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Where power lies, is often not understood well and that is why many individuals and movements fail. It is important to understand the three faces of power - the visible, the hidden, and the invisible.

By Abhisht Chaturvedi The Reserve Bank of India (RBI) released an update to its "Guidance Note on Management of Operational Risk" on April 1, 2024. This update incorporates the latest international best practices and aligns with the Basel Committee on Banking Supervision (BCBS) principles. The note applies to regulated entities (REs) in the financial sector, including commercial banks, cooperative banks, all-India financial institutions, and non-banking financial companies (NBFCs). The inclusion of NBFCs in the operational risk management note is an indication of greater and more active regulation of the NBFC sector at par with the regular commercial banks and the rest of the financial sector going forward. Further, the RBI noted that until recently, the primary operational risks faced by regulated entities (REs) stemmed from vulnerabilities associated with the increasing dependence on and rapid adoption of technology for providing financial services and intermediation. However, the financial sector’s growing reliance on third-party providers (including technology service providers), amplified by the Covid-19 pandemic and the shift to virtual working arrangements, has underscored the rising importance of operational risk management and operational resilience. This not only strengthens an RE's ability to remain a viable ongoing concern but also supports the financial system by ensuring the continuous delivery of critical operations during any disruption. These updates also signify the RBI's ongoing commitment to strengthening the risk management practices of Indian banks. They encourage banks to move beyond simply managing operational risks to building resilience against unforeseen events. Here's a breakdown of the key changes: Focus on Operational Resilience: The updated note emphasizes the concept of operational resilience. This refers to a bank's ability to absorb, adapt to, and recover from operational disruptions while maintaining critical functions. Alignment with BCBS Principles: The framework is now aligned with the revised "Principles for the Sound Management of Operational Risk" and "Principles for Operational Resilience" issued by BCBS. This ensures consistency with international standards. Scenario Testing: The updated note emphasizes the importance of conducting regular scenario testing. This involves simulating potential operational disruptions like cyberattacks, natural disasters, or system failures to assess the bank's ability to respond and recover. Incident Response Management: The guidance highlights the need for a robust incident response management plan. This plan outlines the steps a bank will take to identify, contain, recover from, and learn from operational disruptions. Continuous Improvement in Risk Management It's important to understand that the RBI's approach to risk management is dynamic. While there haven't been any entirely new guidance notes in recent days, the RBI constantly revises and updates existing ones to reflect evolving risks and best practices. They actively monitor the banking landscape and may issue specific circulars or notifications addressing emerging risk areas. Here are some ways the RBI promotes continuous improvement in risk management: Supervisory Reviews: The RBI conducts regular on-site and off-site supervisory reviews of banks to assess their risk management practices. Based on these reviews, they may provide specific guidance or recommendations for improvement. Benchmarking: The RBI encourages banks to benchmark their risk management practices against national and international standards. This helps banks identify areas for improvement and learn from best practices adopted by other institutions. Industry Outreach: The RBI regularly interacts with the banking industry through workshops, seminars, and conferences. These interactions facilitate discussions on emerging risk trends and best practices in risk management. Conclusion The recent update to the "Guidance Note on Operational Risk Management and Operational Resilience" demonstrates the RBI's proactive approach to strengthening risk management in Indian banks. While there may not be frequent issuance of entirely new guidance notes, the RBI's commitment to continuous improvement ensures a robust and evolving framework for managing risks in the banking sector. Abhisht is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.

By Abhisht Chaturvedi India's recent decision to allow 100% foreign direct investment (FDI) in the space sector marks a significant milestone in the country's quest for space exploration and commercialization. The proposed FDI Space Policy, with its clear guidelines and thresholds, is likely to spur a wave of innovation, collaboration, and growth in the Indian space industry. India's decision to liberalize the space sector and open it up to 100% FDI presents a host of opportunities for both domestic and foreign stakeholders. By attracting foreign investment and expertise, India can accelerate the pace of innovation, expand its industrial base, and strengthen its position in the global space market. Foreign collaboration can bring in advanced technologies, best practices, and access to new markets, driving efficiency, competitiveness, and growth in the Indian space industry. It can also facilitate technology transfer, skill enhancement, and knowledge exchange, empowering local businesses (especially for component sourcing) and workforce. Under the new policy framework, various activities within the space sector have been categorized, each with its own FDI thresholds and entry routes. Opportunities in Specific Product Segments Satellites: Manufacturing & Operation, Satellite Data Products, and Ground Segment & User Segment The FDI threshold for activities related to satellites, including manufacturing, operation, satellite data products, and ground segment & user segment, is set at up to 74% under the automatic route. This means that foreign investors can directly invest up to 74% in these activities without requiring prior approval from the government. Beyond 74% (up to 100%), approval will be needed through the government route. This provision opens up avenues for collaboration and investment in satellite technology, data analytics, and ground infrastructure with companies in the US (such as Tesla) and other global players. It paves the way for the development of advanced satellite systems, enhanced data services, and improved connectivity, which are crucial for applications ranging from telecommunication and navigation to weather forecasting and disaster management. Launch Vehicles and Associated Systems or Subsystems, Creation of Spaceports For activities related to launch vehicles, associated systems or subsystems, and the creation of spaceports, the FDI threshold is set at up to 49% under the automatic route. Beyond 49% (up to 100%), approval will be required through the government route. This provision encourages investment in launch vehicle technology, infrastructure development, and spaceport facilities. It presents opportunities for collaboration in the design, manufacturing, and operation of launch systems, enabling India to enhance its capabilities in space transportation and satellite deployment. Manufacturing of Components and Systems/Sub-systems for Satellites, Ground Segment, and User Segment The FDI threshold for manufacturing components and systems/sub-systems for satellites, ground segment, and user segment activities is set at up to 100% under the automatic route. This means that foreign investors can fully own and operate businesses engaged in the manufacturing of key components and systems essential for satellite operations and ground infrastructure. This provision promotes investment in high-tech manufacturing facilities, research and development initiatives, and skill development programs. It fosters the growth of a robust ecosystem of suppliers and service providers, supporting India's ambition to become a global hub for satellite manufacturing and technology development. Potential Risks and Pitfalls However, while the liberalization of the space sector presents immense opportunities, it also poses certain challenges and considerations that need to be addressed. These include issues related to national security, intellectual property rights, technology transfer, and regulatory compliance. There is still no clear protocol to identify which technology counts as “dual use” i.e. can both have commercial application and pose a military threat. Our discussions with leaders in the space industry suggest that the lack of such a protocol stifles progress leads to bureaucratic roadblocks. India must ensure that adequate safeguards and mechanisms are in place to protect its strategic interests, safeguard sensitive technologies, and maintain sovereignty over its space assets. It must also establish clear guidelines, regulations, and oversight mechanisms to govern foreign investment and ensure compliance with international standards and obligations. Conclusion India's decision to allow 100% FDI in the space sector under the proposed FDI Space Policy heralds a new era of collaboration, innovation, and growth in the Indian space industry. By embracing foreign investment and fostering strategic partnerships, India can unlock the full potential of its space sector, propel technological advancements, and emerge as a global leader in space exploration and commercialization. As India embarks on this transformative journey, the world eagerly anticipates the remarkable achievements and contributions that lie ahead. Abhisht is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.

