enterprises, providing them with advanced tools to enhance efficiency and innovation and drive digital transformation.  

India’s Food Investment: More updates on the food processing industry following yesterday highlights! At the World Food India 2025 event, Tata Consumer Products and Godrej Agrovet signed non-binding MoUs with the Food Processing Ministry, pledging a combined investment of ₹2,960 crore. Tata Consumer will invest up to ₹2,000 crore over a five-year period, while Godrej Agrovet will invest ₹960 crore to build new manufacturing and R&D facilities by FY27. Godrej’s investment will be focused on its oil palm and pet food businesses in Andhra Pradesh, Assam, Tripura, Telangana, and Maharashtra, to create jobs and promote regional development.

Economic Catalyst: A ₹3 lakh crore consumption surge is expected in India, fuelled by GST cuts, income-tax relief, and lower loan rates. This will awaken both urban and rural demand. Discretionary sectors, such as fashion, food services, and entertainment, could see up to 1% growth, while personal care and alcohol may grow by 0.5%. This shift is expected to benefit companies like Nykaa, Britannia, and Nestlé.

Green Hydrogen Highways: India is rolling out “hydrogen highways,” with a ₹500 crore allocation for two-year truck trials across 10 routes, using 37 vehicles and setting up nine refuelling stations. The initiative is backed by a consortium of companies, including Tata Motors, Ashok Leyland, and Reliance. This push is aimed at cutting India's reliance on crude imports, fostering a complete green hydrogen value chain, and targeting 5 million tonnes (MT) of green hydrogen production by 2030, which would create jobs and attract investment while reducing emissions. 

Indian Pharma Escapes New US Tariffs: President Trump’s new 100% tariff on imported branded and patented drugs, effective October 1, is set to hit European countries like Ireland, Switzerland, and Germany the hardest, which together contribute a significant portion of the $212.82 billion US pharma import market. India, however, appears largely insulated as its pharmaceutical exports, totalling $9.8 billion in FY25, are predominantly generics, which are not currently affected. The announcement still triggered a decline in some Indian pharma stocks, reflecting investor uncertainty about a potential expansion of tariffs to include generic medicines in the future.