Buffett's Quiet Bet On Compute

The most quietly important capital markets story of yesterday was not the eighty billion dollars. It was the ten billion inside it.

Warren Buffett's Berkshire Hathaway put ten billion dollars into Alphabet's latest equity raise: five billion of Class A shares at $351.81 and five billion of Class C at $348.20. Buffett does not normally pay for compute. For most of his career he avoided technology companies on the grounds that their capital was consumed faster than it returned. That he is now anchoring an eighty-billion-dollar stock sale designed almost entirely to fund AI data centres is a more telling signal than the headline number.

An industrial capex cycle has begun

Alphabet expects to spend roughly $180 to $190 billion on capex in 2026. Together with Microsoft, Meta and Amazon, the four hyperscalers are projected to put close to $700 billion into AI infrastructure this year, and Wall Street estimates point north of a trillion in 2027. These are not software numbers. They are railway, electricity-grid, telecom-trunk numbers, the kind of capital intensity that defines an industrial cycle, not a product cycle.

The raise itself is structured to look like one: thirty billion in underwritten public offerings, of which fifteen billion is mandatory convertible preferred stock, a forty-billion at-the-market programme to be drawn through the year, and the Berkshire anchor on top. Mandatory convertibles are the financing instrument of a company that wants equity-like permanence without immediate dilution. ATM programmes let you tap the market the way a utility taps a balance sheet. This is not a tech firm raising opportunistically. It is a hyperscaler behaving the way a power utility did in the 1920s.

The compute concentration that follows

Capital flows are not neutral. A trillion dollars of capex absorbed annually into four American balance sheets, almost entirely deployed inside the United States with custom silicon and dedicated power, is a redirection of the world's marginal investable capital toward one geography and one stack. The natural counterpart is already visible. Foreign investors pulled more than twenty billion dollars out of Indian equities in the first four months of this year alone, eclipsing the full-year record of 2025, and the rupee has touched all-time lows against the dollar under the combined pressure of energy shocks and capital outflows.

It would be a mistake to credit all of this to the Iran war. The war is the proximate shock. The deeper current is that risk capital globally is being pulled toward an AI capex story that, for now, is built and owned almost entirely by a handful of American firms. In Prof. Richard Robb's International Capital Markets class at Columbia, the point worth remembering was that cross-border capital follows narrative as much as yield. The narrative now has one destination.

Where the sovereignty instinct misfires

The reflex in capitals from Delhi to Brasília will be to demand domestic equivalents. Indian compute sovereignty. Indian foundation models. Indian sovereign silicon. Some of this is genuinely necessary. Most of it, at the scale being discussed, is not feasible.

Consider the arithmetic. Alphabet alone will commit more capex to AI infrastructure in 2026 than the Union government's entire capital expenditure outlay for the year. A press release calling for a Bharat-class hyperscale buildout that can sit at parity with the four American giants is not a strategy. Even a credible five percent of that footprint would consume a meaningful share of domestic risk capital and crowd out infrastructure, housing and credit to small firms.

The harder question is the right one. If we cannot build at parity, and the world's compute will sit on a small number of foreign balance sheets, what is the negotiating position?

The smarter move

I think the correct frame is to treat compute the way India once thought about energy: as a strategic input that does not have to be domestically owned to be domestically governed. A few concrete moves follow from that.

• Sovereign compute partnerships, not sovereign compute factories. Long-duration capacity contracts with hyperscalers, partly funded by domestic institutional capital, locking in priced access to GPUs and inference for Indian public workloads over a decade. The mental model is closer to an LNG offtake agreement than to Make-in-India.
• Co-investment vehicles routed through sovereign and pension capital. When the most capital-hungry sector in the world is issuing equity in eighty-billion-dollar tranches with Berkshire on the cover page, the disciplined move is to be a calibrated buyer of those issues, not an admiring spectator.
• Domestic compute concentrated on what only India can do. Indian-language models, public-data fine-tuning, citizen-facing inference at low cost, audit and compliance tooling fitted to Indian law. Not foundation-model parity. Sovereignty at the layer that actually touches citizens.
• A tax architecture that recognises compute as infrastructure. Depreciation schedules, transfer pricing rules and withholding treatment for cross-border compute services were drafted for an earlier world. They need a careful refresh, because in five years a large share of value added in Indian sectors will be running on rented foreign GPUs, and the statute should not be ambiguous about where that value is taxed.