By Abhisht Chaturvedi Elon Musk, CEO of Tesla, has been in conversation with the Government of India to enter the Indian market with the recent announcement of Tesla's plans to manufacture electronic vehicles in the country. This strategic move follows the Indian Government's decision to impose a 15% import duty electric vehicles down from a 100% tariff, with a requirement of sourcing 50% of the components from local sources. While Musk's announcement has stirred excitement among Tesla enthusiasts, it has also triggered apprehensions among existing automobile manufacturers in India. The Indian Government's decision to levy a 15% import duty on electric vehicles reflects its broader agenda of promoting domestic manufacturing and fostering the growth of the electric vehicle ecosystem in India. By encouraging local production, the government aims to create jobs, stimulate economic growth, and reduce dependence on imported goods. Tesla's decision to set up manufacturing operations in India aligns with these objectives and signals its commitment to the Indian market. The Indian automotive industry, renowned for its resilience and adaptability, now finds itself at a crossroads as Tesla prepares to make its mark on Indian soil. With a commitment of $2 billion towards its Indian operations, Tesla's entry signifies a significant investment in the country's burgeoning electric vehicle sector. The company is reportedly exploring various locations, including Gujarat and Maharashtra, for the establishment of its manufacturing plant. However, Tesla's foray into India hasn't been met with universal acclaim. Established automobile companies in India are grappling with the prospect of increased competition and disruption within the industry. Tesla's reputation for cutting-edge technology and sleek design poses a formidable challenge to traditional automakers, who now face the daunting task of defending their market share amidst Tesla's entry. Tesla's entry into India has the potential to accelerate the adoption of electric vehicles and drive innovation in the automotive sector. With its state-of-the-art technology and global brand appeal, Tesla could catalyze a shift towards sustainable mobility in India, contributing to efforts to mitigate climate change and reduce pollution. Moreover, Tesla's presence could stimulate competition and incentivize existing automakers to invest in research and development, ultimately benefiting consumers with advanced technologies and improved products. However, Tesla's success in India is not guaranteed, and the company faces several challenges as it navigates the complexities of the Indian market. Infrastructure limitations, including inadequate charging infrastructure and logistics challenges, pose significant hurdles to the widespread adoption of electric vehicles in India. Moreover, Tesla must navigate regulatory and bureaucratic hurdles to ensure smooth operations and compliance with local laws and regulations. Despite these challenges, Tesla's entry into the Indian market represents a significant milestone in the country's journey towards sustainable mobility. It offers an opportunity for collaboration and partnership between Tesla and existing players in the Indian automotive industry, fostering innovation and driving growth. As India embraces the electric vehicle revolution, the stage is set for a transformative shift in the automotive landscape, with Tesla leading the charge towards a greener and more sustainable future. Tesla is also reportedly in talks with Reliance Industries Limited (RIL) to form a joint venture to set up a manufacturing facility in the country. However, as per experts, the move shouldn’t be taken as Reliance’s entry into the automobile space. RIL’s objective in the joint venture is to create capacities for electric vehicles in India. While the role of RIL hasn’t been crystalised yet, it is expected that the Indian conglomerate may play a significant hand in establishing the manufacturing facility and the allied ecosystem for Tesla in India. Partnering with high capability Indian organizations, seems to be a viable way forward for foreign organizations to navigate the Indian markets as it provides a reliable partner with domestic knowhow. We expect such joint ventures to accelerate as more companies plan their entry into the Indian markets. About the Author: Abhisht is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.

By Abhisht Chaturvedi India's strategic initiative to establish a domestic semiconductor industry represents a significant shift in its technological and economic policy, with the government approved a substantial investment of 1.26 trillion rupees (approximately $15.2 billion USD, with 1 USD = 83.3 INR). This move is aimed at reducing dependency on semiconductor imports, notably from China, and fostering an indigenous manufacturing ecosystem will come with a substantial government subsidy (nearly half of the invested value). The hope is that this subsidy will place India on a strong footing in the global semi-conductor supply chain in particular and global technology supply chains in general. The plan includes setting up three semiconductor chip-making plants and to inaugurate them by July-August, 2024. The largest of these, a collaboration between Tata and Taiwan's Powerchip, will see a combined private and public investment of 910 billion rupees (approximately $10.92 billion USD) in Gujarat's Dholera. Furthermore, CG Power will partner with Japan's Renesas Electronics Corp and Thailand's Stars Microelectronics to establish a 76 billion rupees (approximately $912 million USD) chip packaging plant, also in Gujarat. The third facility, with a combined investment of 270 billion rupees (approximately $3.24 billion USD), will be a chip packaging plant set up in Assam by Tata Semiconductor Assembly and Test Pvt Ltd. Economic Implications Indian Electronics Minister Ashwini Vaishnaw indicated that construction for these plants would start between June to August 2023, focusing on sectors like defense, electronic automobiles, and telecommunications. This development is not just an economic endeavor but a testament to India's aspirations for technological self-reliance and enhanced economic security. Yet there are other direct and indirect economic benefits involved. The semiconductor industry is labor-intensive, requiring a vast array of skilled labor. Thus, establishing local manufacturing will likely spur job creation across various sectors, including engineering, manufacturing, research, and development. This job growth extends beyond the immediate semiconductor industry, potentially benefiting ancillary sectors such as logistics, construction, and services. Moreover, the need for a sophisticated semiconductor manufacturing base will drive substantial investments in research and development, fostering an environment ripe for innovation and technological advancement. This could not only spur the growth of India's broader technology ecosystem but also facilitate knowledge transfer and collaboration with global semiconductor powerhouses. A thriving semiconductor industry could significantly contribute to India's GDP growth, enhancing manufacturing output, stimulating domestic demand for electronic products, and reducing import dependency. The industry's expansion might attract foreign direct investment (FDI), bolstering India's position in the global electronics market and contributing to overall economic resilience. From a supply chain perspective, localizing semiconductor production aims to diversify India's supply chain, reducing economic vulnerabilities associated with import dependencies and enhancing national economic stability. This strategic shift could shield the country from global supply chain disruptions, as witnessed during the COVID-19 pandemic, which highlighted the risks of heavy reliance on semiconductor imports. In Comparative Terms Comparing India's efforts with those of established players like the United States, South Korea, and China provides a broader perspective on its ambitions. The U.S. has a mature semiconductor industry, supported by government funding and a focus on innovation, while South Korea's government-backed policies have fostered a robust semiconductor ecosystem. China, on the other hand, has aggressively pursued semiconductor self-sufficiency through substantial state investments and technology acquisitions. India's venture into semiconductor manufacturing, though in its infancy, is critical for its strategic and economic aspirations. Unlike the established semiconductor markets, India faces challenges such as infrastructure development, skill shortages, and funding needs. However, the strategic significance of this initiative lies in its potential to bolster national security, support strategic industries, and enhance technological sovereignty. Moreover, India's semiconductor initiative can be seen as a move to mitigate geopolitical risks associated with over-reliance on foreign technology and supply chains. The global semiconductor supply chain is highly concentrated, with major manufacturing hubs located in geopolitically sensitive regions. By developing its semiconductor industry, India seeks to reduce its vulnerability to international tensions and supply chain disruptions. Moreover, this initiative aligns with India's broader economic and strategic goals, such as the "Make in India" campaign, aimed at transforming India into a global manufacturing hub. It also reflects a strategic calculus to balance economic growth with national security concerns, ensuring a stable supply of critical components for key sectors like defense, telecommunications, and healthcare. Conclusion Realizing the vision of a self-reliant semiconductor industry requires navigating complex challenges, including aligning policy frameworks, ensuring sustained investment, and developing the necessary infrastructure and skilled workforce. It also requires careful management of international relations, as building a domestic semiconductor industry might affect trade dynamics and necessitate negotiations over technology transfers and intellectual property rights. India's efforts to build a semiconductor industry are not merely economic; they are a strategic imperative to enhance technological independence and sectoral resilience. The initiative represents a long-term vision to position India as a significant player in the global semiconductor market, aligning with its broader economic and strategic objectives. The success of this initiative could redefine India's economic trajectory and enhance its standing in the global technological landscape, making it a pivotal moment in India's economic and technological history. About the Author: Abhisht is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.

