In This Economy: High-End EVs, Low-End CPI, And RBI In The Middle

Happy Tuesday (+1)!

We know we are a day late to bring you this newsletter, but yesterday was all about the big Tesla launch in Mumbai. Elon Musk's wonder car is now available for booking and purchase in India, as Tesla opens its first-ever experience centre in the country. The store will display Tesla's Model Y, which is its most popular sports utility vehicle.

Considering Musk's sudden decision to skip his India trip last year had followed long-pending conversations about easing customs duty on imported SUVs. While the Indian government did not opt for reducing the duties below 70%, it did encourage foreign carmakers to build in India to enjoy a more competitive pricing model.

Tesla so far has not indicated any interest in putting up a plant in India. That may follow successful sales in the country. Though the pricing question still might come in the way. At a price tag of over Rs 60 lakh, though, the Tesla Model Y is one of the more expensive electric vehicles available in the country.

To sweeten the deal, Musk's iconic car company is offering a limited offer of free wall connector chargers with every car.

Will this attract buyers? Guess we will find out. For now, NamasTesla!

On to this week's newsletter. 

TO CUT, OR NOT TO CUT, THAT IS THE QUESTION

With Monday's retail inflation reading at a six-and-a-half-year low of 2.1%, the buzz around more rate cuts this year has picked up again. Led largely by a glut in food inflation, the consumer price index has seen a sharp downturn since October 2024. Retail inflation might even touch historical low levels in July, according to SBI Research's Soumyakanti Ghosh.

There is also the core question. Core inflation continues its upward trend, albeit within a small range. As of June, core inflation is trending at 4.4%. Though this is not that much of a hangover since this was largely driven by gold prices and personal care items.

With a better than expected monsoon, improved crop sowing, and higher water reservoir storage levels, food prices are only expected to moderate further. Economists expect retail inflation may undershoot RBI's estimates for the year. QuantEco economists said that at 3% in FY26, CPI inflation might come in lower than what it was in 1991 during the economic liberalisation.

The only downside risks to watch out for include supply chain disruptions due to trade policy uncertainties and geopolitical tensions. As far as the trade situation is concerned, US President Donald Trump has already highlighted that a deal is likely coming soon, after he signed a deal with Indonesia.

But is the RBI listening? In a recent TV interview, Governor Sanjay Malhotra said that the central bank will focus on outlook rather than just past data to decide future courses of action. Inflation is not going to outweigh growth for the RBI's assessment, Malhotra said.

FEATURE FIVE

• Charu Singh reports on this small investment advisory firm in Delhi, which promised 500% returns to investors through a newspaper ad.

• Charu's other big story was the SEBI crackdown on pump and dump scams running across 200 players.

• SEBI is asking its various departments to increase scrutiny of market manipulation and take due action in light of the Jane Street fiasco. Shrimi Choudhary reports.

• The income tax department is initiating a crackdown on fake return filings, Shrimi's other big report says.

• Agnidev Bhattacharya picks up that Tesla's wonder car won't be Tarzan just yet.

CAUGHT MY EYE

Fauja Singh, the 114-year-old British-Indian marathon runner, died in a hit-and-run case in his hometown of Beas Pind, Punjab. Often tagged as the world's oldest marathon runner, Singh was actually on his way to Kuldeep Dhaba, a family restaurant named after his late son, who died in 1994. The Punjab police have arrested the driver of the car that hit Singh and ran away without any assistance. This is a heart-wrenching story.