Commercial office market across top six cities approaches record low vacancy levels

Mumbai: India’s commercial office sector is entering a period of record absorption and tightening supply, according to new projections from rating agency ICRA. The firm expects net leasing activity across the country’s six largest office markets to reach unprecedented levels in the next two years, driving vacancy rates down to figures not seen in recent history.

ICRA estimates that net absorption will climb to between 69 and 70 million square feet in the financial year ending March 2026, surpassing the previous year’s tally of 66 million square feet. This momentum is forecast to continue into 2027, with absorption of more than 65 million square feet. The sustained demand is expected to push vacancy rates to 12.0–12.5 per cent by March 2027, a sharp fall from the 15.6 per cent recorded in March 2024 and 13 per cent in September 2025.

The agency notes that this will mark the third consecutive year in which demand outpaces new supply. Developers added 58 million square feet of new space in FY2025, yet leasing activity exceeded that figure. The first half of FY2026 has already seen 36 million square feet absorbed against 30.6 million square feet of new completions. This imbalance is strengthening the position of landlords and developers, with fundamentals improving across the board.

A major driver of this surge is the expansion of Global Capability Centres, or GCCs, which are increasingly choosing India as a base for strategic operations. ICRA projects that GCCs will account for 40 per cent of incremental office demand between April 2025 and March 2027, leasing 50–55 million square feet during that period. Their share of absorption has already stood at 35–37 per cent in FY2024 and FY2025.

Anupama Reddy, vice president and co-group head of Corporate Ratings at ICRA, said the resilience of GCCs has been striking despite global headwinds. “The surge in demand for office space is being driven by expanding global capability centres, flex-space operators, and the Banking, Financial Services, and Insurance sector. Despite policy tightening and trade restrictions in the US, office leasing activities by the GCCs in India have remained buoyant,” she explained. Reddy added that the combination of cost advantages, talent availability and policy support is setting the stage for a new era of growth and stability in the sector.

City-level trends underline the strength of this demand. Bengaluru continues to lead in net absorption and is projected to see vacancy rates decline from 9.2 per cent in September 2025 to between 7.5 and 8 per cent by March 2027. Chennai is expected to see vacancies dip to 5.5–6.0 per cent, reflecting limited new supply. Delhi NCR, which has historically carried the highest vacancy among the top six cities, is forecast to improve from 21 per cent to 19.5–20 per cent. Hyderabad and Pune are expected to maintain steady vacancy levels, while the Mumbai Metropolitan Region is likely to see further declines.

The broader picture is one of strengthening debt protection metrics and improved investor confidence. With vacancy rates projected to reach historic lows, ICRA believes the sector will remain attractive to both domestic and international investors. Policy support and scalable technology infrastructure are reinforcing India’s position as a global office hub.

The agency’s analysis suggests that the expansion of GCCs is not a short-term phenomenon but a structural shift. Their incremental demand for leased space signals long-term commitment from global enterprises, supported by state-level incentives such as subsidies, training programmes and infrastructure development. This is expected to accelerate investment flows and deepen India’s role in global corporate strategies.

The figures also highlight the resilience of India’s office market in the face of international uncertainty. While global economic conditions remain challenging, the country’s combination of competitive costs, skilled workforce and supportive policy environment is sustaining demand. The sector’s fundamentals are improving, with absorption consistently outpacing supply and vacancy rates falling to levels that indicate a tightening market.

ICRA’s projections point to a sector entering a new phase of stability and growth. Net absorption is expected to remain strong through FY2026 and FY2027, underpinned by GCCs, BFSI firms and flex-space operators. Vacancy rates are forecast to reach historic lows, while city-level performance shows broad-based improvement. For landlords, developers and investors, the outlook is one of strengthening fundamentals and sustained demand.

The coming two years will test the sector’s ability to balance record absorption with new supply. Yet the projections suggest that India’s office market is well positioned to capitalise on emerging opportunities, with GCCs at the forefront of this transformation. As Reddy noted, “The sustained demand from the GCCs and BFSI, coupled with India’s cost and talent advantages, is setting the stage for a new era of growth and stability in the sector.”