Author: Abhisht Chaturvedi, Research Analyst, Insights International On March 1, 2024, The Ministry of Electronics & Information Technology (hereafter referred to as the Ministry), Government of India, issued an Advisory for Big Tech Firms like Google, Adobe, etc., which are working on their AI, not on startup firms. All those firms that want to put out their AI in the public domain first should seek permission from the government. Additionally, if a firm wants to release its AI in the public domain while it is still in the underdeveloped stage, it should include a disclaimer stating that the AI is still under development and may not be fully reliable. However, these two advisories have sparked discontent among many firms working on their AI, who believe that this could be a significant obstacle for India to compete on the global stage in terms of tech. Challenges Faced by Big & Small Tech Firms due to Government Regulations While the advisory aims to prevent malpractice in AI, for big tech firms, these advisories may pose logistical challenges and regulatory burdens. The process of obtaining government permission could be time-consuming and bureaucratic, potentially delaying product launches and hindering innovation. For big tech firms, the requirement to seek government permission before deploying underdeveloped AI solutions and the mandate to include a disclaimer about the AI's unreliability could have significant financial implications. The permission process may introduce bureaucratic delays and administrative costs, potentially affecting investment decisions and project timelines. Furthermore, these regulatory advisories may discourage small firms from making significant advancements in the future. The stringent regulatory requirements could create barriers to entry, making it challenging for small firms to compete with established player. Additionally, concerns about the market acceptance of underdeveloped AI solutions may impact the financial viability of AI projects, leading to cautious investment strategies in India's evolving tech landscape. Moreover, concerns about compliance and market acceptance may deter small firms from investing in AI research and development, limiting their ability to innovate and make breakthroughs in the future. For small tech firms, navigating these regulatory requirements could pose challenges. The process of seeking government permission and adhering to disclaimer mandates may seem daunting, particularly with limited resources and expertise. Moreover, the stigma associated with underdeveloped AI may deter potential users and investors, impacting the firm's growth and viability. Benefits and Challenges of AI Disclaimers in Ensuring Credibility and Transparency As for the disclaimer requirements, they may raise concerns about the credibility and market acceptance of underdeveloped AI solutions. However, the disclaimers could benefit the public as well as AI developers themselves. There have been cases where machine learning and large language models instead of getting trained on human produced data, also inadvertently feed on to AI generated data. This can cause distortions and discrepancies that can grow substantially and make the models erroneous and even make them hallucinate more. A label that clearly spells out that an output is AI generated could go a long way in not only helping the public in discriminating between AI generated and human generated data/outputs but also other AI developers as well. Current Situation and Future Directions In response to criticism from both local and global entrepreneurs and investors. The Ministry of Electronics and IT released an updated version of the advisory on March 15, which no longer mandates government approval before launching or deploying AI models in the South Asian market. Instead, firms are advised to label under-tested and unreliable AI models to inform users about potential fallibility or unreliability. The ministry stated earlier this month that while the advisory is not legally binding, it serves as an indication of the future direction of regulation, with government compliance expected. The advisory underscores that AI models must not be utilized to disseminate unlawful content as per Indian law, and should not condone bias, discrimination, or threats to the integrity of the electoral process. Intermediaries are also encouraged to employ "consent popups" or similar mechanisms to transparently notify users about the potential unreliability of AI-generated output. The ministry maintains its focus on ensuring the easy identification of deepfakes and misinformation, advising intermediaries to label or embed content with distinct metadata or identifiers. However, it has removed the requirement for firms to develop a method for identifying the "originator" of specific messages. Despite these challenges, there are avenues for small tech firms to thrive amidst regulatory constraints. By leveraging agile development practices and focusing on iterative improvements, these firms can demonstrate their commitment to addressing AI's developmental challenges. Additionally, fostering open communication with users about the AI's limitations can help build trust and manage expectations effectively. Eventually, it is imperative for the Ministry and top forms to consult with each other and more importantly, it is important for the Ministry to consult with smaller firms because they hold the potential to grow in the future. The effort should be to reach a common ground to ensure that regulation does not impede India's journey to the global stage in terms of technology and doesn't compromise the reliability of AI for People. About the Author: Abhisht is a Research Analyst at Insights International. His research interests include tech policy, media, and communications.

By Jay Makhijani Less than 25% of Micro, Small and Medium Enterprises (MSMEs) have access to credit in India. The credit gap for MSMEs is estimated at INR 20-25 trillion. MSMEs account for nearly 27% of India’s GDP. On average, the MSME sector comprises approximately 36 million units, providing employment to about 80 million individuals. MSME-related products constitute a significant portion of India’s exports. During 2021-2022 (April-September), they accounted for 45.8% of overall exports. Traditional lending models, geared towards long-term commitments and stringent eligibility criteria, often leave out a significant portion of businesses, particularly those without stable incomes. This disparity in access to credit stifles growth and innovation within the MSME sector. The Open Credit Enablement Network (OCEN) attempts to fill this gap by allowing lenders to access data on MSME firms that enables them to offer short tenure and small ticket loans. The recently launched OCEN 4.0 platform introduces a promising shift in MSME lending. By leveraging technology and innovative financial instruments, Open 4.0 aims to democratize access to credit, particularly for the 85% of MSMEs currently underserved by traditional lenders. OCEN 4.0 provides an API (Application Programming Interface) framework that serves as a standardized platform for lenders and borrowers to connect and transact. With the integration of account aggregator frameworks, Open 4.0 empowers lenders with comprehensive, high-provenance data. This allows for better risk assessment and enables cash flow-based lending, unlocking access to credit for previously underserved MSMEs. OCEN, through its API framework, simplifies the process for borrowers to access credit. Borrowers can use the platform to apply for loans, receive credit offers, and interact with multiple lenders seamlessly. This increased accessibility can be particularly beneficial for individuals and businesses that may have had limited access to credit in the past. Further, this platform, incorporates real-time reporting mechanisms, reducing regulatory compliance burdens for lenders. This ensures adherence to guidelines while fostering a conducive environment for innovation and growth. Moreover, in many such platforms, just the creation of a meeting space for lenders and borrowers is not enough. Someone playing the role of a connector or a catalyst is usually desirable. Therefore, OCEN 4.0 introduces the concept of borrower agents, streamlining the lending process and fostering relationships between borrowers and lenders. These agents act as intermediaries, facilitating loan applications, verifying borrower information, and expediting the approval process. By reducing administrative burdens and enhancing transparency, borrower agents play a crucial role in improving access to credit for MSMEs. Potential Risks and Mitigation Strategies Implementing OCEN 4.0 entails various risks, but proactive risk mitigation strategies can help address these challenges effectively. One significant risk is related to data security and privacy concerns arising from the extensive collection and sharing of sensitive financial information within the OCEN ecosystem. To address this, robust encryption protocols and data protection measures must be implemented, along with regular security audits and compliance with relevant data protection regulations. Additionally, operational challenges and infrastructure readiness pose a risk, particularly in areas with limited digital infrastructure and connectivity. Investing in expanding digital infrastructure, providing training on digital literacy, and developing offline capabilities can help overcome these challenges. Credit risk and default management are also critical considerations, given the inherent volatility of MSME lending. Implementing robust credit risk assessment models, diversifying lending portfolios, and offering financial literacy programs to MSMEs can help mitigate these risks. Furthermore, regulatory compliance and legal risks must be carefully managed to avoid fines, penalties, and reputational damage. This involves staying updated on regulatory changes, establishing compliance frameworks, and fostering dialogue with regulatory authorities. Market concentration and competition risks refer to the possibility of a few large players gaining significant control or dominance within the OCEN ecosystem. In such a scenario, these dominant players may have the power to influence market dynamics, potentially limiting competition and choices available to borrowers. This concentration of power could lead to less favorable terms for borrowers and hinder the development of a diverse and competitive lending landscape within the OCEN framework. To mitigate these risks, regulatory interventions are crucial. Regulatory bodies can enact policies and regulations that promote fair competition within the OCEN ecosystem. These regulations may include measures to prevent anti-competitive practices, ensure transparency in lending processes, and promote equal access to lending opportunities for all players, regardless of their size or market presence. Furthermore, collaboration among stakeholders is essential to foster innovation and diversity within the OCEN ecosystem. By encouraging collaboration between large financial institutions, fintech startups, and other players, stakeholders can pool their resources, expertise, and ideas to develop innovative lending solutions that cater to the diverse needs of MSMEs and borrowers. This collaborative approach can help create a more inclusive and competitive lending environment, where borrowers have access to a wide range of lending options and services. Support for alternative lending models is also critical in mitigating market concentration and competition risks. Alternative lending models, such as peer-to-peer lending platforms and community-based lending initiatives, can provide additional options for borrowers, reduce reliance on traditional financial institutions, and promote healthy competition within the OCEN ecosystem. By providing support and incentives for the development and adoption of these alternative lending models, stakeholders can help diversify the lending landscape and reduce the risk of market concentration. The role and active consultations with the Reserve Bank of India and the Finance Ministry would be crucial here to foster easier credit access to the MSME sector. About the Author: Jay Makhijani is a Program Manager at Insights International with a focus on finance, tech, and inclusion policies.