The Buffett tell, again

Return to Buffett. The investor who built a career on insisting that capital must compound, not be incinerated, has now decided that the compute build is the rare case where the spend itself is the moat. For an Indian observer that is the cue, not to argue with the cycle, but to find the cleanest seat inside it. The wrong response is national chest-thumping about sovereign models. The right one is the unglamorous work of contracts, capital allocation, and statute. The cycle is industrial now. Treat it as such.

#CapitalMarkets #AICompute #IndianEconomy #Alphabet #BerkshireHathaway #ComputeSovereignty #Hyperscalers #EmergingMarkets

The First Job Isn't a Verdict

India's joining season is in full swing. Trains and flights to Bangalore, Pune, Hyderabad and Gurgaon are unusually full of nervous twenty-two-year-olds with new wheeled suitcases. Some are taking up offers they want. Many are taking up offers they will accept because the ones they wanted did not arrive. Almost everyone is asking, quietly, the same question: have I picked correctly?

I want to take that question apart, because it is the wrong one.

The fear is real. It is also pointed the wrong way.

The macro numbers do not help. Industry reports this year suggest only about 42.6 percent of graduates are considered job-ready, and major IT services firms have trimmed entry-level mass hiring by close to a quarter as AI quietly rewrites the bottom of the pyramid. Only roughly 30 to 40 percent of engineering graduates are placed through campus drives; the rest assemble their own ladder. None of this is news to you if you spent April watching half your batch get one offer and the other half get none.

But fear about which first job is the wrong target. Your first job is a sample. It is not a sentence. The variable that compounds, and ultimately decides the next ten years, is not the company name printed on the offer letter. It is the rate at which you become useful.

Optimise for velocity, not for identity

Spend your first twenty-four months optimising for four things, in this order: reps, proximity, feedback, and ownership.

Reps

How many real problems will you actually solve in a year? An analyst at a small firm who closes thirty messy projects will be sharper in twenty-four months than a peer at a brand-name firm who is the seventh name on three big slide decks. Volume of completed work is the most under-rated input to early skill.

Proximity

Who do you sit next to? At twenty-three, the people in the room you happen to be in are your second university. A mediocre role next to a brilliant boss beats a glossier role next to a checked-out one. Ask, in every final interview, who you will report to and what their last three hires now do.

Feedback

Does the work tell you, within days, whether you were right or wrong? Sales, building products, writing, litigation, trading, and certain operating roles have that quality. Many fresher strategy roles do not. Choose closer to the customer, the code, or the courtroom; wherever the world keeps score.

Ownership

Will anything bear your name? One small line item that you fully own, end to end, will teach you more than a rotational program of twelve passenger seats.

None of this requires choosing the right industry. All of it requires choosing the right shape of work.

Read the employer, do not only let them read you

The hiring market has spent two years reading you through aptitude tests, GitHub repos and structured interviews. You are allowed to read back. Two minutes of honesty from a current employee tells you more than two days reading a Glassdoor page.

Before you sign, find one person who joined the same role twenty-four months ago and is still there, and one person who joined and left within twelve. Ask both: what did you actually do in the first six months, and what made you stay or go. If neither call happens, you are not too humble; you are uninformed.

Take the offer where the work is honest about itself. A role that admits to repetitive client servicing in year one but a real shot at owning a portfolio in year two is more truthful than a role that promises transformation and strategic impact on day one. Be careful with brochures.

One unfashionable thing I would ask you to do anyway

Write things down. By hand or on a screen, but write. A weekly note to yourself, ten minutes, on what you learned, who taught you, where you embarrassed yourself, what you would do differently. Nothing performative. No one else reads it.