At a time when global markets face uncertainty, India’s office sector is charting a path of resilience and expansion. The figures released by ICRA indicate that vacancy rates are heading for historic lows, driven by record leasing activity and structural demand from global enterprises. The sector’s fundamentals are strengthening, and its role as a global office hub is becoming more firmly established.

Indian shrimp exporters turn to new markets amid tariff strain

Mumbai: India’s shrimp export industry is undergoing a marked shift as exporters reduce their reliance on the United States (US) and expand into new geographies, while also increasing the share of value-added products to sustain growth. A recent report by CareEdge Ratings highlights how exporters are adapting to tariff challenges in the American market by diversifying their destinations and product mix.

During the first five months of FY26, non-US markets accounted for 86 per cent of the incremental export value, underscoring the scale of the pivot. Overall exports rose 18 per cent year-on-year in value terms to reach $2.43 billion, with shipment volumes increasing by 11 per cent to 348,000 metric tonnes.

While exports to the US grew by a muted 5 per cent, demand from countries such as Vietnam, Belgium, China and Russia surged, lifting non-US export values by 30 per cent to $1.38 billion compared with $1.06 billion in the same period last year.

Vietnam has emerged as a key re-export hub, while Belgium has benefited from improved compliance with traceability standards. Together, these markets have helped raise the non-US share of India’s shrimp exports to 57 per cent, up from 51 per cent a year earlier. This shift reflects a deliberate strategy by exporters to reduce dependence on the US, which has long been India’s largest buyer but is now a more difficult market due to tariff pressures.

Since early FY26, higher tariffs have eroded India’s price competitiveness in the US. CareEdge notes that India’s effective tariff rate stood at around 18 per cent between April and August 2025, compared with 13–14 per cent for competitors such as Ecuador and Indonesia. 

Following the imposition of reciprocal duties on August 27, 2025, India’s effective duty surged to 58 per cent, while competitors faced rates between 18 and 49 per cent. This disparity has had a direct impact on shipments, with exports to the US falling by 35 per cent in August compared with July.

Priti Agarwal, senior director, CareEdge Ratings, said the industry must accelerate bilateral trade agreements and strengthen compliance frameworks in areas such as traceability, sustainability and cold-chain infrastructure. “Developing a future-ready shrimp sector requires moving beyond reactive export strategies and focusing on building a geopolitically balanced and demand-driven supply chain,” she noted.

Exporters are also betting on value-added products to cushion margins. Globally, value-added shrimp exports grew 27 per cent during the period, with non-US markets recording a 78 per cent increase. This trend is expected to reduce reliance on commodity-grade exports and improve profitability. 

CareEdge projects a moderation in operating margins by 150 basis points in FY27, but the growing share of value-added products, partial cost pass-through and softer farm-gate prices are likely to provide some relief.

The report suggests that Indian exporters are taking proactive measures to mitigate the impact of US tariff headwinds. Approvals for exports to the European Union and Russia have increased, opening up new opportunities. At the same time, the industry is focusing on compliance and sustainability to strengthen its position in these markets. The emphasis on diversification and product innovation reflects a broader effort to build resilience in the face of global trade uncertainties.

India’s shrimp industry has long been a critical component of the country’s seafood exports, and the current shift marks a significant departure from its traditional US-centric strategy. By expanding into new geographies and investing in higher-value products, exporters are positioning themselves for more balanced and sustainable growth. The challenge will be to maintain momentum in these markets while continuing to navigate tariff pressures in the US. For now, the pivot appears to be cushioning the industry against immediate headwinds and laying the groundwork for longer-term resilience.

Passenger traffic grows as industry battles rising costs

Mumbai: Domestic air travel in India continued to expand in October 2025, with passenger numbers rising 4.5 per cent year-on-year to 14.28 million, according to the latest assessment by ICRA Limited. The increase was supported by a healthy passenger load factor of 84.7 per cent, reflecting strong demand despite a series of operational and financial challenges that have weighed on the sector. Capacity deployment also edged higher, with airlines scheduling 1.7 per cent more flights than the same month last year, underscoring their efforts to meet demand even as grounded aircraft constrained overall fleet strength.

