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International News From the Field: India

Despite some challenges, India's outlook is bright. With a massive boost in spending on projects such as roads, railways, electronics, and EV parts, its economy remains solid and in growth mode. For more industry intel and other tidbits, read on.
Feb 02, 2023

India’s manufacturing PMI remained robust at 55.4 in January, slowing marginally from December’s 57.8. According to the most recent IMF projection, with resilient domestic demand despite external headwinds, India will see 6.8% growth in the current fiscal year (2022-23), and further growth for the next fiscal year (2023-24) will be around 6.1%, rising to 6.8% in 2024.

This year’s annual fiscal budget announced on Feb. 1 laid special emphasis on infrastructure spending. About $125 billion is earmarked to be spent on various infrastructure-related projects. Outlay on the transition to a green economy, in line with climate goals, will be around $4.3 billion. Effective capex will be about 4.5% of GDP, which should crowd private investment to create an economic boom.

To boost manufacturing and exports across 14 different sectors, the government offered PLI (production-linked incentives) valued at over $23.5 billion for the next three to five years. So far, 384 global and homegrown companies have applied and are availing themselves of the benefits under the scheme. The government plans to extend this scheme to other sectors, enhancing the allocation by around 20%-30%.

Apple Inc. is looking to boost India’s production to 25% of its global production by 2025. Over a dozen of Apple’s Chinese suppliers, including Luxshare, Ningbo, etc., received clearance to set up their operations in India, joining the big three suppliers – Foxconn, Wistron, and Pegatron – as well as Tata Electronics, which is already assembling and manufacturing the latest series of iPhones. In addition to shifting manufacturing and the sourcing of Apple products to India, Apple plans to open its own retail stores across the country soon.

Auto Expo, India's largest automotive show, was held in the Delhi region on Jan. 13-18, 2023. The 16th edition of the show saw all international and domestic OEM companies focus on launching EVs, hybrids, as well as ethanol and bio-fueled products over the next two to three years. China’s BYD is planning to push into India’s EV market aggressively. The company will capture about 40% of the local EV market by 2030.

A few recently announced projects and investment news items are listed below for your reference:

  • Siemens signed a $3.25 billion contract with Indian Railways to manufacture and supply 1,200 9,000-horsepower electric freight locomotives over the next 11 years and provide 35 years of full-service maintenance.

  • Omega Seiki Mobility will invest around $98.1 million to set up two manufacturing facilities for EV components like batteries and powertrains. One of the facilities of 0.5 GW would be put up in the state of Maharashtra for batteries, which would be scaled up to 2 GW. The other one would be established in Haryana for powertrain components, which would produce around 10,000 units initially and be scaled up to 100,000 in four years.

  • JSW steel plans to invest around $3 billion for capacity expansion for the forthcoming fiscal year. The capex would add nine metric tons of steel production to its existing capacity.

  • Stanadyne is planning to invest around $25 million to build a new plant to increase its capacity for producing fuel pumps and fuel injectors for agriculture and commercial vehicles.

  • Taiwan-based Gogoro and India-based Belrise have created a 50-50 joint venture that would invest $2.5 billion in Maharashtra to build energy infrastructure across the state.

  • Mitsubishi Electric is investing $225 million to set up an air conditioner and compressor manufacturing facility in Tamil Nadu.

For more information, please contact Arun Mahajan at AMahajan@AMTonline.org.

Arun Mahajan
Director - Chennai Tech Center
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