2023, so far seems to be promising for India, taking over the presidency of the G20 seems to be a year of tremendous opportunity, especially for the developing world to see international cooperation across multilateral forums. Read our Mid-Review and Outlook 2023 to asses and make sense of 2023 so far - and to know what to expect in the world of geopolitics and public policy for the remaining of the year!

by Jay Makhijani and Mansi Bahl Background ESG, or Environmental, Social and Governance is one of the core essentials of any business today. It is formulated out of the United Nations’s sustainable development goals and hopes to make the world shift to more sustainable forms of living. Though ESG has showcased importance for a long time it was earlier ignored as the business world did not take the field seriously, however it is now gaining significant momentum as countries worldwide are trying to live up to the promises they have made during COP27 and the Paris Agreement to shift to more sustainable forms of energy. Therefore, countries are implementing stricter regulations in the field of ESG and also giving concessions to companies that comply with the regulations. Hence, ESG is beginning to impact the business world in a way that no one had foresighted. Forms of ESG Reporting In order to report their ESG data organizations use many different frameworks some of the popular frameworks are the Carbon Disclosure Project which is primarily based in India, China, the UK, Japan, Germany, Brazil, and the USA and focuses on issues of water, forests and climate change and is popularly used in India by companies like Tata Steel. Other popular frameworks include Global Real Estate Sustainability Benchmark (GRESB), Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD) companies have become attentive towards their consumer needs and satisfying the growing demand of the stakeholders and investors which align best with the business's goals and SDGs.The Global Reporting Initiative (GRI) is largely accepted by Indian businesses to support their global presence. Major ESG Regulations in India ESG reporting in India officially started in 2009 with the Ministry of Corporate Affairs issuing voluntary guidelines for Corporate Social Responsibility. The Securities and Exchange Board of India (SEBI) has been a major driving force in implementing ESG regulations in India. It issued guidelines for mutual funds to integrate ESG practices in their investments in 2018. The Reserve Bank of India has been taking similar steps in the banking domain with creating a mandate for Banks to conduct Environment and Social Impact Assessments for all new projects, to ensure ESG principles are integrated into financing new projects. ESG in the World of Indian Businesses In the world of business, one of the biggest ESG developments has been the mandating of Corporate Social Responsibility (CSR) activities in 2013 under the Companies Act, which made it compulsory for all companies to conduct CSR activities. Another major development took place in 2019, when the National Guidelines on Responsible Business Conduct (NGRBC) came into effect, which were the founding principles for Business Responsibility and Sustainability Report (BRSR). Before the mandate in 2021 most CSR reporting in India was limited to big corporations like Tata and Reliance which usually complied with the GRI and UNGC principles as of 2009. However, after the introduction of BRSR there now exists a comprehensive framework that is mandated by the Indian government, that would involve cross-checks and further investment in the division of CSR and ESG. Initially, BRSR was voluntary but as of 2021, it has been made mandatory for the financial year 2022-2023 for the top 1000 listed companies. This framework is based on the nine principles and it replaced its processor Business Responsibility Reporting (BRR) and is more qualitative in nature BRR was supposed to function as a tool for an easy transition to BRSR. BRSR format is aligned with the Global Reporting Initiative which allows it to appeal to global standards as well, and considering how popular the framework is among Indian companies, the transition would also be easier. In terms of format, BRSR is divided into two major parts, these are essential and leadership indicators. The essential indicators are mandatory for every company under the guidelines of the report, while the leadership indicators are voluntary. Most of the essential indicators focus on details of a company’s impact on the environment, human rights indicators, health and welfare of employees, and their efforts to promote economic and social development. The leadership indicators go beyond these indicators to focus more on the company’s efforts towards innovating and adopting new sustainable mechanisms, it looks at all levels of a company’s engagement from stakeholders, consumers, and employees to analyze what has been done on each level to encourage a more sustainable and growth-oriented environment. Though voluntary, adopting leadership indicators can have a deeply positive effect on a company’s overall image, especially considering the Indian government’s push toward sustainability. Table 1: Comparisons between 2021 and 2016 Sustainability Frameworks to indicate change in number to indicators and the increase in complexity. The table illustrates the increase in complexity and detail in the 2021 framework compared to the 2016 one. The number of indicators and the details that need to be disclosed by a company have increased from 18 to 29 and the information is much more specific. This complexity is only bound to increase as India’s regulations aim to meet international standards. Over the years, ESG frameworks have evolved, especially post the introduction of BRSR. An example of the same can be seen in the table below, if one compares the frameworks used by Tata Power in 2021 and the ones used by them in 2016. Table 2: Tata Power GRI Indicators 2021-22 Annual Report v/s Tata GRI ESG Reasons Behind India’s Push For ESG The world is becoming increasingly climate-conscious. Events like COP and the Paris Agreement are no longer for show and have to be taken seriously to have a good global reputation. India aspires to be a global leader and has promised to have net zero emissions by 2070 and it is one of the largest carbon emitters in the world. Hence, to live up to its promises the country needs to make drastic decisions, and encouraging companies to adopt a comprehensive ESG framework is a step in the right direction. Additionally, investing in ESG will boost the capital of Indian companies as the pool of global ESG-driven capital is in the trillions. Firms and stakeholders all over the world look at a company’s CSR performance and ESG indicators before investing, international standards for sustainability are also on the rise, and the inability to comply with these standards could reduce the investments for Indian companies. Following ESG mandates is not just an environmentally conscious decision but also one of economic advancement. ESG also ensures the provision of better and cleaner services to clients as they receive products that are more sustainably manufactured. In Addition, increasing ESG investments can reduce India’s dependence on coal and push businesses to innovate new technologies that have lower carbon emissions. Some of the ESG indicators also ensure the protection of a country’s labor force, by ensuring that businesses do not employ child or slave labor in any domain of their businesses. Hence, ESG frameworks benefit both the business and the employees of a business. Lastly, establishing proper ESG frameworks can allow India to make its products globally famous by contributing to more sustainable supply chain methods. Letting them compete with their global counterparts in global markets. Importance of ESG for SMEs Small and medium enterprises encompass a wide range of businesses across various industries. These enterprises play a crucial role in the Indian economy, contributing significantly to employment generation, GDP growth, and overall industrial development. SMEs are the ones that will have to develop an ESG framework from scratch as the regulations are fairly new to them in comparison to large businesses. Though investing in an ESG framework will be costly, it is the only way they can ensure their businesses stay relevant for the future. It can offer then a variety of benefits such as: Access to Capital and Investment: Investors and financial institutions are increasingly considering ESG factors when making investment decisions. SMEs that prioritize ESG reporting may attract more interest from socially responsible investors and gain better access to capital, including loans and funding opportunities. Improved Risk Management: ESG reporting helps SMEs identify and address potential risks related to environmental regulations, social impacts, and governance issues. By proactively managing these risks, companies can avoid costly penalties and reputational damage. Talent Attraction and Retention: Many employees today prioritize working for companies that align with their values and contribute positively to society. ESG reporting can help SMEs attract and retain top talent by demonstrating their commitment to sustainability and social responsibility. Competitive Advantage: SMEs that integrate ESG principles into their business strategies may gain a competitive edge in the marketplace. ESG-conscious consumers and businesses may prefer to engage with companies that demonstrate ethical practices and sustainability efforts. Enhanced Innovation and Efficiency: Implementing ESG reporting can drive SMEs to adopt more sustainable and efficient practices. This focus on innovation and efficiency can lead to cost savings and improved resource utilization. Regulatory Compliance: ESG reporting can assist SMEs in meeting evolving regulatory requirements related to environmental protection, social welfare, and corporate governance. By staying ahead of compliance obligations, companies can deal with government tenders and international partnerships. Stakeholder Engagement and Trust: ESG reporting fosters transparent