The broader outlook for the financial year remains stable, with ICRA projecting domestic traffic growth in the range of 4–6 per cent. International travel is expected to expand more robustly, at 13–15 per cent, driven by sustained demand for overseas routes. Yet these gains are tempered by the industry’s financial position. Net losses are forecast to widen to between ₹95 billion and ₹105 billion in FY2026, compared with an estimated ₹55 billion in FY2025. Rising aviation turbine fuel (ATF) prices – up 4.4 per cent year-on-year in November 2025 – have squeezed margins, while the weakening of the rupee against the dollar has amplified foreign exchange losses, much of which remain unrealised but nonetheless weigh heavily on balance sheets.

Operational hurdles have further complicated the picture. Around 133 aircraft were grounded as of March 2025 due to supply chain disruptions and engine failures, particularly linked to Pratt & Whitney engines. This represented 15–17 per cent of the total industry fleet, reducing available capacity and forcing airlines to rely on costly wet leases and older aircraft with lower fuel efficiency. Although some compensation has been provided by engine manufacturers, the financial strain of maintaining operations under these conditions has been significant. The grounding of aircraft has also led to higher lease rentals and increased operating expenses, eroding the benefits of strong passenger demand.

The industry’s resilience is evident in its ability to sustain traffic growth despite these pressures. However, the balance between demand and cost remains precarious. As Kinjal Shah, Vice President at ICRA, noted in the report, “Healthy yields and high passenger load factors are helping to absorb the impact to an extent, but the structural challenges of rising costs and supply chain constraints continue to weigh on the sector.” The interplay between passenger traffic trends and industry challenges highlights the fragile equilibrium in which Indian aviation currently operates – one where growth is possible, but profitability remains elusive.

Production Linked Incentive scheme attracts ₹1,914 crore in fresh investments with strong MSME participation

Mumbai: The fourth round of the Production Linked Incentive (PLI) Scheme for White Goods has attracted 13 new applications worth ₹1,914 crore, with more than half of the applicants being micro, small and medium enterprises (MSMEs). Officials said the level of MSME participation reflects growing confidence among smaller firms in joining the air conditioner and LED manufacturing value chain.

Nine applicants have committed ₹1,816 crore to air conditioner components such as copper tubes, aluminium stock, compressors, motors, heat exchangers and control assemblies. Four others have pledged ₹98 crore for LED components including chips, drivers and heat sinks. The proposed projects span six states, 13 districts and 23 locations, and are expected to contribute to regional industrial growth and employment generation.

The scheme, launched in 2021 with an outlay of ₹6,238 crore, aims to establish a complete component ecosystem for air conditioners and LED lights in India. So far, it has attracted ₹10,335 crore of committed investment from 80 approved beneficiaries. The government expects the scheme to generate production worth ₹1.72 lakh crore and create around 60,000 direct jobs nationwide. The initiative is designed to increase domestic value addition from the current 15–20 per cent to 75–80 per cent, positioning India as a global manufacturing hub for white goods.

Officials noted that the strong presence of MSMEs in the latest round is significant, as it broadens the base of manufacturers and strengthens supply chains. By encouraging smaller enterprises to invest in high-value components, the scheme is expected to reduce import dependence and enhance competitiveness in the sector.

The PLI programme has already spurred localisation of production and attracted investment in critical components. With MSMEs now taking a larger share of participation, the government sees further momentum in building a resilient domestic manufacturing ecosystem for white goods.

Banas Dairy and BBSSL join hands to strengthen potato value chain

Mumbai: Banas Dairy, part of Amul and Asia’s largest cooperative dairy, has signed a Memorandum of Understanding (MoU) with Bharatiya Beej Sahakari Samiti Limited (BBSSL) to establish a comprehensive seed-to-market value chain for potatoes. The agreement, signed in New Delhi in the presence of senior government officials is aimed at boosting productivity, reducing input losses and improving farmer incomes.

