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International News From the Field: India

India maintains its strong manufacturing PMI despite global headwinds and recession risks. Machine tools, heavy electrical equipment, building supplies, and green investments continue showing promise. For more industry intel and other tidbits, read on.
Oct 18, 2022

Despite global headwinds and growing recession risks, India’s manufacturing PMI remained robust in September at 55.1 from 56.2 in August. The unemployment rate came down to 6.4% in September from 8.3% in August 2022. Manufacturing output did see a 0.7% year-over-year drop in August 2022, the first month of contraction since February 2021, due to a decline in the production of pharma, textiles, electrical equipment, rubber, and plastic products.

Automobile retail sales increased 11% to 1,464,001 units in September from 1,319,647 units in August 2022. Passenger vehicle sales jumped 10%, two-wheelers reached 9% growth, and commercial vehicles saw a growth of 19% over August 2022. September’s year-over-year numbers saw a rise of 92% in passenger vehicles and 13% in two-wheelers, and these numbers are likely to climb further in October in the festive season.

According to the Indian Machine Tool Manufacturer’s Association (IMTMA), India’s machine tool consumption is expected to reach around $2.3 billion by the end of the current fiscal year and to grow at a CAGR of 20% over the next five-year period, reaching $5.5 billion by the end of the year 2027. Machine tool imports are presently around 50% of consumption value and are projected to grow at a CAGR of 15% over the next five years.

India’s heavy electrical equipment production is presently valued at $22 billion. The electrical equipment market is forecasted to grow at 12% CAGR and reach $72 billion by 2025 from its current level of around $50 billion. The electrical equipment export market is forecasted to reach $13 billion by 2025, up from $8.65 billion.

For your reference, a few recently announced projects and investment news items are listed below.

  • JSW Steel and its partner JFE Steel of Japan intend to invest over $1 billion in setting up a specialty steel manufacturing facility in Vijayanagar, Karnataka.

  • JSW Cement will invest around $400 million to set up two greenfield cement plants in Madhya Pradesh.

  • Adani Group will build three giga factories to manufacture solar panels, wind turbines, and hydrogen electrolyzers in India as part of a $70 billion green investment.

  • Reliance Strategic Business Ventures, an arm of Reliance Industries, and Sanmina completed a JV deal for the investment of $400 million to produce 4G and 5G electronic hardware equipment. The manufacturing will take place at Sanmina’s Chennai-based plant.

  • Mallawa Ventures is investing $1.2 billion to set up a hydrogen fuel cell bus factory project near Chennai.

  • Schneider Electric is setting up a second unit in Telangana. About 75% of the products manufactured at the facility would be exported.

  • Vedanta will set up a hub for manufacturing iPhones and other television equipment in Maharashtra.

  • Cement-maker Birla Corp. will invest $1 billion to ramp up production capacity from 10 million tons to 30 million tons at their Chhattisgarh-based plant.

  • Hindustan Aeronautics Limited (HAL) has set up a new integrated cryogenic rocket engine manufacturing facility for ISRO (Indian Space Research Organization).

  • Goldi Solar will invest $750 million to expand manufacturing capacity at their Gujarat plant.

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Author
Arun Mahajan
Director - Chennai Tech Center
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