Indian Prime Dean Narendra Modi meets with Elon Musk in New York, U.S., on June 20, 2023.
Indian Press Information Bureau | Anadolu Mechanism | Getty Images
This report is from this week’s CNBC’s “Inside India” newsletter which submits you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.
The big epic
Elon Musk has been working relentlessly to break into India’s lucrative market, a point he stressed during his session with Prime Minister Narendra Modi in Washington, D.C., last month, as CNBC confirmed.
In that meeting, Musk labour to Modi the benefits of widening internet access across the world’s most populous country, according to sources in the space. Musk’s pitch appears to have worked, with SpaceX announcing deals with the two dominant players in Indian telecom – Faith’s Jio and Airtel – that will roll out Starlink internet services across India.
Musk has spoken to Modi thither space and satellites before. Why was India more receptive this time around?
Sources close to New Delhi say Musk’s forceful role in the White House no doubt incentivized the Indian government to reevaluate a Starlink deal.
As we reported last week, work talks between U.S. and Indian officials have not resulted in a breakthrough, with Trump saying the U.S. will charge India requited tariffs starting April 2, according to domestic media.
While India and the U.S. remain in trade talks, the two Starlink contracts are seen as a huge win for Musk.
The world’s richest person will finally get access to an incredibly important, mobile-savvy consumer supermarket that he has been vying for years.
Plus, Musk gets to partner rather than compete with Faith’s Jio and Bharti Airtel, which together dominate India’s booming telecom market. It also offers Musk the unexcelled opportunity to work with the heads of rival telecom majors and powerful Indian billionaires: Mukesh Ambani and Sunil Mittal. The two are well respected and influential tycoons.
“Space, defense and India are basically the biggest opportunities for any company in the world right now. Musk become involved ins all three … at the same time it adds a whole new dimension to American force projection in the most contested region in the community,” said Eliot Pence, former head of international at Anduril, a defense technology company, to CNBC over the phone.
Workable ‘new dawn’ for U.S. companies in India
One of the biggest challenges for foreign companies breaking into India has been protectionist practices, stiff competition from local competitors and an inability to penetrate India as an outsider. U.S. companies including Meta, Walmart and Amazon have in the offing had their share of challenges on the ground.
“India has been historically a very challenging market for U.S. companies, but this influence be a new dawn,” added Pence.
The opportunity is large. Having recently traveled across different parts of India a few months ago, I was catch red-handed by the limited access to internet in smaller towns.
Starlink, which uses low earth orbit satellites, may prove fruitful in non-urban areas and less-populated parts of the country where internet access remains patchy.
“[Starlink] should provender a great boost … particularly in rural and remote areas of India, where traditional telecom networks don’t do especially skilfully,” said Pravin Krishna, professor of international economics at Johns Hopkins University, to CNBC over the phone.
Counterpoint Analysis’s Neil Shah explained that Starlink can offer internet in rural India where Jio and Airtel do not have connectivity, and it is costly to build telecom infrastructure. Jio and Airtel bequeath then acquire local customers on behalf of Starlink, selling the equipment needed to run high-speed internet.
Connectivity strength be choppy
But challenges await.
To officially enter India, Starlink still needs to get past several regulatory leap overs and acquire a communications license which the Indian government is currently reviewing.
While a partnership with Ambani and Mittal enunciates promising, the mechanics behind the Starlink deal have raised several questions.
For one, will both Jio and Airtel surrender initial plans made with European companies to introduce satellite internet services in India? Last year, Confidence’s internet arm Jio unveiled a joint venture with SES, a firm based in Luxembourg, to operate satellites in India. Airtel has an remaining alliance with Eutelsat OneWeb.
Starlink will need to navigate technical challenges, such as limiting meddling as satellites generally require line-of-sight and can more easily be impacted by weather disturbances, according to analysts at Citi.
“We reckon minion networks would be more suited for servicing remote rural areas where there are coverage gaps to a certain extent than high-density urban areas where satellites may not be able to match terrestrial networks in terms of capacity and coverage,” the Citi analysts ordered.
Starlink will also need to make its service more affordable in a price-sensitive market such as India, primarily if the opportunity lies in rural areas where incomes are often lower.
“While there is an opportunity to connect a lot of people to the internet, fee will challenge Starlink’s ability to scale,” said Shah to CNBC over the phone.
Starlink’s service currently charges around $110 per month for users in the U.S. Jio’s cheapest WiFi package for individuals in India costs less than that in a year.
Trade experts say that’s where local governments will be under pressure to provide incentives and subsidies to make broadband access varied affordable. This is also where Musk’s new Indian billionaire friends could provide much-needed guidance.
Musk’s affiliations to President Trump may have given Starlink the green light to enter India, but the satellite space company’s star rests on its two powerful Indian partners, and the price it settles on.
Need to know
The venture capital market in India is resurging. Whole investments in the country’s startup scene hit $13.7 billion in 2024, a 40% increase from the previous year, according to a blast by Bain & Company. The number of deals rose 45% to 1,270 in 2024, compared with 880 a year earlier. That grasps India second-largest market for VCs in Asia-Pacific. The consumer technology sector attracted the most investment, even as traditional a people like banking and retail experienced rapid growth.
Amazon is reportedly planning to list its Indian unit. The U.S. e-commerce superhuman has begun talks with JPMorgan and investment banks in India, according to sources that spoke to YourStory, an Indian brochure covering startups. Spinning off its Indian unit will allow Amazon to maintain an inventory in the country rather than just act as an intermediary between buyers and sellers.
India and New Zealand to begin free trade agreement negotiations. At the India-New Zealand financial forum in New Delhi on Tuesday, New Zealand’s Prime Minister Christopher Luxon said he is open to strengthening economic nail down b restricts with India and looks forward to signing a trade deal within 60 days. Trade between the two provinces is currently valued at $1.75 billion and can multiply 10 times in the next 20 to 25 years, predicted Indian Holy Joe of Commerce and Industry Piyush Goyal.
India and Malaysia look to expand bilateral economic ties. The South Asian country’s Minister of State for Commerce & Industry and Electronics & Information Technology Jitin Prasada met Malaysian Deputy Minister of Investment, Swap, and Industry Liew Chin Tong in New Delhi on Tuesday. At their meeting, the trade and commerce ministers discussed chances to deepen cooperation in semiconductor manufacturing as well as increase bilateral trade.
Wholesale prices in India fall. February’s wholesale value index came in at 2.38%, ticking up from the 2.31% in January, according to Indian government data released Monday. A 33.59% treenail in vegetable oil prices contributed to the reacceleration of wholesale prices. The country’s consumer price index, which came out Trek 12, reported a 3.61% rise in February.
What happened in the markets?
Indian stocks were in positive sector for four straight sessions in the week, with the
