What Henry Ford Got Right About Wages

Noida’s Wage Squeeze: Why India Needs a Henry Ford Moment

In Noida, a thriving conurbation of Uttar Pradesh that adjoins Delhi, factory workers and domestic help staged violent protests, damaging property and blocking traffic, demanding better wages. 

The trigger was news of notification, in neighbouring Haryana, of higher minimum wages, causing resentment among workers at the Noida plants of the same company, whose Haryana employees now receive higher wages, and the affordability crisis triggered by the increase in cooking gas prices.

The company managements have not allowed their workers to form unions, and so there have been few organised demands and wage bargains. Workers’ resentment expressed itself as chaotic protests, some of which took a violent turn. It turns out that the striking Noida workers draw salaries of Rs 10,000-12,000 a month. 

The Uttar Pradesh state government, to its credit, immediately revised its minimum wages for unskilled, semi-skilled and skilled workers. However, after increasing the minimum wage at different rates for different urban clusters of the state, the revised rates for the three classes of workers in Noida stand at meagre Rs 13,690, Rs 15,059 and Rs 18,868 per month.

With this much, workers are expected to pay for rent, clothing, food, cooking fuel, transport, out-of-pocket healthcare expenses and their children’s educational expenses. Enlightened self-interest should persuade India’s employers to pay their workers decent wages and give them sufficient periods of leisure, instead of keeping them in penury.

One enterprise’s wage bill is purchasing power for the rest of the economy. If every enterprise depresses its wage bill to the barest minimum level needed for its workers to subsist, the result would be sharply curtailed effective demand for the economy’s output at large. 

Lessons from Henry Ford 

Higher wages will make for higher levels of demand in the economy. Tardy creation of new towns drives up the cost of existing urban spaces and of housing. The higher the outlay on housing, the lower the funds available for discretionary spending. 

When real estate advertises elite residences priced at several crore rupees per unit, it advertises an economy-wide squeeze on consumption, compared to what would obtain were India to have more towns housing its economic activity.

When Henry Ford, founder of the Ford Motor Company, paid his assembly-line workers wages high enough to allow them to buy the cars they made, he paved the way for the whole economy to experience a consumption boom. Instead of being crushed by a heavy wage burden, Ford thrived. Indian industry would do well to draw the right lesson from Ford’s so-called magnanimity.

Also this week — Markets continued to yo-yo as US President Donald Trump continued to make contradicting statements; the US has taken an early lead in the new space race; and Indian tech made news of a different kind.

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Rs 18,000 crore

That’s the amount of losses India’s aviation sector could face as the West Asia conflict disrupts flight operations and dents inbound travel, according to a report released by the PHD Chamber of Commerce and Industry (PHDCCI).

Trigger: Escalating tensions have led to airspace restrictions, forcing airlines to reroute flights and increasing flying time and fuel consumption. At the same time, rising crude oil prices are pushing up aviation turbine fuel costs, adding further strain on carriers.

Inbound travel has taken a visible hit, with foreign tourist arrivals estimated to decline by 15–20%, as uncertainty impacts travel sentiment. Airlines are adjusting schedules and bearing higher operational costs, particularly on international routes linked to West Asia.

Forecast: The report recommends strengthening air service agreements, rationalising taxes on aviation turbine fuel, hospitality, and food services, and easing credit for tourism MSMEs. It also calls for better infrastructure, faster visas, stronger digital systems, and wider tourism promotion in alternative markets.

For food services, it highlights supply chain stability and lower compliance costs, while stressing the need for a more resilient tourism ecosystem.

India To Revive Covid Playbook

Indian officials are drawing on their Covid playbook to manage the economic fallout from the Iran war, warning the disruption could prove as severe and prolonged as the pandemic. The government is weighing a credit guarantee scheme worth up to Rs 2.5 trillion for small businesses, Bloomberg reported.

The report quoted officials as saying that the West Asia crisis could be as damaging for India as the pandemic was.

Overview: The strain is broad-based as the rupee has breached 95 to the dollar, overseas funds have pulled nearly $19 billion from local markets, and growth forecasts are being revised downward. Goldman Sachs now projects 5.9% for 2026, against the government's 6.8-7.2% target for FY2027.

Setup: Meanwhile, Indian LNG importers, including BPCL and GAIL, have reportedly seized on a recent price dip, below $16 per million BTU, to accelerate spot purchases. This comes as the Strait of Hormuz closure pushed prices as high as $25.

The Mobius Legacy

Veteran emerging markets investor Mark Mobius passed away aged of 89, marking the end of an era in global investing. Widely regarded as a pioneer of emerging markets investing, Mobius spent decades identifying opportunities in economies that were often overlooked by global capital.

Context:  Mobius led the Templeton Emerging Markets Group for over 30 years and helped channel billions of dollars into developing markets, earning him the nickname “Indiana Jones of emerging markets.”

He was also a strong advocate of India’s long-term potential. “But the trajectory is definitely up. And it will continue to be that way going forward,” he had said in an interview with The Core.

Talking about some of his best stock picks, he emphasised the importance of management. “I found that managements that were committed to the success of the company and were compensated based on the success of the company usually perform the best,” he said speaking to The Core.

Implication: While his passing marks a significant loss, Mobius’s belief in emerging markets, especially India, continues to shape global investment thinking.

NBFC Branch Flexibility

The Reserve Bank of India has eased branch expansion norms for NBFCs, allowing them to open branches without prior approval in most cases.

Context: The move aims to provide operational flexibility and improve ease of doing business. Under the revised framework, NBFCs can generally expand their branch network without seeking regulatory nod, marking a shift from earlier rules that required approvals for certain categories.

However, the central bank has retained a calibrated approach for deposit-taking NBFCs. Entities with net owned funds (NOF) of up to ₹50 crore or with a credit rating below AA can operate only within their home state. Those with NOF above ₹50 crore and a rating of AA or higher can expand nationwide, while others remain restricted to their state.

Forecast: The changes are expected to ease expansion while maintaining regulatory oversight, with immediate effect.

Musk Moves On Chips

Elon Musk's representatives have approached major semiconductor equipment suppliers, including Applied Materials, Tokyo Electron, and Lam Research, seeking price quotes and delivery timelines for his proposed Terafab chipmaking venture, a joint Tesla-SpaceX initiative targeting one terawatt of annual computing capacity, Bloomberg reported.

Catch Up Quick: The outreach signals Musk is advancing the project despite widespread industry scepticism. Intel has already signed, and the Terafab team approached Samsung for manufacturing support, though the South Korean company counter-proposed allocating additional capacity at its planned Texas facility instead.

Fast Facts: Analysts at Bernstein estimate the full project could require between $5 trillion and $13 trillion in capital expenditure. A pilot production line processing 3,000 wafers per month is planned first, with silicon manufacturing targeted to begin by 2029, a timeline TSMC's CEO has publicly cautioned cannot be rushed.

Global Markets Ride on Unbelievable Exuberance

On Episode 849 of The Core Report, financial journalist Govindraj Ethiraj talks to Vibhuti Garg, Director at South Asia at Institute for Energy Economics and Financial Analysis (IEEFA) as well as Dr. Jaijit Bhattacharya, President of the Centre for Domestic Economy Policy (CDEP) Research.

• Global markets ride on unbelievable exuberance

• IMF official says countries must pass on true cost of energy to users and reduce subsidies

• Is India geared for peak power demand given gas supplies are restrained?

• Have India’s moves to free up imports for exporting companies and industries worked, particularly in textiles and apparel?