- 6 hours ago
India’s large population, strong domestic demand and long-term infrastructure needs make it one of the most promising markets globally, says Arvind Tiku.
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00:00Good afternoon. My guest today is perhaps one of the most least known billionaires in India.
00:08But the reason he is at this stage and that conference is not to talk about his personal wealth,
00:16but a very important moment in India's economy, global trade, particularly energy security.
00:27Incidentally, his grandfather and my grandfather both were able to speak and write Farsi,
00:33which also tells us how integrated the world of trade was.
00:37But Arvind Thiku, founder and CEO of AT Capital, a very warm welcome to the India Today Conclave stage.
00:44Thank you. Thank you.
00:46His is like so many other Indian entrepreneurs, a journey that started very early.
00:51It's a journey that has shown hard work and the Indian can-do spirit.
00:57He started early on in his life, among various things, also dabbling in oil and gas.
01:03And that's what I want to use to set the context for one of the most important issues.
01:07And we've been speaking to several businessmen.
01:10Our businessmen have been in this hall over the past two days.
01:14And this is the moment that we are seeing in geopolitics and how tough I would imagine, Arvind,
01:21it is to plan doing a business.
01:23You know, businesses are supposed to do annual plans.
01:27You have quarterly results in India that you have to deal with.
01:31But in today's time, Arvind, is geopolitics the biggest concern for business people all over the world?
01:40Arvind, thanks for having me.
01:44There was a time when, as you said, you would look at, you would wake up in the morning,
01:49you would look at the world knowing the rules of the game.
01:52And you would know what you're playing and you could plan it accordingly.
01:55Today, as we just have been hearing since morning,
01:59energy which sits at the core of anything any business does and touches in different ways,
02:04if the uncertainty on the energy is so visible, as it has been since morning in this room,
02:09it tells you that for any business today, the day starts with geopolitics and it ends with geopolitics.
02:17And even during a day, the number of statements or the kind of changes that you see geopolitically
02:24affect your business in ten different ways.
02:26So the only thing certain about existing business is uncertainty.
02:31The only thing certain is uncertainty.
02:33Let's try and understand what that uncertainty is on this subject of energy.
02:38Because global supply chains have been disrupted, as we can see.
02:41Imagine a situation where Basmati exports from India are stuck in ships
02:46because a strait somewhere has been blocked.
02:50This is a war that we had nothing to do with.
02:52It's hundreds of kilometers away from Indian shores.
02:56There is fresh food that we export.
02:58Many other perishable commodities.
03:01And all of that is stuck.
03:02So imagine the consequences on energy.
03:05I mean, there are two parts to the discussion.
03:08One is oil and gas prices.
03:10And we are fully exposed because we are so dependent on imports.
03:14The second part is that if you look at it in terms of the next two, three years,
03:19what do you see happening or is required to happen as far as India's energy, Atman Nirbharata, is concerned?
03:30As far as oil and gas is concerned, oil and gas, as we as a nation, we are dependent on
03:37imports.
03:37I mean, there's nothing you can do about it.
03:40And if you really look at the supply chains and the disruption to the supply chains that's been caused by
03:45geopolitics,
03:46for us as a nation in the next two, three years, the key is our ability to maneuver these geopolitical
03:54changes.
03:55And even when you talk to the people who form the policy or talk to, you know, be it governments,
04:03bureaucrats who want to formulate the policy,
04:05they might have a view in the morning and nobody knew what would happen in Iran.
04:11I mean, as we all know, there were discussions and even the Europeans said we have no idea about where
04:16this war started from.
04:18So being able to, the only, the only, I'd say, thing that you can today control is ability to change
04:28and adapt.
04:29And when we talk about ability to change and adapt, it means building relationships across countries, across supply chains,
04:37not being independent on any one of them.
04:39And I think as a nation, India has done an amazing job with it.
04:43We saw as soon as the Americans so-called removed the ban on India to buy Russian oil, we've just
04:49bought 30 million barrels.