Over years inside institutions, I have watched many careers form and a handful go genuinely far. The single shared habit, far more reliable than raw talent, is a private practice of reflection that builds judgment quietly. People who arrive at thirty-five with judgment did not get there by accident. They earned it one Sunday evening at a time. Writing Journals, reflecting on what went right and what is it that's going wrong.

If you must hold a worry, hold this one: not that you picked the wrong first job, but that you will sleepwalk through it. Sleepwalking is the actual risk. Bad job plus alert person becomes a good career. Good job plus bored person becomes a long, unhappy LinkedIn.

Take the offer in front of you. Show up on Monday. Be the one who asks the most precise question in the meeting. The first job is not the verdict. The first decade is.

#CareerAdvice #FirstJob #IndianGraduates #PlacementSeason #YoungProfessionals #CampusToCareer #JobMarket2026

Mind The Reinvestment Gap

In the first nine months of FY26, gross foreign direct investment into India hit roughly $73.7 billion. Over the same window, net FDI turned negative for six consecutive months through January 2026. That is not a paradox to paper over with a press release. It is the gap that should be on every policymaker's desk this week.

The Finance Ministry's Monthly Economic Review, released on 30 May, made the now familiar case that the macro is resilient. PMIs are expansionary, GST is healthy, rural demand is holding. All true. But the FDI signal is the one the headline does not catch, because it requires reading the following two numbers together: how much came in, and how much quietly walked out.

The metric that flatters us

For a decade, gross FDI has been India's favourite slide in every investment pitch. The figure has held up. What has changed is the denominator the world now looks at - net FDI, which subtracts repatriations by foreign investors and outward investment by Indian firms.

The trajectory is uncomfortable. RBI reported net FDI of $10.1 billion in FY24, then just $0.4 billion in FY25 - a 96 per cent collapse in a single year - even as gross inflows climbed from $71.3 billion to $81 billion. In the first nine months of FY26, net FDI inched up to about $3 billion. The inward door is fine. The outward door has been thrown open.

Where the gap really opens

Two channels drive the leak. Repatriation and disinvestment by foreign investors rose to $51.5 billion in FY25, up from $44.5 billion in FY24 and $29.3 billion in FY23 - a near doubling in three years. Outward FDI by Indian companies surged to $29.2 billion in FY25, a 75 per cent year-on-year increase. Singapore, the United States, the UAE, Mauritius and the Netherlands took the bulk of it.

Sectorally, the rotation is sharper than the totals suggest. FDI into banking fell from $898 million in FY23 to $115 million in FY25 - an 87 per cent drop. Software and hardware's share of inflows fell from 44 per cent in FY21 to 14 per cent in FY25. Renewable energy is the bright spot, with FDI up about 50 per cent in a year. The composition is telling foreign investors a story about where they think Indian returns will be earned, and where they will not.

A reinvestment problem, not an entry problem

The instinct in Delhi will be to read this as a confidence problem and respond with another round of FDI cap relaxations. I think the diagnosis is wrong. India does not have an entry problem. It has a reinvestment problem.

Listed multinationals are now doing what corporate finance textbooks tell them to do. After 2021, several foreign businesses listed their Indian subsidiaries on local exchanges; a large slice of the capital raised was promptly sent home. Indian equities at roughly 22 times forward earnings versus 13.6 times for the MSCI emerging markets index are a structural invitation to take chips off the table. India is now expensive enough that the rational move for a foreign owner, after a good run, is to sell some down.

Meanwhile, the chief economic adviser has publicly observed that Indian private firms are not stepping up capex in proportion to their profitability. The two trends - foreign owners harvesting, domestic owners deploying capital abroad - are not separate stories. They are the same story told twice. The marginal rupee of profit, foreign or Indian, is finding it more attractive to leave than to build the next plant here.

What might actually move the needle

From inside a national tax administration, a few things become obvious that do not always show up in market commentary.