communication with stakeholders, including customers, suppliers, employees, and local communities. Building trust for SME business is essential to serve long-term partnerships. Enhanced Reputation and Brand Value: ESG reporting showcases a company's commitment to responsible business practices. By demonstrating their efforts to address environmental and social issues, SMEs can enhance their reputation and build a positive brand image among customers, investors, and other stakeholders. Hence, there are more advantages than disadvantages to the investment. Case Study of a Successful ESG Transition in an SME An SME that has successfully made a transition to comprehensive ESG frameworks is SELCO India. Their primary mission is to provide sustainable energy solutions to underserved and marginalized communities in rural and urban areas. They specialize in offering solar energy products and services to improve the livelihoods of low-income households and small businesses. SELCO India took the ESG initiatives and reporting and recognized the importance of formalizing its commitment to Environmental, Social, and Governance (ESG) principles. They began to document and report on their sustainability efforts, highlighting the positive impact they were making on various stakeholders. Environmental Initiatives: SELCO India focused on providing access to clean and renewable energy solutions through solar power systems. By promoting solar energy adoption, the company significantly reduced carbon emissions and helped combat climate change. Social Impact: The core of SELCO's business was centered around social impact. They provided solar lighting solutions to rural households, reducing the dependence on kerosene lamps and improving the living conditions of thousands of families. Access to reliable and clean electricity also enabled children to study after dark, leading to improved education outcomes. Governance and Transparency: SELCO India prioritized strong corporate governance practices and transparent reporting. They maintained a high level of transparency in their financial reporting and operational processes. This level of transparency built trust with customers, investors, and other stakeholders. Some results and growth by ESG reporting and sustainable practices led to several positive outcomes for SELCO India: Increased Access to Capital: As the company established its commitment to social and environmental impact, it attracted impact investors and socially responsible investors who were keen to support its mission. This influx of capital helped them expand their operations and reach more underserved communities. Business Expansion: The growing demand for clean energy solutions and the company's reputation as a socially responsible organization allowed SELCO to expand its reach to new regions and markets within India. They opened new branches and formed partnerships with NGOs and government agencies. Recognition and Awards: SELCO India received several awards and recognitions for their ESG initiatives and impact on society. This recognition further enhanced their credibility and helped them gain a competitive advantage in the industry. Job Creation: As the company expanded its operations, it created job opportunities, particularly in rural areas, leading to improved livelihoods for the local communities. The case of SELCO India exhibits how ESG reporting and a strong commitment to sustainability and social impact can drive growth and success in the SME sector. By addressing environmental and social challenges while maintaining transparent governance practices, SMEs cannot only make a positive difference in society but also attract investment and achieve sustainable growth in their businesses. The Way Ahead for Indian SMEs SMEs can follow in the footsteps of SELCO in the following way: Step 1: ESG Assessment and Materiality Analysis Conduct an ESG assessment to identify the environmental, social, and governance factors that are most relevant to your SME's operations and stakeholders. Prioritize these factors based on their impact on the business and the expectations of stakeholders. Step 2: Setting Clear ESG Objectives and Targets Establish clear and measurable ESG objectives that align with the company's overall business strategy. Set achievable targets to address identified ESG issues and continuously monitor progress. Step 3: Leadership Commitment and Employee Engagement Secure leadership commitment to incorporating ESG principles into the company's values and operations. Educate and engage employees at all levels to foster a culture of sustainability and responsibility. Step 4: Integrating ESG into Business Strategy Embed ESG considerations into the company's business strategy, risk management practices, and decision-making processes. Align ESG goals with core business objectives and explore synergies between financial performance and sustainable practices. Step 5: Compliance and Reporting Comply with relevant ESG regulations and reporting requirements. Utilizing Develop a comprehensive ESG report that highlights the company's progress, achievements, and plans. Step 6: Stakeholder Engagement and Communication Engage with stakeholders, including customers, investors, suppliers, employees, and local communities, to understand their expectations and concerns related to ESG. Maintain transparent communication with stakeholders about ESG initiatives and progress, fostering trust and building long-term relationships. Step 7: Resource Optimization and Efficiency Implement resource optimization measures to reduce energy consumption, water usage, waste generation, and emissions. Focus on operational efficiency to drive cost savings and improve overall performance. Step 8: Social Impact and Community Engagement Engage in activities that positively impact local communities and society. Support initiatives related to education, healthcare, livelihood, and environmental conservation. Collaborate with stakeholders and NGOs to enhance social welfare efforts. Step 9: Supply Chain and Vendor Management Encourage sustainable practices among suppliers and vendors. Implement criteria that consider ESG factors when selecting and working with partners. Collaborate with suppliers to improve supply chain sustainability. Step 10: ESG Risk Management Identify and mitigate ESG-related risks that could impact the company's operations and reputation. Develop contingency plans to address potential ESG challenges and crises Step 11: ESG Incentives and Recognition Explore incentives and benefits offered by the government or financial institutions to encourage SMEs to adopt ESG practices. Seek ESG-related certifications or awards to enhance the company's reputation and credibility. Step 12: Continuous Improvement and Innovation Foster a culture of continuous improvement and innovation to address emerging ESG challenges and seize new opportunities. Regularly review and update ESG strategies to stay relevant and responsive to changing circumstances. Following these steps will ensure that SMEs can successfully incorporate ESG frameworks in their businesses. By following this comprehensive plan and actively integrating ESG principles into their operations, SMEs in India can gain a strategic advantage, leading to improved reputation, access to capital, customer loyalty, and long-term sustainability. Conclusion The climate crisis is real and in the coming years, the world is going to face the brunt of it. Hence, ESG becomes all the more essential as the world needs to adopt cleaner forms of energy to survive. As the world continues to strive toward sustainability, ESG regulations are going to continue to gain more prominence in the future. Hence, businesses need to start identifying and complying with ESG reporting, which best suits their business demand. The evolution of ESG frameworks is important for companies to learn about. Over time, all ESG frameworks have become more deep and demanding for businesses, which has led to an additional cost attached to them. However, the various frameworks have also ensured that the purpose of ESG implementation is met and the SDGs are more in focus. ESGs have also created a positive impact which has attracted more investments for ESG-focused businesses, which has led to an increase in employment. Whereas, innovation is bringing solutions to businesses and solving complex issues. ESG could also deeply benefit SMEs as they can reap the benefits of ESG reporting by attaining investments to scale up the business and the benefits of government schemes and incentives. In addition, they can also be champions and serve as successful examples of ESG reporting for businesses all over the world, adding to their prestige and global brand value. References What are ESG Frameworks? | IBM. (n.d.). https://www.ibm.com/topics/esg-frameworks Choosing the Best ESG Framework. (n.d.). ESGgo. https://www.esggo.com/blog/best-esg-framework#:~:text=The%20GRI%20framework%20assists%20companies,are%20the%20most%20popular%20worldwide. Ahuja, N. (2022, November 14). Introduction To Environmental, Social, And Governance (ESG) Disclosures In India With An Overview Of. https://www.mondaq.com/india/diversity-equity--inclusion/1250572/introduction-to-environmental-social-and-governance-esg-disclosures-in-india-with-an-overview-of-the-global-standards-on-esg#:~:text=ESG%20reporting%20in%20India%20commenced,Guidelines%20on%20Corporate%20Social%20Responsibility ESG regulations gain prominence in India: A positive step towards sustainable development. (2023, May 10). Times of India Blog. https://timesofindia.indiatimes.com/readersblog/esg-insights/esg-regulations-gain-prominence-in-india-a-positive-step-towards-sustainable-development-53683/ ESG: Regulatory Framework in India. (n.d.). https://samistilegal.in/esg-regulatory-framework-in-india/ DiVito, C. (2023, April 10). BRSR 101: Everything You Need to Know About India’s Business Responsibility & Sustainability Report - FigBytes. FigBytes. https://figbytes.com/blog/brsr-101-everything-you-need-to-know-about-indias-business-responsibility-sustainability-report/ Csr, I., & Csr, I. (2023, May 10). What is BRSR and What are the 9 Principles of BRSR? India CSR. https://indiacsr.in/what-is-brsr-and-what-are-the-9-principles-of-brsr/#:~:text=The%20BRSR%20Framework%20is%20based,and%20equitable%20development%2C%20among%20others. Das, A., Goswami, A., & Jain, A. (2023, February 28). An Introduction of ESG Disclosures in Indian Regulatory Space – Part 1. Business Today. https://www.businesstoday.in/technology/news/story/an-introduction-of-esg-disclosures-in-indian-regulatory-space-part-1-371707-2023-02-28 The importance of ESG for SMEs | Insights | HSBC. (2022, June 1). https://www.business.hsbc.com/en-gb/insights/sustainability/the-importance-of-esg-for-smes 92% of Indian SMEs are focused on adopting ESG measures: DBS and Bloomberg Media Studios Survey. (n.d.). https://www.dbs.com/newsroom/92_percent_of_Indian_SMEs_are_focused_on_adopting_ESG_measures SMEs Should Embrace Sustainability. (2022, December 6). SMEs Should Embrace Sustainability. https://www.cogoport.com/en-IN/blogs/sme-and-sustainability