04:51Effectively, if you look at the month of February, India imported about 1.2 million barrels a day.
04:55Here we bought 30 million barrels, which is one month production, just in one day.
05:01And, and these are the barrels that have been on the sea.
05:05And if you follow the movement of the vessels, vessels turned halfway as soon as these things change.
05:12So it's about adaptability.
05:14It's about being on the feet.
05:16It's about being willing to act proactively rather interactively.
05:20And that's the only thing we can do.
05:22Arvind, you know the oil and gas trade pretty well.
05:26And I don't know how many here in this hall and our viewers would know that the road on which
05:31this venue, this hotel is located is named after one of the most famous Russian ambassadors to India,
05:37Mr. the late Alexander Kadakin, who was a scholar of Sanskrit, by the way, and one of the people
05:45who actually played a stellar role for India-Russia relationship, including the rupee-ruble trade.
05:53Arvind, you speak Russian.
05:56Will our oil industry continue to speak Russian for long?
06:00How much will our dependence on Russian crude oil remain?
06:04Because we had to kind of reduce it because of American pressure, but now we've been allowed.
06:09This seems to be a temporary waiver for a month.
06:12But do you think Russian, there is really no alternative that India has to Russian crude oil purchases?
06:20Energy, you can purchase from various sources.
06:22But at the end of the day, the most important point and the most important thing which matters to an
06:27economy like India is,
06:28what's the price of that energy?
06:30What cost are you buying energy at?
06:32If you really look before the Ukraine-Russia war, we never used to buy Russian barrels.
06:38Russians were a very insignificant part because for us, it was Middle East that was primarily the source of energy.
06:45After the Europeans stopped buying Russian oil and the molecules which India was buying,
06:53which was the shortest route for us from the transportation point of view, had to be bought from Russia.
06:59Now, purely looking at the shipping and the cost of shipping, somebody had to bear that cost.
07:04Obviously for India, because Russia didn't have markets, the cost of that was borne primarily by Russians,
07:09which gave us access to cheap energy.
07:14But the total amount of energy, especially oil and gas, that gets produced in the world today
07:19and the price at which it gets produced, and the refining capacities which were built traditionally over a very long
07:25period of time,
07:26were built taking these supply chains into account.
07:29It's not just the cost of transportation, it's the quality of the crude,
07:33the kind of crude the refineries can process.
07:36So, I just don't see how you can remove four million barrels of Iranian production out
07:42and stop five million barrels of Russian production from export
07:46and then have the energy balance maintained.
07:48And with the oil price of $113, which is reflected now,
07:52you will have at some point of time demand falling off
07:55because you just won't be able to sustain the price increase anymore.
07:59So, I just don't see a world without, you know, being able to live without Russian energy.
08:05Russian energy has to find home.
08:07How much of U.S. oil and gas can India absorb
08:11and does that become not just an energy security question
08:15but also a geopolitical hedge against turmoil?
08:19Can India and should India expand its purchases of U.S. energy?
08:25I think we started buying American energy again.
08:28It's like the same thing, you know, you have Europeans buying American energy
08:32which is costing them, if not double, maybe triple the price that they were paying.
08:36And that's what is leading to deindustrialization of Europe at a pace at which we've seen.
08:40The German economy is not coming out of recession since Ukrainian war
08:43and we see how the industry is moving literally, you know, manufacturing out of Europe
08:50either into America or further integrating into China
08:53because they want to be close to the markets where they can get cheap energy
08:56and secondly be able to be closer to the customer.
09:00So, the fact of the matter is that even if India wants to buy American energy,
09:04first of all, America itself is a huge consumer of energy, right?
09:07Number two is that the Europeans have no other choice
09:11either to rely on the American energy or the Middle East.
09:15And now with the Iran war, we've seen when Qatar's LNG exports are completely down,
09:20the first day, prices were up 68%.