Reinvested earnings deserve a separate, named regime. An MNC parent paying tax on dividend repatriation under treaty rates faces no real incentive structure that distinguishes "I am taking this money home" from "I am ploughing it back into a new line here." A modest tax credit, or a lower effective rate for verified reinvestment into greenfield capacity, would be fiscally cheap and signal-rich. Prof. Richard Robb's International Capital Markets course at Columbia drilled in a point that still travels well: capital is taxed at the margin where it can move, and small wedges decide whether it stays.

Certainty pays more than concession. Repeated assurances on tax stability matter only if assessment behaviour at the field level matches the rhetoric. The reinvestment call is made in a boardroom in Tokyo or Seoul by someone reading not just the statute but twenty years of dispute outcomes. A measurable improvement in dispute closure timelines is worth more to that boardroom than another headline rate cut.

India can keep celebrating gross inflows, or it can begin measuring what actually builds capacity. The honest scoreboard is net FDI plus retained earnings reinvested in the country. Until that number recovers, every "highest ever FDI" headline is, with respect, a vanity metric.

#FDI #IndianEconomy #PublicFinance #CapitalMarkets #Macroeconomics #ForeignInvestment #Reinvestment

After the Carve-Out, India's Window

Reporting in the New York Times on Friday put a hard number on something tax administrators around the world had been quietly calculating since January: roughly forty billion dollars in US corporate income tax has gone unpaid since the start of 2025 because the Trump administration walked out of the global minimum tax negotiation. Thermo Fisher Scientific alone reportedly shaved $3.5 billion off its tax bill via Malta. American Express, PayPal, Pepsi and others routed earnings through Cyprus, Bermuda, Switzerland and the Cayman Islands. The US Treasury took the position on day one of the second Trump term that the OECD's Pillar Two had "no force or effect" in the United States, and in January the OECD blinked.

That is the bare news. The harder question is what countries like India should do now.

What the side-by-side actually did

On 5 January 2026 the OECD Inclusive Framework released the Side-by-Side package. It is not a withdrawal of Pillar Two. In the polite language of international tax it is a structural exemption: US-headquartered multinationals are deemed to satisfy the global minimum tax standard because they are subject to the rebadged GILTI regime, now called Net CFC Tested Income, or NCTI. The Income Inclusion Rule and the Undertaxed Profits Rule will not be applied to them by other jurisdictions for fiscal years beginning on or after 1 January 2026.

The problem, which technical readers know and policymakers are still digesting, is that NCTI does not work the way Pillar Two does. NCTI permits global averaging across jurisdictions. Pillar Two requires a country-by-country effective tax rate at the 15 per cent floor. The two regimes differ by design. Calling NCTI "robust enough" to substitute for Pillar Two is a polite legal fiction, and the empirical evidence is now in. Forty billion dollars in fifteen months is not a rounding error.

India's seat at the table, and the larger irony

India was not a passive bystander in any of this. The OECD's own implementation handbook on the global minimum tax was prepared under the Indian G20 presidency. The G20 finance ministers' communiqué from Rio in July 2024 explicitly urged all jurisdictions to implement the minimum tax. India quietly withdrew its 2 per cent equalisation levy in August 2024 to align with Pillar One and Pillar Two, sacrificing a domestic revenue stream as the price of multilateral consensus.

Eighteen months on, the multilateral consensus has a hole the size of US corporate income in it, and India has neither the equalisation levy nor a domestic minimum tax. That is a bad place to be.

The QDMTT question is now the only question

Within the Pillar Two architecture there is a quietly useful instrument: the Qualified Domestic Minimum Top-up Tax, the QDMTT. It allows a country to impose its own top-up tax on undertaxed profits earned by multinationals operating within its borders, so that the revenue accrues domestically rather than to the parent country. The OECD's own Side-by-Side text reinforces QDMTTs as the principal mechanism for protecting local tax bases, particularly in developing countries.