Under the partnership, BBSSL will utilise Banas Dairy’s tissue culture and aeroponic facilities to produce high-quality, disease-free seed potatoes. Banas Dairy will provide technical expertise and market support, ensuring that farmers benefit from scientific cultivation methods, contract farming arrangements and efficient market linkages. The initiative is expected to enhance resilience among potato growers by aligning cooperative strength with technological innovation.

The collaboration reflects the Ministry of Home and Cooperation’s vision of Sahakar se Samriddhi – prosperity through cooperation – and builds on its broader initiative of promoting cooperation among cooperatives. Speaking at the signing, officials described the agreement as a milestone in empowering farmers and strengthening agricultural value chains. By expanding beyond dairy into crop production, Banas Dairy is positioning itself as a diversified cooperative enterprise, while BBSSL is reinforcing its role in seed self-reliance.

The partnership is also significant in the context of India’s growing demand for certified seed potatoes, which are critical for improving yields and reducing disease prevalence. With the country’s potato sector facing challenges of productivity and quality, the MoU offers a structured approach to modernising cultivation practices and ensuring reliable supply chains. Farmers are expected to benefit not only from improved inputs but also from better access to markets, reducing dependence on intermediaries.

For Banas Dairy, the agreement highlights its ‘Beyond Dairy’ expansion strategy, while for BBSSL it represents a step towards strengthening India’s capacity in seed production. Together, the two cooperatives aim to create a model that integrates scientific research, cooperative networks and farmer participation, setting a precedent for similar collaborations in other crops.

The signing of the MoU underscores the role of cooperatives in driving agricultural transformation. By combining resources and expertise, Banas Dairy and BBSSL are seeking to deliver tangible benefits to farmers, while contributing to national goals of self-reliance and sustainable growth in agriculture.

Directorate General of GST Intelligence (DGGI) Delhi exposes ₹645 crore tax credit fraud

Mumbai: The Directorate General of GST Intelligence (DGGI), Delhi Zonal Unit, has uncovered a large-scale fraud involving the wrongful availment and passing of Input Tax Credit (ITC) worth approximately ₹645 crore. The case centres on a network of 229 dummy firms registered under GST, allegedly controlled by a Delhi-based syndicate. Investigators found that these entities were issuing invoices without any actual supply of goods or services, enabling the circulation of ineligible tax credits and causing significant loss to the exchequer.

Search operations across multiple premises in Delhi led to the seizure of incriminating documents, digital devices and ledgers. Officials also recovered 162 mobile phones, believed to have been used for generating one-time passwords linked to GST and banking transactions, along with 44 digital signatures and more than 200 cheque books belonging to various firms. The evidence pointed to a coordinated effort to create and operate non-existent companies for the sole purpose of manipulating tax credits.

The investigation identified Mukesh Sharma as the key operator of the syndicate. According to DGGI, Sharma managed GST registrations, returns and records of the dummy firms, while also overseeing banking transactions and the layering of illicit funds. He was arrested on 11 November under Sections 132(1)(b) and 132(1)(c) of the Central GST Act, 2017, offences that are cognisable and non-bailable. He has since been remanded to judicial custody.

Preliminary findings suggest that the fraud extended beyond tax evasion, with indications of money laundering. Authorities reported that proceeds from the scheme were allegedly routed through an NGO and a political outfit, adding another dimension to the case. The matter is under further investigation, with officials examining the extent of financial flows and potential beneficiaries.

The exposure of this racket highlights the continuing challenge of tackling fake invoicing and ITC fraud under the GST regime. Such practices undermine the integrity of the tax system and erode government revenues. The DGGI’s action demonstrates the scale of enforcement required to address complex networks of shell companies and layered transactions. It also underscores the importance of digital trails, as mobile devices, electronic signatures and banking records provided crucial evidence in dismantling the operation.

The case is one of the largest uncovered by the Delhi Zonal Unit in recent months and is expected to have wider implications for compliance monitoring. With GST collections forming a critical component of government revenue, enforcement agencies are likely to intensify scrutiny of suspicious registrations and transactions. The arrest of Sharma marks a significant step in holding individuals accountable for orchestrating systemic fraud, while the broader investigation may reveal further links across financial and political channels.