09:25So, while we might want to buy, you know, geopolitically and to maintain,
09:30we might want to buy American energy,
09:32the reliability of that energy over a longer period of time
09:35is something which can be, you know, under question any day.
09:40So, because of which we have to maintain diversified supply chains,
09:44because of which we have to engage with every possible exporter of energy
09:47and keep on working with them.
09:49Okay.
09:50We've reached the midpoint of our conversation.
09:52I just want one more sort of geopolitical question
09:55before we turn the focus on India.
09:57And this is to understand from you,
10:00what has changed for business?
10:01Because you yourself are in the renewable energy space,
10:05you are in the real estate space, in the private credit markets.
10:09What will be the lingering impact of the West Asia conflict?
10:14For example, as we understand it, even if the war were to end tomorrow,
10:18we know that oil production cannot be just,
10:22cannot go back to the same levels within a matter of days.
10:25There is a certain physics and a science that is involved
10:28that the disruption will remain for maybe at least two, three quarters.
10:32Given that context, I want you to tell our audience
10:35what will be the medium to long term consequences of this conflict for global business.
10:44You know, we were talking backstage, you said never could we imagine
10:47that there will be a day when there will be a shortage of gas in modern India, right?
10:51And today we see in the news restaurants running low on LPG, for example, right?
10:57When businesses normally function, there are a lot of risks
11:00which we probably know do exist,
11:02but are not taken on board while making investment decisions.
11:05But once they surface and come out, and you see them,
11:09then next time you're going to look at the investment,
11:11this is going to be a risk which you will have to square off.
11:14These kind of risks have grown substantially over a period of time,
11:18which is making it extremely difficult,
11:20and especially with the policy uncertainty,
11:22is making it extremely difficult for businesses to commit long-term capital.
11:29An example would be when Biden started the IRA,
11:34which was the Inflation Reduction Act in America,
11:37and people flocked and went to invest substantial capital in the U.S.,
11:43and here comes Trump regime and all that money gets pulled back by Department of Energy,
11:48and all of a sudden there are businesses that are going bankrupt
11:50because the funding stopped.
11:52Today, the biggest challenge for business is the changes that we see,
11:55which the Trump administration has made.
11:57When the new administration comes,
11:59what of these policies are going to be there?
12:01The point in case is tariffs.
12:04The commitment to invest in America was based on the tariffs,
12:07and the Supreme Court of U.S. has just thrown them out.
12:10So the biggest uncertainty is when you have to build long-term businesses
12:14and commit capital over a very long period of time.
12:18These uncertainties, every business will have to take into account going forward.
12:22Okay.
12:22There is uncertainty around the world.
12:25But what about India?
12:26Many of the businessmen that I speak with,
12:30and we had Karan Adani,
12:32we had Anil Agarwal,
12:34we had Prashant Ruya here.
12:36Everybody seems to suggest that India remains one of the best spots to invest
12:42because of our domestic demand,
12:44the resilience of our economy.
12:46Do you agree with that?
12:48And which are the sort of hot sectors
12:51that you think will power India's growth in the months and years ahead?
12:57Definitely looking at the uncertainties across,
13:02India is a bright spot.
13:03You can't take that away.
13:05You would say,
13:06if I really look at the world and divide the world into three large or four large blocks,
13:11you have U.S.,
13:12you have the European Union,
13:14you have China on the other side,
13:17and then you have South Asia and Southeast Asian economies,
13:20which are becoming significant economic power centers.
13:25And India undoubtedly is a bright spot in all of them
13:29because if you really look at, as you said,
13:31the domestic demand,
13:321.4 billion people,
13:34a young population,
13:36the need for infrastructure,
13:38the need for growth,
13:38we have a long way to go.
13:40We might be a 4.5 trillion economy,
13:43but we still are below $3,000 per capita GDP.
13:47So for us,
13:48even if we double the GDP from $3,000 to $6,000,
13:51that makes us a $9 trillion economy.
13:54And that, you know,
13:56that these are basically some macro things which work for the nation.