For India, the case for a QDMTT was always strong. With the US carve-out, it has become close to obvious. If a US-headquartered multinational operates a significant capability centre or manufacturing presence in India and pays an effective rate below 15 per cent because of incentives or transfer pricing arrangements, the choice is straightforward. Either India collects the top-up itself, or it leaves the difference on the table. Under the side-by-side, no other jurisdiction will collect that top-up from a US parent. The money simply disappears.

The Income-tax Act, 2025, which came into force on 1 April this year, is the cleanest vehicle in which to introduce a QDMTT. The Act was designed as a generational rewrite. Slotting in a domestic minimum tax now, while the architecture is still fresh and the rules are being shaped, is administratively far easier than retrofitting later.

A closing argument from inside administration

The instinct of every tax administration when global rules get watered down is to wait and see. That instinct is wrong here. The signal from January is not that Pillar Two is dying. It is that Pillar Two will survive in a fragmented form, and the countries that move first on domestic top-ups will keep their taxing rights intact. Those that wait will discover, two budget cycles from now, that revenues have leaked through a perfectly legal door.

There is a quieter argument as well. India's credibility in international tax forums was built on two decades of substantive contribution. Walking away from that posture because the United States walked away first would be the wrong lesson. The right lesson is that multilateralism, when it cracks, is best repaired by countries who take the rule and apply it at home, not by countries who wait for the rule to be restored from above.

A domestic minimum tax of fifteen per cent on large multinationals, implemented through the new Act with the standard €750 million revenue threshold, would do four things at once. It would protect the domestic tax base. It would signal continuity of India's commitment to the BEPS framework. It would give Indian-headquartered groups a level playing field with US-headquartered ones. And it would, frankly, put forty billion dollars back on the table as a question other countries have to answer for themselves.

The carve-out is done. The window for the response is open. The next budget is the place to take it.

#IncomeTax #PillarTwo #BEPS #GlobalMinimumTax #IndianTaxation #PublicFinance #InternationalTax #CBDT

Three Cents On The Dollar

Three cents.

That is roughly what one extra dollar of AI model spend is replacing, in routine knowledge work, at the firms most exposed to the shift. Among the most AI-exposed companies, each $1 drop in spending on online labour marketplaces corresponded to only about three cents in added AI model spend by the third quarter of 2025. The ratio comes from firm-level payments data analysed by Ryan Stevens of Ramp, and it has been doing the rounds in public-sector commentary this week.

If that number holds, the implication is not that AI is ‘cheaper’ in the comforting, marginal way most agency notes describe it. The implication is that the market price of a meaningful slice of first-pass, reviewable knowledge work has collapsed by roughly an order of magnitude. That is not a procurement story. It is a public finance story, and we should treat it as such.

What the 33-to-1 ratio actually says

A 33-to-1 substitution ratio is not, strictly, a substitution ratio. It is a ratio between two budget lines, captured at one moment, in one slice of the economy, by one provider’s payments data. Read with care, it tells you three things.

One: buyers have found a class of output where the first pass is now an AI deliverable rather than a human one, and the first pass is the part they used to outsource. Two: the unit cost of producing that first pass has fallen far enough that even a sceptical CFO is rewriting last year’s contractor budget. Three, and most important: the saved spend is not, mostly, being reinvested in a more expensive in-house model. It is leaving the books altogether.

For a government department, that last point matters most. In the private sector, ‘leaving the books’ eventually shows up as somebody’s lost job. In the public sector it shows up - or refuses to show up - as a backlog that does not grow, a clearance cycle that does not lengthen, a sanctioned post quietly left vacant. The change is invisible until you go looking for it.

Why government cannot just copy the ratio

It would be a mistake to read this number and rush to swap people for tokens inside a tax administration. Public-sector value is not what the private sector buys when it buys ‘first-pass output’. From inside a national tax administration, one learns quickly that the value of a routine notice is not in its first draft. It is in the fact that the draft is recorded, attributable, reviewable and defensible six years later under cross-examination.