India’s textile and apparel exports show resilience amid global challenges

Mumbai: India’s textile and apparel sector, including handicrafts, demonstrated notable resilience in the first half of FY 2025-26, managing to sustain growth despite global headwinds and tariff-related challenges in key markets. According to official data, exports of textiles, apparel and made-ups grew marginally by 0.1 per cent during April to September 2025 compared with the same period last year.

The performance was underpinned by diversification across markets. Exports were recorded in 111 countries, contributing $8,489.08 million in the six-month period, up from $7,718.55 million in the previous year. This reflects a 10 per cent increase in value and an absolute rise of $770.3 million. The figures highlight how Indian exporters have managed to offset pressures in traditional destinations by tapping into newer geographies.

Several major markets registered positive growth. The United Arab Emirates (UAE) saw exports rise by 14.5 per cent, Japan by 19 per cent, Spain by 9 per cent and France by 9.2 per cent. The United Kingdom (UK) and Germany also posted modest gains of 1.5 per cent and 2.9 per cent respectively. Beyond these, Egypt recorded a sharp 27 per cent increase, Saudi Arabia 12.5 per cent and Hong Kong an exceptional 69 per cent. This spread of growth across diverse regions underscores the sector’s adaptability in navigating shifting demand patterns and trade barriers.

The resilience comes at a time when global textile trade has been affected by slowing demand, rising costs and tariff-related frictions in some of India’s largest markets. The ability to maintain overall growth, even if modest, reflects the sector’s capacity to withstand external pressures. Ready-made garments, made-ups and handicrafts were among the key segments driving exports, showing that traditional strengths continue to support India’s position in global trade.

While the headline growth rate of 0.1 per cent may appear subdued, the broader picture reveals a sector that has managed to expand its footprint and secure higher value in several destinations. The increase in export earnings from a wider set of countries suggests that Indian textiles and apparel are finding new opportunities despite the challenges posed by tariffs and competition.

Sustaining this momentum will depend on continued diversification, investment in quality and design, and effective engagement with trade partners to address tariff concerns. The government’s data indicates that exporters are already moving in this direction, with the sector showing signs of resilience that could provide a foundation for stronger growth in the coming quarters.

India’s textile and apparel industry remains a critical contributor to employment and foreign exchange earnings. Its ability to adapt to global shifts while maintaining export levels highlights the importance of strategic diversification and market responsiveness. The first half of FY 2025-26 has shown that even in a difficult environment, the sector can hold its ground and build on its strengths.

₹25,060 crore export promotion mission to strengthen exports and support MSMEs

Mumbai: The Union Cabinet has approved the Export Promotion Mission (EPM), a new framework designed to consolidate and strengthen India’s export ecosystem. With an outlay of ₹25,060 crore for the period from FY2025–26 to FY2030–31, the initiative is expected to provide targeted support to vulnerable sectors, particularly micro, small and medium enterprises (MSMEs), first-time exporters and labour-intensive industries. The move represents a shift away from fragmented schemes towards a single, outcome-based mechanism that can respond more effectively to global trade challenges.

Exports remain a cornerstone of India’s economy, contributing significantly to foreign exchange earnings and employment. MSMEs alone account for nearly half of India’s total exports, yet they often face structural barriers such as limited access to affordable trade finance, high compliance costs and inadequate branding in international markets. The EPM seeks to address these issues through two integrated sub-schemes, Niryat Protsahan and Niryat Disha, which together combine financial and non-financial support for exporters.

Niryat Protsahan focuses on improving access to affordable trade finance. It includes measures such as interest subvention, export factoring, collateral guarantees and credit cards for e-commerce exporters. These instruments are designed to ease liquidity constraints and enable businesses to diversify into new markets. For MSMEs, which frequently struggle to secure credit on reasonable terms, the scheme provides a structured mechanism to reduce risk for lenders while ensuring that smaller firms are not excluded from global trade opportunities.

