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Date
2024-10-01
India Targets Samsung, Huawei Exits, $200B Foreign Capital Flees
In the past, India's development has always relied on the excessive issuance of US dollars, with a large influx of dollars into the Indian market, supporting the rapid development of India's manufacturing industry.
However, the economic bubble inflated by the US dollar will always burst due to the dollar's return flow, and this scene is now being played out in India.
But the Governor of the Reserve Bank of India claims that India's economy has safely landed.
Where does India's confidence come from? How does India deal with the dollar's harvest?
01
India's GDP figure in the third quarter of this year became the first among major economies at a speed of 7.5%, not only surpassing the United States, Europe, and Japan, but also surpassing China.
Goldman Sachs released a forecast report last week, which mentioned that by 2035, China's GDP will surpass the United States to become the world's first. As the second most populous country in the world, India's economy will also develop rapidly and will rise to the second place in the world by 2075.
In recent years, India has a lot of development space in both the economy and stocks, and India's real estate market has attracted the attention of many investors.
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It seems that India has not been affected by the United States' interest rate hikes.
02Recently, a piece of news has caught the attention of many domestic netizens.
Samsung's Indian subsidiary has become embroiled in a tax dispute, with India's tax authorities claiming that Samsung has deliberately evaded import duties amounting to 17 billion rupees in the past.
Many Chinese netizens, from this news, have sensed a familiar odor.
In fact, there is another similar piece of news, which comes from India's antitrust department, accusing Google of monopolistic practices.
In the past two years, Indian authorities have already conducted various reviews and penalties against Chinese mobile phone brands such as vivo and Xiaomi.
Huawei, which leads the global 5G industry, has been unable to obtain relevant orders due to various obstacles in India and has already planned to gradually withdraw from the Indian market.
Many netizens believe that India, in order to cope with the dollar's harvest, has used the method of harvesting foreign enterprises to shift risks.
03
Nowadays, more and more international analysts are beginning to worry that India's GDP growth momentum is good, but due to the continuous increase in interest rates and balance sheet reduction by the United States, there is not enough capital support, and India's asset bubble will burst.
In the past few years, India's economy has been supported by the over-issued currency of the United States. Now, foreign investors have sold at least 2 trillion rupees in Indian stock transactions, which means a large amount of foreign capital is withdrawing from India's financial market.Looking back at historical records, during the 2008 U.S. subprime mortgage crisis, foreign investors also withdrew massively, but the current selling is more than 2.5 times that of the period back then.
At the same time, data from the Reserve Bank of India shows that India's foreign exchange reserves decreased to $547.3 billion in mid-November, a significant drop of 15% compared to the same period last year, and the lowest point since 2019.
From the chart above, it can be seen that India's foreign reserves have been increasing over the years, but after the U.S. raised interest rates in 2022, India's foreign reserves have shown a noticeable decrease.
Due to the continuous increase in U.S. interest rates, the interest rates India will have to pay in the future will also become higher and higher. At the same time, the continuous devaluation of the Indian rupee also brings greater costs for paying foreign debts. This will undoubtedly further accelerate the consumption of India's foreign exchange reserves.