14:00So in all this uncertainty,
14:03when you see India,
14:04India undoubtedly is a bright spot.
14:06Obviously for businesses going forward,
14:08the ability to maneuver and take risks,
14:11which can happen somewhere else,
14:13you mentioned Basmati,
14:15or same gas,
14:16you know,
14:16today imports of gas,
14:17they will affect local investments.
14:19So the horizon of these investments has to be,
14:24and the government support to businesses
14:25is going to be more important in these uncertainties
14:28than would happen otherwise.
14:29You know,
14:30the uncertainty is very,
14:33very significant.
14:33All of you must have been focused on oil and gas.
14:36I don't know how many of you knew.
14:39I also didn't know as a reporter who should have,
14:41that we are dependent on helium,
14:44and the extent of helium shortage that is now happening
14:46is very,
14:47very significant.
14:48Sulfur,
14:49for example,
14:49the fertilizer shortage that seems to be looming,
14:52everything has changed.
14:53But in the five odd minutes that we have,
14:56I want to focus on two sectors that you yourself are in
14:59and follow up on this.
15:01Renewables.
15:02You have a large footprint in that space
15:04through your company.
15:09Are renewables an answer in the long term
15:13to India's import dependence on hydrocarbons?
15:17And where do we stand as far as our renewable energy capacity is concerned,
15:22particularly Atmanerbharata,
15:24because there too we are dependent on a lot of foreign equipment,
15:28particularly Chinese.
15:31Obviously renewal has to form as part of the solution.
15:35I mean,
15:35you can't do without renewables,
15:36undoubtedly.
15:38And renewable energy for India is even more significant
15:40because it is the cheapest form of energy that we today have
15:42in terms of electricity.
15:44If you really look at coal,
15:46you look at nuclear,
15:49you look at gas,
15:50if you compare with all of that
15:52and look at the basket of all the pricing,
15:55renewable is the cheapest.
15:56Now,
15:56renewable has its own challenges.
15:57The challenges of renewable obviously is grid,
16:01which means you have to invest a lot of money
16:03for grid stability and modernization of the grid,
16:05which the government is investing in.
16:07And you touch supply chains.
16:10Yes,
16:10supply chains,
16:11as far as renewable is concerned,
16:12is that 90% of the PV industry
16:17and the battery industry is controlled by China.
16:21When we talk about renewable being a replacement for oil,
16:25the only place probably where you can use it most
16:28is transportation.
16:30And again,
16:30as far as transportation is concerned,
16:33the lithium-ion industry is completely controlled by China.
16:37They are the largest producers of it.
16:39So,
16:41yes,
16:42renewable has to be a part of the solution,
16:44but there are these,
16:46you know,
16:47supply chain risks,
16:49which one needs to keep in the back of the mind
16:51and keep on evolving,
16:52which brings the fact that government is pushing
16:54of local manufacturing,
16:57of solar panels,
16:59local manufacturing of batteries.
17:00So,
17:01as we move
17:02and as renewable becomes more and more important
17:04in our energy mix,
17:06the key is going to be
17:07how much of dependence
17:09will we be able to get rid of
17:11over a period of time
17:12so that we can be more self-reliant.
17:14Arvind,
17:15the message that Anil Agarwal delivered here
17:17right on this stage yesterday
17:18was drill,
17:19baby,
17:19drill.
17:19He didn't use these words,
17:21but this is something that
17:22President Trump has said.
17:24Is that also alternative,
17:27also nuclear?
17:28Because it is clear that
17:30no single source
17:32can provide India energy
17:34Atman Nirbhartha.
17:36Undoubtedly.
17:37India is one of the least explored countries
17:39and that's what the government
17:40is trying to work on
17:41is how do you open more of the country
17:43for exploration?
17:44How do you open more country,
17:46more of the country
17:47for and invite businesses
17:48to explore the nation,
17:49especially in oil and gas space
17:50and especially the Andaman,
17:52you know,
17:53sea and the Bombay High Sea.