Beginning 2023, we predicted that this year will be characterized by 3 Rs – Recession, Regionalization, and Reordering. Insights International CEO Arpit Chaturvedi Moderating a Discussion with EU Parliamentarians' Delegation to New Delhi to discuss the European Free Trade Association (EFTA) collaborations and Agreements with India If you were a business who did not keep a close watch on politics and geopolitics, gone are those days when these could be ignored. Political headwinds create unique challenges and opportunities for businesses, once again. Businesses without a keen understanding of political risk have faced severe setbacks in the first quarter of 2023. On the other hand, businesses with insight into how policymaking and the politics of policymaking works, are finding this capability to be of strategic and competitive advantage. From the beginning of 2023 up until now, we have witnessed many disruptions, here are our top picks: 1. Increased supply chain disruptions due to the war in Russia and Ukraine: Some supply chains are genuinely shifting and others are being “white-labelled”, i.e. you do not import from Russia but you really do import from Russia. The Ukrainian counter-offensive set to begin this summer is likely to cause even more of these disruptions across the board. The Indo-Pacific countries are hurriedly developing regulatory codes, implementing reforms, and doling out incentives and subsidies to companies to attract investments ever since the outbreak of Covid-19, with mixed results. In India, the production linked incentives are increasingly tied to not just production, but investment targets and this is causing some consternation among manufacturing giants. What happens next, is yet to be found out. Also, The expected period of Chinese escalation with Taiwan is mid-late 2025 and this should give some time to companies to diversify their supply chains. 2. Increased Extended Producer Responsibility: In a bid to make businesses more sustainable, more and more countries are requiring manufacturers to report on their carbon footprint and Environmental Social Governance (ESG) parameters. While India has come up with Business Responsibility in Sustainability Reporting (BRSR) requirements and plans to expand on its scope/coverage. The challenge is that it triggers a ripple effect where large companies have already started demanding their suppliers (and their suppliers have started demanding their own suppliers) to report on ESG parameters. The smaller players are finding it difficult to do so, and most larger players are also relatively new on the learning curve. 3. Carbon Taxes and Carbon Markets: The European Union (EU) is set to impose a carbon border tax – the Carbon Border Adjustment Mechanism (CBAM) making carbon reporting mandatory to exporters sending their goods to EU from October 2023 (CBAM will cover all industries by 2026). At the same time other countries are likely to impose carbon border taxes of their own. Taxes indeed are accompanied with incentives and market opportunities such as carbon credits markets. The challenge currently is the lack of demand for the carbon credits and imperfect market structuring. 4. AI Policy: With the rise of ChatGPT, Google’s Bard, Microsoft’s AI enabled Bing, generative AI and the capabilities/risks it unleashes is on the minds of every large government. India, Germany, Japan, Brazil, USA, China, and France among other countries are working speedily to develop their own AI policies and looking at each other as they do so. The G7 and the G20 meetings have developed significant agendas around AI. The diffusion of policies is taking place with respect to 3 global hotspots – China, EU, and the USA. In almost all countries, various interest groups are either advocating to hasten or to slow down AI regulations depending on their relations and investments in China. 5. Monetary Tightening: The first half of 2023 has witnessed monetary tightening mainly because of the US Fed’s attempt to get the country back on its feet. The second half of 2023 is likely to see some relief with the easing of interest rates. However, with no end in sight for the Russia-Ukraine war and US beginning to contemplate categorizing the Russia-Ukraine War as a frozen conflict, the relief could turn out to be too little, too late – at the detriment of developing economies. 6. The government re-emerges as a large buyer: 2023-24 are years of big elections. 2023 is the year of many state elections in India. Major (and politically critical) states such as Chhattisgarh, Rajasthan, Telangana, Madhya Pradesh, and Karnataka are going into elections. On a global level, India goes into general elections in April-May 2024, the United States in November 2024, and the UK in January 2025. This means a continuation and increase in subsidies with increased pressures on governments to tax the higher income brackets. Further, this means large spending by the governments with a caveat – most of the spending is either already happening or new contracts will be awarded once a new government takes office. Most importantly, elections mean new interest groups and newer bureaucrats gain importance at various levels. At Insights International we have a dual focus: (1) A deep insight into policymaking, politics, and geopolitics: We inform businesses of political and regulatory risk and support them in anticipating and navigating through these currents to gain strategic advantage. (2) A deep understanding in new age business sectors: Sustainable development, space, water, recycling, technology, artificial intelligence – if you are in an “new age sector” we believe that your business will be core to the national and global economy, sooner than you might expect. Now, time for a story A veteran public affairs professional was contemplating on the fate of two of the largest Indian companies – first, a tremendously successful Indian company that recently become one of the world’s largest but now embroiled in controversy; and second, an old and large business house credited to have played a great role in India’s development story since the Independence. Both companies have sound credentials. However, the first company (the newer one) is developing infrastructure in India and abroad, creating many jobs, and is bringing in foreign capital. The second (the old conglomerate) while it does all that, is also purchasing aircrafts from abroad, and has significant debt (more than the first company. Yet, the second company, the old and stable one gains all the applause (it always has), and despite the good work the first company has done, it gets public derision. Why? The reason is, that the second company has a history of 3 potent practices: (1) Tying its narrative intricately with the country’s growth. This way the company almost becomes seen as a public institution or an institution for the public good. (2) Using Corporate Social Responsibility initiatives and meaningful investments, not directly for their own benefit but quite genuinely for the public good (sometimes overtly and sometimes silently) as a cushion against future reputational risk. (3) Conducting a long and thorough Political, Economic, and Cultural (PEC) Analysis before it enters a new market and conducting regular PEC audits to track and forecast change in the current markets. Strategically positioning its image and business initiatives informed by the PEC imperatives. Building lasting relations, rapport, and goodwill with key players in the economic, scientific, academic, cultural, civil, and political communities. Most companies are not able to do that. While many companies do 1, only some companies are able to do 2 with much success. Rarely do companies even know or do 3 in a structured manner. The 3 Levels of Companies So what do we do at Insights International? We make your company a Level 3 Company. Please remember that your company size, revenue, years of operations etc. do not play a significant role in defining a company’s level. What matters is your level of “influence”, “agility”, and “resilience”. Level 1 A Level 1 company, is financially stable and possesses the right messaging to position itself as contributing to a cause larger than enhancing shareholder value. This company publishes occasional thought leadership pieces, typically around 6-9 publications or blogs annually, focusing on industry insights and trends. It engages in CSR programs that indirectly benefit the company or its employees, such as employee volunteer programs or charitable donations. Collaborations with local organizations or institutions are limited to joint initiatives or events. The company has a broad understanding of changes in the political economy and political risk but does not conduct regular or structured PEC analysis. It develops patronage relationships with a few decision-makers or bureaucrats (3-5 individuals). The company's impact on societal or public good beyond financial stability is limited, as is its ability to navigate and mitigate political, financial, and reputational risks. A Level 1 company is able to influence some policy outcomes, but not in a significant manner and not consistently. Level 1 Companies: Characteristics: Financially sound. Has the right messaging