None of that vanishes if AI does the drafting. But it changes who is accountable for what, and at which moment in the workflow. Records-management law, natural justice, statutory limitation, the discipline of audi alteram partem - these are not procurement constraints. They are the architecture of the trust the department holds with the citizen. Any honest AI strategy in this domain begins there and works backwards to the model, not the other way around.

The serious question for the head of any large administration is therefore not ‘where can I deploy a model?’ It is: where in my workflow is the first pass currently a bottleneck, who reviews it, and what does that review actually verify? If the review is genuine - a senior officer reading, weighing, signing - AI is a gift; the bottleneck moves to where it belongs, which is judgment. If the review is rubber-stamping, AI will reprice that work to zero and the institution will not notice until the courts do.

Where the repricing is already real

The categories where this repricing is real will be familiar to anyone who has worked the field. Drafting of routine intimations and standard show-cause notices. Cross-referencing returns against third-party information. Summarising voluminous assessment records before a hearing. Preparing first-pass replies to grievance petitions. Tagging and classifying taxpayer correspondence. Translating dense statutory text into plain-language guidance for citizens.

Each is a place where the marginal cost of a first pass has fallen sharply. Each is also a place where a human signature still ought to mean something. The design problem is precisely how to keep the signature serious while the draft becomes cheap.

Three operating shifts that would actually help

• Measure the bottleneck, not the licence. An honest dashboard tracks clearance cycle times, refund-issue latency, time-to-first-response on grievances. If those are not moving, the model is decorative.
• Promote the reviewer. Where AI does the first pass, the human downstream should be more senior, not less. The saving is bought by elevating the reviewer’s standard, and paying her for judgment rather than throughput.
• Budget for the audit trail before the model. Every AI-assisted output in a tax administration must carry a verifiable record of what the model saw, what it produced, what the officer changed, and why. The audit trail is the primary product. The draft is secondary.

The budget question we should be asking

Michael Ting’s course on public sector organisations at Columbia used to insist that the deepest puzzle in bureaucratic design is not how to motivate effort but how to allocate scarce attention. The Ramp number, read honestly, is a story about attention, not effort. Cheap first passes free attention; what an institution does with that freed attention is the whole game.

The danger a department most needs to guard against is the most boring one: cashing the saving without rebuilding the work. If sanctioned posts are quietly left vacant, if the freed hours are absorbed by more of the same routine work, and if the audit trail is patched on at the end, then the 33-to-1 ratio will become the public sector’s number too - and we will have repriced our own knowledge work without ever asking what we wanted to do with the difference.

The better view, I think, is to treat this moment as a budgeting exercise, not a tooling exercise. Ask, for every freed officer-hour, what higher-value question we now want that officer to be asking. Then build the model around the answer. The cheapest first pass in history will be wasted on the same old second pass.

When The Rich Quietly Quit Dollars

UBS has just published its 2026 Global Family Office Report, and the number to underline is 60. Sixty percent of family offices are planning the biggest strategic changes to their portfolios in five years. Globally, North America is the only region they intend to cut.

The signal in family-office money

These are not retail flows. Family offices have no clients to redeem on a bad month, no benchmark to hug, no consultant grading them quarterly. They have the longest discretion in private finance. When that money rebalances, it is rarely noise.

The detail under the headline is sharper than the headline itself. Two-thirds expect confidence in the dollar’s reserve role to fall. Nearly half say they are already overexposed to the dollar. The Swiss franc and the euro are the preferred diversification currencies. Emerging-market equities, infrastructure and gold get a top-up. The first-ranked risk for both the next twelve months and the next five years is geopolitical uncertainty.

This is not a BRICS communique or a yuan-internationalisation press release. It is balance-sheet behaviour from the deepest patient pools in private wealth, and it deserves to be read as such.

The Hormuz crucible

The timing is not coincidental. We are in the third month of the Strait of Hormuz crisis. ORF’s input-output modelling places the structural CPI ceiling for India somewhere around 4.5 percent on this shock. MUFG’s adverse-scenario USD/INR sits above 95.