Niryat Disha complements this by offering non-financial enablers that enhance market readiness and competitiveness. Support will be provided for compliance with international standards, branding and packaging, participation in trade fairs, warehousing and logistics, and inland transport reimbursements. The scheme also includes trade intelligence and capacity-building initiatives, which are intended to help exporters understand and adapt to shifting global demand. Together, the two sub-schemes create a comprehensive framework that addresses both the financial and operational challenges faced by Indian exporters.

Priority support will be extended to sectors that have been affected by recent global tariff escalations, including textiles, leather, gems and jewellery, engineering goods and marine products. These industries are not only significant contributors to India’s export earnings but also major sources of employment, particularly in regions with high concentrations of labour-intensive production. By providing targeted interventions, the EPM aims to sustain export orders, protect jobs and encourage diversification into new geographies. This is especially important at a time when global trade is facing headwinds from slowing demand and rising protectionism.

The Directorate General of Foreign Trade (DGFT) will act as the implementing agency, with all processes managed through a dedicated digital platform integrated with existing trade systems. This is expected to streamline applications and disbursals, reduce administrative delays and make the system more transparent. The collaborative framework involves the Department of Commerce, the Ministry of MSME, the Ministry of Finance, financial institutions, export promotion councils, commodity boards, industry associations and state governments, ensuring that the mission is anchored in broad-based participation.

The consolidation of existing schemes such as the Interest Equalisation Scheme (IES) and the Market Access Initiative (MAI) into the EPM reflects an effort to align support mechanisms with contemporary trade needs. By bringing these under a single umbrella, the government aims to reduce duplication, improve efficiency and create a more adaptive system that can respond quickly to changing global conditions. For exporters, particularly those entering international markets for the first time, this offers a clearer and more accessible pathway to support.

The expected impact of the mission extends beyond immediate financial relief. By facilitating access to affordable trade finance, enhancing compliance and certification support, and improving market visibility, the EPM is designed to boost exports from non-traditional districts and sectors. This could help broaden the base of India’s export economy, reduce dependence on a limited set of products and markets, and generate employment across manufacturing, logistics and allied services. The emphasis on inclusivity and technology-enabled processes also reflects a longer-term vision of making India’s export framework more resilient and globally competitive.

For MSMEs, the mission represents a significant opportunity. These enterprises often operate with limited resources and face disproportionate challenges in meeting international standards and accessing global markets. The combination of financial instruments under Niryat Protsahan and operational support under Niryat Disha provides a balanced approach that addresses both immediate liquidity needs and longer-term competitiveness. First-time exporters, who may lack experience in navigating complex trade requirements, stand to benefit from the structured support offered through compliance assistance, branding initiatives and trade intelligence.

Labour-intensive sectors are also expected to gain from the mission. Industries such as textiles and leather employ millions of workers, many of whom are based in rural and semi-urban areas. By sustaining export orders and supporting diversification, the EPM could help protect livelihoods and ensure that these sectors remain viable in the face of global competition. The focus on vulnerable sectors highlights the mission’s role not only in boosting exports but also in safeguarding employment and promoting inclusive growth.

To make this scheme effective, strong execution will be crucial, together with exporters’ capacity to channel the additional liquidity into market expansion and improved competitiveness. If implemented efficiently, the Export Promotion Mission can play a decisive role in sustaining India’s export growth while safeguarding millions of jobs across vulnerable and labour-intensive sectors. The initiative represents a forward-looking step to align the country’s export framework with the broader vision of Viksit Bharat @2047.

From achieving perfection to perfecting imperfection

Mumbai: For decades, the global marketplace was defined by an unyielding drive towards perfection. Manufacturers poured resources into designing ever-better products, each new release striving for greater reliability, longer lifespans, and seamless user experience. It was an era where premium brands boasted near-flawless craftsmanship and durability as hallmarks of their leadership. But beneath the sheen, the relentless pursuit of perfection eventually collided with an inconvenient truth: impeccably made products, while satisfying, often failed to generate the recurring profits that modern corporate realities demanded. The consumer’s purchase, once an end point in the transaction, became a barrier to future sales – a phenomenon keenly observed in the boardrooms of industry giants, from Detroit to Shenzhen.