positioning itself as contributing towards a cause larger than enhancing shareholder value. Level 1 Behaviors: Publishes occasional thought leadership pieces reflecting on how it contributes to the larger good (6-9 publications/blogs annually) with a focus on industry insights and trends. Engages in CSR programs related to issues that indirectly benefit the company or its employees, such as employee volunteer programs or charitable donations. Develops limited collaborations with local organizations or institutions for joint initiatives or events. Broadly understands changes in political economy and political risk but does not conduct PEC-type analysis on a regular or structured basis. Develops patronage relationship with few (3-5) decisionmakers/bureaucrats Level 1 Outcomes: Limited impact on societal or public good beyond financial stability. Limited engagement in in-depth analysis of political, economic, and cultural factors. Limited ability to navigate and mitigate political risk, financial risk, and reputational risk. Is able to influence some policy outcomes, but not in a significant manner and not consistently. Level 2 A Level 2 company in addition to possessing characteristics of a Level 1 company, actively engages in Corporate Social Responsibility initiatives and meaningful investments for the public good as a cushion against future reputational risk. This company demonstrates a broader understanding of changes in the political economy and political risk. It conducts periodic PEC analysis before entering new markets, assessing regulatory frameworks, cultural nuances, and economic trends. Regular PEC audits are conducted to track and forecast changes in current markets, adjusting strategies accordingly. The company strategically positions its image and business initiatives based on PEC imperatives, aligning with local values and priorities. It develops collaborations with local NGOs, national nonprofits, or research institutions to address specific social or environmental issues. The company participates in industry-specific events, conferences, or forums, contributing to knowledge sharing and thought leadership through detailed reports and memos. The scope of CSR initiatives expands to include sustainable practices, environmental conservation, community development, or social welfare projects that align with community needs. The company develops long-standing but transactional relationships with a significant number of decision-makers or bureaucrats and institutions. The company's impact on societal or public good is significant, and it demonstrates a moderate ability to navigate and mitigate political, financial, and reputational risks. The government and civil society consider the company a key interested stakeholder on industry and public good issues. A Level 2 company is able to is able to influence policies significantly to its advantage. Level 2 Companies: Characteristics (in addition to Level 1): Engages in Corporate Social Responsibility initiatives and meaningful investments for the public good (sometimes overtly and sometimes silently) as a cushion against future reputational risk. Demonstrates a broader understanding of changes in the political economy and political risk. Level 2 Companies Behaviors: Conducts periodic PEC (Political, Economic, and Cultural) analysis before entering new markets, assessing regulatory frameworks, cultural nuances, and economic trends. Regularly conducts PEC audits to track and forecast changes in current markets, adjusting strategies accordingly. Strategically positions its image and business initiatives informed by PEC imperatives, aligning with local values and priorities. Develops collaborations with local NGOs, nonprofits, or research institutions to address specific social or environmental issues. Hosts or participates in industry-specific events, conferences, or forums to contribute to knowledge sharing and thought leadership (For example, publishes or sponsors detailed reports, memos etc.) Expands CSR initiatives to include sustainable practices, environmental conservation, community development, or social welfare projects that go beyond the current scope of business interests but are more aligned towards community needs. Develops long standing but transactional relationship with a significant number of decisionmakers/bureaucrats and institutions (1-2). Level 2 Companies Outcomes: Significant impact on societal or public good through targeted CSR initiatives, such as education programs, environmental initiatives, or community development projects. Improved reputation management and risk mitigation through CSR investments. Enhanced understanding of the political, economic, and cultural landscape, leading to better navigation of political risk and financial risk. Moderate ability to pre-empt, mitigate and manage reputational risk through proactive engagement in social and environmental issues. Is seen as a key interested stakeholder by the government and civil society on issues relevant to industry. Is seen as a key stakeholder by the government and civil society on issues of public good. Is able to is able to influence policies significantly to its advantage. Level 3 A Level 3 company in addition to possessing the characteristics of a Level 2 company, intricately ties its narrative with the country's growth, positioning itself as almost a public institution or an institution for the public good. It presents itself as an expert or aggregator of experts on an issue of public importance or public good. This company actively integrates its narrative with the country's growth, aligning goals and initiatives with national priorities such as sustainable development or innovation. It invests significantly in CSR initiatives for the public good, with a genuine focus on long-term societal impact, including large-scale environmental conservation projects or educational scholarships. The company conducts comprehensive and regular PEC analysis to inform strategic decision-making, incorporating deep cultural understanding and economic forecasts. It proactively builds strong relationships with key stakeholders in political, economic, scientific, academic, cultural, civil, and political communities, fostering partnerships for joint initiatives. Collaborations with leading national and international academic institutions, think tanks, government bodies, and multilateral institutions, are established to conduct research or share knowledge on critical issues. The company organizes high-profile events, conferences, or symposiums to drive discussions on key industry challenges and societal impact. It develops long-standing and meaningful relationships with a network of decision-makers or bureaucrats at all levels across geographies and multiple institutions. The company's impact on societal or public good is high, and it demonstrates advanced abilities in pre-empting, navigating, and mitigating political, financial, and reputational risks. The government and civil society consider the company an expert and collaborator on issues relevant to industry and public good. A Level 3 company is able to co-create policies with the government and relevant institutions and set the policymaking agenda. Level 3 Companies: Characteristics (in addition to Levels 1 & 2): 1. Ties its narrative intricately with the country's growth, making it seen as a public institution or an institution for the public good. 2. Positions itself as an expert/aggregator of experts on an issue of public importance/public good. Level 3 Behaviors: Actively integrates its narrative with the country's growth, aligning its goals and initiatives with national priorities, such as sustainable development or innovation. Invests significantly in CSR initiatives for the public good, with a genuine focus on long-term societal impact, such as large-scale environmental conservation projects or educational scholarships. Conducts comprehensive and regular PEC analysis to inform strategic decision-making, incorporating deep cultural understanding and economic forecasts. Proactively builds strong relationships with key stakeholders in political, economic, scientific, academic, cultural, civil, and political communities, fostering partnerships for joint initiatives. Collaborates with leading national and international academic institutions, think tanks, government bodies, and multilateral institutions. Organizes high-profile events, conferences, or symposiums to drive discussions on key industry challenges and societal impact. Develops long-standing and meaningful relationships with a network of decisionmakers/bureaucrats at all levels across geographies and multiple institutions. Level 3 Outcomes: High impact on societal or public good through extensive and meaningful CSR initiatives, addressing critical social, economic, or environmental challenges. Strong reputation management and risk mitigation through proactive engagement in social and environmental issues, positioning the company as a trusted and responsible entity. Strategic positioning of the company's image and initiatives based on a deep understanding of the political, economic, and cultural context. Advanced ability to pre-empt, navigate and mitigate political risk, financial risk, and reputational risk through comprehensive PEC analysis, strong relationships, and proactive measures. Is seen as an expert and collaborator by the government and civil society on issues relevant to industry. Is seen as an expert and collaborator by the government and civil society on issues of public good. Is able to co-create policies with the government and relevant institutions and set the policymaking agenda. So, how do we help you? Our team of experts which includes former diplomats, bureaucrats, current international business and development practitioners, and academics from all over the world provides you with strategic advice to make your business thrive in a complex and uncertain world. Step 1: Our team sets up 1-2 introductory calls to gain a deep understanding of your business (Complementary). Step 2: We conduct a briefing session with your organization’s leadership team where our expert apprises your company of regulatory risks, challenges, and