More interesting than the price is the plumbing. Roughly 60 million barrels a month are reportedly settling in yuan and dirhams under wartime arrangements. That is not large next to the global oil trade. But it is the first time in this cycle that non-dollar settlement rails have moved real volume under stress, and importers have, for the first time in years, seen the cost of dollar-denominated energy clearing exposed as a strategic vulnerability rather than a piece of cheap plumbing.

India: beneficiary and victim at once

There is a comforting reading of the UBS data for Delhi. Money rotating out of North America flows naturally into emerging-market equities, and India sits at the top of that allocation pile. The eighteen rupee-invoicing arrangements the Reserve Bank has quietly enabled with trading partners are exactly the rails the world is now testing under fire.

The discomfort is that the same regime is squeezing us simultaneously. Foreign portfolio investors pulled over a billion out of Indian equities in the first four months of 2026. The current-account arithmetic is being held together by intermittent yuan-priced crude cargoes and a slowly bleeding reserves stock. Anyone telling you that a multipolar monetary order is unambiguously good news for India is selling something. It is a structurally improved bargaining position with a near-term liquidity risk. Both things are true; the policy has to address both.

Four moves that would actually matter

Commentary at this point usually retreats into “deepen capital markets”. The list that moves the needle is shorter and more specific.

Operationalise rupee invoicing properly. The Gulf bottleneck is not policy; it is correspondent banking economics and Vostro account uptake. If an Indian refiner finds it cheaper to settle a UAE crude cargo in INR than in USD, the share moves on its own. Today the friction runs the other way, and no announcement fixes that.

Resize the strategic petroleum reserve. Roughly 45 days of cover is acceptable in normal times. It is thin in a Hormuz regime, where supply losses since February have already exceeded a billion barrels globally. We can either top it up with leased commercial space and term contracts, or this becomes a recurring crisis the RBI is quietly asked to fund out of forex reserves.

More sovereign gold. Emerging-market central banks have absorbed roughly 225 million ounces of gold since 2008, and still hold about half the physical gold of advanced economies. India is underweight by every reasonable benchmark. The argument that buying more is atavistic is the wrong frame: this is now the most consensus trade in central banking, and the data has stopped being shy about it.

Clean the rails for inbound capital. If we want the rotation into Indian equities and rupee bonds to be sticky, settlement, repatriation timelines and tax certainty for non-residents must be visibly frictionless. A family office choosing between Mumbai and Rio de Janeiro (where i did my Columbia Capstone) will not decide on yield alone. It will decide on execution friction. We control that variable entirely.

The takeaway

One framing from Kent Daniel’s capital-markets course at Columbia has stayed with me longer than the lecture notes: in any market, the patient money tells you where the cycle is going long before the loud money does. The patient money right now, very politely through a UBS survey and very impolitely through gold, is saying the post-1971 dollar order is being repriced. We have something like the next decade to position for that. The Hormuz crisis is the first real stress test. If the policy answer is reduced to “buy more Russian crude”, we will have wasted the lesson.

Frameworks Don't Move Rocks

The photograph from Hyderabad House this week is the kind diplomacy is good at producing: two foreign ministers, two folders, two signatures, one framework. The actual constraint on India's rare-earth ambition, though, is not the absence of a framework. It is the absence of plants.

India and the United States on Tuesday signed a bilateral framework aimed at securing the supply, mining, and processing of critical minerals and rare earth elements. The scope is wide: the framework seeks to deepen cooperation across the critical minerals and rare earths supply chain, including mining, processing, recycling and related investments. Read carefully, the document concedes that mining is the easy bit.

The Gap Between Reserve And Production

India is not poor in this geology. Government estimates put the country's monazite at 13.15 million tonnes, containing roughly 7.23 million tonnes of rare earth oxides. A serious endowment by global standards. And yet India currently produces only four critical minerals — copper, graphite, phosphorous and titanium — owing to limited exploration and a lack of proper infrastructure and processing technology. The gap between what we have under the soil and what we ship out of a factory is the entire story.