17:55So,
17:55obviously,
17:55that has to be,
17:56you know,
17:57that has to sit at the core of it.
17:59And nuclear,
17:59undoubtedly,
18:01is a solution.
18:02The problem with nuclear,
18:04as far as India is concerned,
18:06is the gestation period
18:07is very long.
18:08The investments
18:08are very high
18:10and then the dependence
18:11on the import of uranium
18:12is there.
18:14Again,
18:14where there is import dependence.
18:16So,
18:16we have to find a way
18:17how do we explore
18:19and become more energy independent,
18:21you know,
18:22using all the mixes
18:23and the policies
18:25have to be on us,
18:26not just on one front,
18:27but on every front.
18:28Okay,
18:28one final quick question
18:30before we run out of time
18:32and this is to do
18:33with the real estate sector.
18:34Again,
18:34many of you might have read
18:36the headlines about
18:37Dubai real estate
18:38and what seems
18:39to be happening
18:39on account
18:40of the West Asia crisis,
18:41but Arvind,
18:44you've invested
18:45in real estate
18:46and I don't know
18:48how many know here
18:48a project called
18:50Experion
18:52and okay,
18:54you can see
18:54some hands come up
18:56and that is
18:56a company
18:57that is backed
18:58by them.
18:59Give us a sense
19:00about the future
19:01of real estate.
19:01We have seen prices
19:03kind of stabilized,
19:04taper off.
19:06market
19:06in the market
19:07that
19:07the real estate sector
19:10has come up
19:11What's your sense
19:12Arvind?
19:12The real estate
19:12has come up
19:13or is there
19:14still scope
19:15for appreciation?
19:16I think we are
19:17at very early stages
19:18of urbanization
19:19of this nation
19:20and real estate
19:21is cyclical.
19:22Real estate
19:23is cyclical
19:24everywhere.
19:26But what sits
19:28really good
19:28for our nation
19:29is the need
19:29for urbanization.
19:30We still
19:31have a long
19:32way to go.
19:32So if you are
19:34an investor
19:35with a longer
19:35term horizon
19:36this undoubtedly
19:37is a space
19:38to be in
19:38because we need
19:40homes.
19:40We need places
19:42to live
19:42and we have
19:43to provide
19:43homes for a
19:44nation of
19:451.4 billion
19:45people.
19:46But Arvind
19:47do we only
19:48need 5 crore
19:49plus homes
19:49or do we
19:50need some
19:50affordable homes
19:511 or 2 crores
19:52as well?
19:52We undoubtedly
19:53need affordable
19:54homes.
19:54We undoubtedly
19:55need government
19:56policy to look
19:57into making
19:58rental homes
19:59more accessible
20:00especially at the
20:01early stages
20:01of when people
20:03just enter
20:03the workforce.
20:05And we
20:06definitely
20:07could do better
20:09with a lot
20:09more policy
20:10intervention
20:10from the
20:10government
20:12for making
20:13homes more
20:13affordable.
20:14But yeah,
20:17I don't see us
20:19being able to
20:20get away with it.
20:21So we'll have
20:21to confront it
20:22and handle it.
20:23One day find
20:24a solution to it.
20:25Absolutely.
20:26So many solutions,
20:27so many things
20:27that we need to do
20:28because after all
20:29we are a country
20:29of 1.4 billion
20:31people.
20:31But I'm glad
20:32to tell you
20:33and this is the
20:33very last point
20:34on today's
20:36session here
20:37that his company
20:38only buys
20:39auction land
20:41and that tells
20:42you about the
20:43future of real
20:43estate done
20:45cleanly,
20:45done with the
20:46best partners
20:47and done in a
20:48straightforward manner
20:49because the real
20:50estate sector also
20:51had a lot of
20:52difficulties.
20:53But Arvind,
20:53thank you very much
20:54for your time with us.
20:55That is a wrap
20:56on this.
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