As the 20th century drew to a close, a quiet revolution in business thinking began to take hold. Companies realised that a perfect product, paradoxically, might undermine economic sustainability. Once an appliance lasted a lifetime, its manufacturer was left to chase ever-diminishing returns, unable to attract repeat customers or sustain the manufacturing machinery that powered their expansion. It was this dilemma that opened the door to a concept now etched in modern business lore: planned obsolescence. By intentionally limiting the useful life of a product – whether through wear-prone parts, proprietary components, or software updates that render older models sluggish – manufacturers found a way to tip the equation back in their favour. As Investopedia explains, planned obsolescence describes ‘a deliberate strategy of shortening the lifecycle of products to force customers into repeat purchases and upgrades’.

This underlying shift was neither accidental nor surreptitious. For example, the light bulb industry’s infamous Phoebus cartel of the 1920s colluded to reduce the lifespan of bulbs, ensuring customers returned to the shops every few years rather than once or twice in their lives. In more recent decades, the smartphone has emerged as the emblem of calculated imperfection. Brands like Apple have periodically introduced design changes that make previous accessories obsolete, and operating system updates that favour new hardware. Similarly Apple’s notorious removal of the headphone jack spurred an entirely new market for wireless earbuds, prompting both direct profits and peripheral sales. As Professor Giles Slade, author of ‘Made to Break’, observed, most manufacturers in the modern economy do not want their products to last forever – their profits depend on replacement cycles, upgrades, and the sale of related accessories.

The business rationale is clear. By selling imperfect products – or products engineered with natural limitations – companies keep their vast manufacturing plants humming year-round. Just as automotive designers in the mid-century realised that subtle changes to vehicle aesthetics would drive every new season’s model, consumer electronics firms now perfect the art of imperfection, enticing repeat visits with ever-shinier alternatives. Planned obsolescence becomes an operating philosophy: the ideal product is one that satisfies, but only briefly. By the time a device falters, its owner is psychologically predisposed to seek the next iteration, sparking demand not just for the core item but a web of cables, chargers, batteries, and software solutions surrounding it.

This approach is especially visible in household items. Older appliances like fridges or washing machines used to last for decades. Today’s versions, made with lighter materials and modular parts, often need repairs or replacements within a few years. This keeps customers coming back – either for spare parts or new purchases – and ensures steady income for manufacturers.

From a macroeconomic perspective, the outcome is twofold. On one hand, manufacturers enjoy greater financial predictability, smoothing the cyclical swings that once threatened factory closures and mass layoffs. On the other, this artificial reduction in product lifespans imposes considerable costs on consumers and society at large. 

Not only are households spending more, but growing volumes of waste – from electronics to household goods – present environmental and ethical problems policymakers now grapple with. The ‘Right to Repair’ movement, which has gained traction in Europe and beyond, aims to challenge these business practices, pressing companies to favour sustainability and give consumers more control over their purchases.

Still, for most brands, the strategy of perfecting imperfection remains lucrative. According to reports businesses employing planned obsolescence typically enjoy higher margins and repeat engagements. And by embracing imperfection – not as a flaw, but as a strategic tool – manufacturers can optimise plant operation, workforce deployment, and product pipeline management. Consumer psychology, too, plays a role. 

Studies also suggest that customers respond favourably to product cycles, associating short-lived versions with innovation and progress rather than failure or exploitation. This logic is supported by the regular queues outside electronics stores with every new gadget release and by the enduring popularity of annual model upgrades across industries.

Of course, not all product flaws are intentional; sometimes, technical limits or cost pressures lead to shorter lifespans. However, there is a fine line between engineering limitations and purposeful design choices, and this space is exploited by imperfect competition—a market scenario wherein companies are free to manipulate quality, life expectancy, and accessory compatibility to shape consumer experience and, by extension, consumer loyalty. 

This strategy, which may have begun as a response to technological bottlenecks, has thus evolved into a calculated method for retaining relevance, maximising revenue, and defending market share.Looking ahead, some businesses are exploring more sustainable designs – products that can be repaired or upgraded easily. But the basic idea of planned obsolescence still dominates. The challenge now is to balance profits with responsibility. Companies that manage imperfections wisely – without losing customer trust – are likely to succeed in the long run.