strategies relevant for your business (Complementary). Step 3: We organize an expert panel discussion (online) to discuss an issue relevant to your business and the larger policy/sustainability landscape (Complimentary). Step 4: We zero down on our terms of engagement to solve your organizations growth challenges (Contractual). So What do we Really Do? As Insights International, we offer a comprehensive range of services to help companies become Level 3 companies by enhancing their influence, agility, and resilience. Specifically, we do the following and more based on the specific needs of your company and industry: Comprehensive PEC Analysis: Our team conducts in-depth and regular Political, Economic, and Cultural (PEC) analysis, enabling companies to gain a deep understanding of the evolving market dynamics, regulatory landscapes, cultural nuances, and economic trends. This analysis serves as the foundation for informed strategic decision-making, allowing companies to anticipate and navigate potential risks and capitalize on emerging opportunities. CSR Strategy and Implementation: We collaborate with companies to develop and implement impactful Corporate Social Responsibility (CSR) strategies that extend beyond traditional philanthropy. Our experts help identify and prioritize social, economic, and environmental initiatives aligned with the company's values and business objectives. This includes designing and managing CSR programs, such as education initiatives, sustainable practices, environmental conservation projects, and community development programs. Stakeholder Engagement and Partnerships: We facilitate proactive stakeholder engagement by helping companies build and maintain relationships with key stakeholders in political, economic, scientific, academic, cultural, civil, and political communities. Through strategic partnerships, companies can position themselves as trusted experts and aggregators of expertise on issues of public importance. We assist in forming collaborations with relevant organizations, think tanks, and academic institutions to drive joint initiatives, research, and knowledge sharing. Reputation Management and Risk Mitigation: Our services support companies in managing their reputation and mitigating risks through proactive engagement in social and environmental issues. We work closely with companies to develop robust reputation management strategies, crisis communication plans, and stakeholder mapping exercises. By aligning their goals and initiatives with national priorities and demonstrating responsible business practices, companies can enhance their reputation and minimize potential reputational risks. Advocacy Campaigns: We design and execute advocacy campaigns on behalf of companies to promote specific causes, influence policy decisions, and drive positive change. Our team helps companies identify relevant issues, develop compelling narratives, engage with policymakers, and mobilize stakeholders to amplify their impact and advance their advocacy goals. Events and Roundtables: We organize high-profile events, conferences, and roundtables where industry leaders, policymakers, and experts come together to discuss key challenges and opportunities. These platforms facilitate knowledge sharing, thought leadership, and networking opportunities for companies to showcase their expertise, contribute to industry discourse, and build meaningful relationships with stakeholders. Reports and Publications: We support companies in producing detailed reports, blogs, podcasts, publications, and thought leadership pieces that reflect their expertise, insights, and contributions to the larger good. These publications serve as valuable resources for industry stakeholders, policymakers, and the wider public, establishing the company as a thought leader and trusted source of information. Training Programs: We develop customized training programs to enhance the knowledge and skills of company employees on topics such as CSR, stakeholder engagement, reputation management, and risk mitigation. These programs empower employees to effectively navigate complex challenges, align their actions with company values, and contribute to the company's Level 3 aspirations. Knowledge Sharing Programs: We facilitate knowledge sharing initiatives, including webinars, workshops, and online platforms, where companies can share best practices, lessons learned, and innovative approaches. These programs foster collaboration, exchange of ideas, and peer learning among companies striving to become Level 3 entities. Fellowship Programs: We design and implement fellowship programs that provide opportunities for professionals and experts to engage with companies on a deeper level. These programs facilitate knowledge exchange, collaborative research, and mentorship, allowing fellows to contribute their expertise and insights to the company's strategic initiatives. By fostering these collaborative relationships, companies can tap into diverse perspectives and strengthen their position as thought leaders. Membership Programs/Forum Building: We assist companies in establishing membership programs or forums that bring together like-minded organizations, industry leaders, and stakeholders. These programs serve as platforms for networking, collaboration, and collective action. By fostering a community of engaged members, companies can drive industry-wide discussions, advocate for common interests, and leverage collective expertise to address key challenges and promote the public good. Our Biggest Updates of the 1st and Second Quarter 2023 CEO Insights International, Mr. Arpit Chaturvedi moderated a discussion between Indian public policy experts and a delegation of Parliamentarians from the European Free Trade Association (EFTA) nations: 2. We hosted a panel discussion on Water, Technology, and Our Common Future with Dr. Lior Asaf, Water Attache, Embassy of Israel in New Delhi and Desire Energy Solutions Pvt. Ltd. in Jaipur and were joined by eminent members from the UNDP, Indian media, Asia Development Banks etc. 3. CEO Arpit Chaturvedi delivered a talk on "Indian Foreign Policy : Tracing the Trajectory” hosted by Global Youth India. He noted that the future of India is in becoming an independent pole with closer cooperation with the USA. Furtherobserved that the importance of #Geotech in addition to Geo-economics and Geopolitics as a key driver of foreign policy.He spoke alongside speakers such as Ambassador Rtn. Anil Trigunayat (IFS Retd). 4. We hosted the Climajo Sustainability Conclave at the Constitution Club of India. The panellists included H.E. Amb. Diana Mickeviciene (Ambassador of Lithuania to India), Suresh Kumar, IAS (Former Chief Principal Secretary to Chief Minister, Punjab, IAS (Retd.), Ajitabh Sharma, IAS (Managing Director, Jaipur City Transport Services Limited), Dipakshi Mehandru (Director for Government Affairs and Public Policy, India, Dell Technologies), John Dickson (President, World Trade Partnership), Amb. Anil Trigunyat (Former Ambassador of India to Jordan, Libya & Malta), Abhishek Jain (Head, Investment Cell at O2 Power), Sandeep Dabur (Director, Comptroller and Auditor General of India), Dhruv Sharma (Election Campaign Manager – Political Advisor, Himachal Pradesh), and Rohit Chauhan (Former GM, Strategy, Policy and Business Development at Adani Enterprises Limited). 5. We were part of the Think 20 Inaugural Event hosted by the G20 Secretariat in India 5. CEO Arpit Chaturvedi Addressed the National Street Vendors' Association of India

On 9 December 2022, the UAE released the Corporate Tax (CT) law through Federal Decree No.47 of 2022 (CT law) signalling the imminent implementation of a corporate tax, set to take effect on June 1, 2023. The tax regime dictates that a taxable entity or enterprise will be liable to a 9% corporate tax from the inception of their initial financial year, beginning on or after the aforementioned date. Given this context, this memo seeks to offer recommendations on innovative tax models that can enhance corporate compliance through behavioral economic research and use case studies. Specifically, the policy suggestions will prioritize designing tax frameworks that are congenial to corporations while also increasing voluntary tax compliance. Download:

The issue of organ donation and transplantation is an important area of concern in India. This report provides an overview of the current state of organ donation policy in India, highlighting key issues and potential solutions. Currently, India faces a significant shortage of organs for transplantation, leading to long waiting lists and high mortality rates. Despite the government allocating budgets for organ donation-related initiatives, the country continues to fall behind in comparison to other countries in organ donation rates. Awareness campaigns have been launched to promote organ donation, but behavioral economics research suggests that awareness alone is not sufficient to drive behavior change. Organ donation systems need to be redesigned to incentivize and encourage donation. In this analysis, we note that a tailored version of the "mandated consent" system of organ donation may work best for the Indian context. Embedded inequities in organ transplantation systems in India, particularly in renal transplants, highlight the need for policy interventions to ensure fair and equitable access to organs. Further, we note that the potential for blockchain technology to transform organ donation is significant. Blockchain could help increase transparency, reduce fraud, and improve the efficiency of organ allocation and transplantation. Country examples of successful organ donation policies, such as those implemented in Spain, the United Kingdon, Brazil, and Belgium, can provide valuable insights for India to develop a unique organ donation model. It is time for India to adopt a unique organ donation model that incorporates best practices from around the world and addresses the specific challenges facing the country. This model must be designed with a focus on the incentivizing donation, improving transparency and efficiency, and promoting equity in access to organs. Download: