Best of BS Opinion: SME IPOs' heady rise masks irrational exuberance

Today's editorials examine the risks around SME listings as well as investments into the AI ecosystems; our columnists bat for automation in agriculture, and for avenues to attract scientific talent

Hello, and welcome to Best of BS Opinion, our daily wrap of the Opinion page! 

Small and micro enterprises (SMEs) are going through heady times, with IPO listings surging by more than 87 per cent between FY23 and FY25, while the issue size grew 52.7 per cent. Given their traditional limited credit access, notes our first editorial, this route of fundraising is giving them a chance to scale up, innovate, and professionalise. There are multiple factors behind the rush, particularly a retail investor boom that has young people looking to make quick listing gains. But there are a few caveats, too. The Reserve Bank of India’s (RBI) October 2025 Bulletin flags significant overvaluation in several of these IPOs. Close to 90 per cent list at a premium, but many fail to sustain that performance, suggesting a market driven more by sentiment than by fundamentals. In fact, retail enthusiasm for these issues has become the main engine, as well as the main risk. The Securities and Exchange Board of India (Sebi) has wisely stepped in with a series of actions to curb the enthusiasm, since unchecked exuberance can erode credibility.

 

A large proportion of investment in the West is headed into the artificial intelligence (AI) supply chain. Not surprisingly, two of the three best performing sectors in the S&P 500 are communications services and information technology – the so-called 'AI trade'. In fact, the top performing sector is utilities, thanks to expectations of future demand from power-hungry data centres. However, there are some red flags, warns our second editorial: it is not just that a classic boom-and-bust cycle is building up, but also that significant systemic risks are being ignored. What is particularly worrying is that signs of circularity are starting to show. Tech today is playing the role that finance played prior to the 2008 financial crash, but governments today have far less fiscal space than at that time for a bailout. For retail investors and cash-strapped developing-world governments like India’s, this should be a time of caution, not exuberance. 

 

The post-GST 2.0 decline in the prices of agricultural machinery is expected to boost mechanisation in Indian agriculture, writes Surinder Sud. This should lead to economic gains, an outcome that is backed by various studies. This is doubly important for India; one, because of the growing scarcity of farm labour and two, to ensure higher productivity and profitability. At present, less than half of farm work in India is carried out through machines, a level that compares poorly with many other countries worldwide. The need now, he says, is to promote new and state-of-the-art technologies, such as geospatial programming and artificial intelligence, to optimise farm productivity. Pushing these technologies can transform Indian agriculture into a truly knowledge-based and technology-driven lucrative business. 

 

Ajay Shah and Pralhad Burli explore the window of opportunity India has in attracting scientific talent, thanks to the funding cuts the US government is imposing on early-stage research and innovation. Using the 'Technology Readiness Level' (TRL) framework, they identify stages of research from TRL-1 to TRL-7, the last one being when the path to a market is clear and private capital is available. For over 70 years, the US federal government was the world's single most important player for TRL 1-6 research. Now, this engine is being dismantled under the Trump administration, leading to the destruction of the world's best innovation ecosystem. India can take advantage of this by offering affected researchers a landing pad in terms of funding, public resources, and easier visas for research. It missed a similar chance when the Soviet Union collapsed; it should do better this time.

 

Stefan Fatsis' residency at the headquarters of the Merriam-Webster dictionary to write about a long-awaited overhaul of its online unabridged version fortuitously coincided with a wave of layoffs at the firm. The revision of the online dictionary never materialised, but the layoffs had Fatsis questioning the role, even the existence, of the dictionary itself and its role in society. In his review of Fatsis' 'UNABRIDGED: The Thrill of (and Threat to) the Modern Dictionary', Dan Pieperbring notes that the author provides an excellent primer on Merriam-Webster’s role in the culture wars, with thorough accounts of the dictionary’s approach to the N-word, the F-word, “Covid-19” and “woke.” Fatsis’ history of the Merriam-Webster is charmingly told, even if his miscellaneous approach means the book sometimes loses its centre.