Which is why the comparison everyone reaches for — China — is more sobering than it first looks. The International Energy Agency estimates China accounted for about 91% of global separation and refining production in 2024 and 94% of sintered permanent magnet production. The challenge is not about geology. It is about industrial depth and policy consistency.

Why Processing Is The Real Chokepoint

Rare earths, despite the name, are not really rare. What is rare is the chemistry plant downstream. Three features of that plant make it unusually hard to finance the conventional way.

It is dirty. Processing costs are high, and mining involves heavy use of chemicals that generate toxic waste. Environmental approvals in India are slow, contested and political.

It is long-dated. A separation-and-refining line takes five to seven years from licence to first commercial yield. Banks dislike the gestation. Public equity markets do not pay for it. Strategic patience is not a line item on a term sheet.

It is exposed to a single buyer's price war. In 2022, to maintain its control over the rare earth market, Beijing increased REE processing by 25% to lower global market prices, causing foreign producers to limit or even halt production. That is the memory every private board has when an Indian processing proposal is put before it.

What The Framework Cannot Do By Itself

India's 2026-27 Union Budget introduced plans for ""rare earth corridors"" in Odisha, Kerala, Andhra Pradesh and Tamil Nadu to support mining, refining, research and magnet manufacturing. ""Corridor"" is a useful planning vocabulary. It is not, by itself, a financing instrument.

Under the Quad framework, governments and private companies are expected to mobilise up to $20 billion through loans, guarantees, subsidies and long-term purchase agreements. Twenty billion sounds large until you remember it is split across four countries and several links of a global chain. India's share, on its own, will not move a single tonne of separated neodymium to a port.

What Would Actually Work

The interesting question is not what the framework says. It is what the Indian state's response to it should look like. Three instruments, all sitting in tools we already own.

1. Use The Tax Code As Strategic Patience

The tax code is the cheapest and most flexible instrument the state owns for shaping long-gestation capex. A targeted package — accelerated depreciation on rare-earth processing assets, an investment-linked deduction with a long carry-forward, a concessional rate on income from notified critical-mineral output — would change the IRR of a separation line more than any subsidy headline. Having watched, from inside, how one statutory regime gives way to another, I am wary of overpromising what an incentive can do. But a calibrated incentive for an industry whose cash flows will not be linear is one of the few honest uses of the tool.

2. Sovereign Offtake At A Floor

The single most important thing the framework enables is the construction of guaranteed demand. The American model is instructive. The Pentagon took a $400 million equity stake in MP Materials last July, the first investment of its kind in Pentagon history, including a guaranteed floor price for some of the company's output and a ten-year commitment to purchase magnets from its planned Texas facility. A floor price from a sovereign buyer is worth more than a soft loan, because it survives a Chinese price war. India's defence, railways, renewables and an eventual critical-minerals reserve can together write that kind of contract. The framework gives us the scaffolding. Procurement has to use it.

3. A Separate, Time-Bound Clearance Track

Environmental clearances for notified processing units should sit on their own track with public timelines and named accountability. Uncomfortable to say in print. Also the difference between a list of corridors and a list of plants.

The Honest Measure

Rare earths are the small, dense node where industrial policy, foreign policy and tax policy meet. The Indian instinct — sign a framework, announce a corridor, wait for FDI — is unequal to the problem. Every successful rare-earth processor today exists because a patient combination of state capital, state demand and state tolerance for environmental cost held the project together long enough for unit economics to mature. Japan did it after 2010. The United States is doing it now. China did it for forty years.

The agreement signed in Delhi gives India a partner, a forum and a public commitment. What it does not give us is a single tonne of separated neodymium. That has to be built — and the building is mostly a domestic exercise of fiscal patience, regulatory courage and procurement discipline. The honest measure of this deal two years on will not be the count of MoUs that followed. It will be the tonnes of magnet-grade output the country ships in 2028.