In the end, the most successful businesses will move beyond creating artificial scarcity – instead perfecting imperfection in a way that fosters trust, durability, and true lasting value. In this new era, the challenge is not to eliminate flaws, but to manage them wisely, so that business sustains itself without sacrificing the goodwill of its market.

Artificial Intelligence sandboxes are shaping the architecture of responsible innovation for the intelligent age

Mumbai: In the rapidly evolving landscape of artificial intelligence (AI), the concept of sandboxes has emerged as a critical tool for fostering innovation while ensuring ethical and responsible development. An AI sandbox is essentially a controlled environment where innovators can safely develop, test, and refine AI models and applications using real-world data, infrastructure, and regulatory guidance. These spaces are designed to reduce risks, accelerate experimentation, and bridge the gap between research and real-world deployment.

The European Union AI Act 2024 defines an AI regulatory sandbox as a framework set up by competent authorities to allow providers or prospective providers of AI systems to develop, train, validate, and test innovative AI systems under regulatory supervision. The Act highlights universal objectives for sandboxes, such as improving legal certainty, fostering innovation, supporting evidence-based regulatory learning, and facilitating market access for AI systems, particularly those developed by small and medium enterprises.

Globally, sandboxes are classified into three categories: regulatory, innovation, and hybrid. Regulatory sandboxes provide supervised spaces for piloting AI solutions under the guidance of regulators, enabling early identification of risks and compliance pathways. Innovation sandboxes offer shared access to data, computational resources, and mentorship, fostering rapid prototyping and collaborative development. Hybrid sandboxes combine the benefits of both models, promoting experimentation while ensuring alignment with ethical and policy frameworks. 

India, with its robust digital public infrastructure, vibrant start-up ecosystem, and demographic scale, is uniquely positioned to leverage AI sandboxes to address systemic challenges and unlock the potential of artificial intelligence. However, the country faces hurdles such as limited access to high-quality, localised datasets, affordable computational infrastructure, and standardised validation frameworks. 

AI sandboxes can address these challenges by providing enablers such as access to multilingual, AI-ready datasets, subsidised compute infrastructure, and domain-specific mentorship. They also embed guardrails like data privacy standards, regulatory alignment, and risk management frameworks to ensure responsible innovation.

The establishment of AI sandboxes in India is not just about creating pilot environments but about building long-term national platforms that propel scalable and inclusive AI development. These sandboxes can support priority sectors such as agriculture, healthcare, education, and micro, small, and medium enterprises, enabling the creation of solutions tailored to local needs. For instance, vernacular speech datasets and automatic speech recognition models can empower voice-first AI agents to serve rural and semi-urban populations effectively.

The operationalisation of AI sandboxes involves defining clear objectives, establishing governance structures, designing core components, and implementing phased execution.  This approach ensures that sandboxes evolve from short-term pilots into national assets, supporting responsible innovation at scale. Key stakeholders, including government bodies, industry leaders, academia, and start-ups, must collaborate to ensure the success of these initiatives. 

Governments can play a catalytic role by funding pilots, developing model policies, and investing in infrastructure, while industry partners can contribute resources and mentorship. Academia can lead capacity-building efforts and provide regulatory-aligned evaluation, and start-ups can actively engage in sandbox pilots to refine and scale their solutions.

AI sandboxes are essential in the intelligent age, where the balance between rapid technological advancement and social responsibility is paramount. They provide a structured pathway for innovation, ensuring that AI solutions are not only cutting-edge but also ethical, inclusive, and aligned with public interest. As India seeks to position itself as a global leader in AI, the sandbox model offers a blueprint for scaling responsible AI development, setting a precedent for other nations to follow.

DISCLOSURE: This feature draws on insights from the white paper Shaping the AI Sandbox Ecosystem for the Intelligent Age, published by the World Economic Forum in collaboration with IndiaAI, the Office of the Principal Scientific Adviser to the Government of India, and BCG X.