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International News From the Field: India

Despite positive growth prospects, external factors pose a risk for the fastest-growing economy. Will strong service activity and robust demand sustain India´s impressive growth of 6.5%? It seems likely. For more industry intel and other tidbits, read on.
Nov 02, 2023

India’s manufacturing PMI for October is down to 55.5 against 57.5 in September. The services PMI grew to 61 in September from 60.1 in August. The index for industrial production climbed to 10.3% YOY in August 2023, the highest since June last year, from a 5.7% rise in the previous month.

According to S&P Global Market Intelligence, India has shown two years of rapid economic growth in 2021 and 2022 and is showing sustained, strong growth in 2023. Presently, it is the world´s fifth-largest economy and is likely to overtake Japan to become the third largest, with a GDP of $7.3 trillion by 2030.

Crisil Ratings stated that the construction equipment sector will see a revenue growth of around 15% in 2024. The reason is the continued government focus on infrastructure buildout, especially roads, metros, railways, waterways, and projects under the National Infrastructure Pipeline, along with mining activity and real estate-related construction activity. Presently, 70% of sales volume is for earth-moving equipment. Material handling and concrete equipment constitute the remaining.

India’s space economy is presently worth around $8 billion with a 2% global share. It has the potential to grow to $44 billion by 2033, representing 8% of the global space economy. IN-SPACe and ISRO are collaborating to position India as a dominant global space power, with a focus on enhancing capabilities and actively engaging private sector participation to bolster the space economy and support a self-reliant India.

India’s automobile sales for September jumped by 20% over the same period in the previous year. According to the Federation of Dealers’ Association, sales volume stood at 1.89 million units for September, fueled by positive market sentiment and a favorable monsoon season. The market observed 19% sales growth in the passenger vehicle segment, 22% in motorcycles, 49% in three-wheelers, and 5% growth in the commercial vehicle segment.

The International Energy Agency (IEA), in its latest World Energy Outlook report, projected that India would witness significant growth in domestic production capacity for solar PV modules that could exceed 70 GW annually by 2027. Currently, India accounts for 3% of the global solar PV market and is well on its way to achieving its 2030 target of having half of its electricity capacity come from non-fossil sources.

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

  • Maruti Suzuki India is planning to invest around $15 billion in capital expenditure over the next seven years. The amount would be spent to enhance their manufacturing capacity across the three plants located in Gurgaon, Manesar, and Gujarat. The company’s capex plans encompass the development of 10 to 11 new passenger vehicle models with various fuel options.

  • Hyundai Motors and its suppliers plan to invest around $1.3 billion to establish their production line in the former General Motors Talegaon plant in Maharashtra. The facility presently has the capacity to produce 130,000 units annually.

  • The state of Uttar Pradesh has allocated around 2,350 acres of land to establish mega manufacturing parks catering to pharmaceutical and medical device production. The medical devices park would be established in an area of 350 acres and accommodate over 100 manufacturing units specializing in medical equipment and devices.

  • Ather Energy plans to set up a new plant in addition to its existing one near Bangalore to supply the increasing demand for electric two-wheelers. Between the two plants, the company aims to achieve an annual capacity of over 420,000 units.

  • TVS Motor Co. in Hosur, near Bangalore, has commenced production of electric two-wheelers for BMW. The first EV, the BMW CE 02, is jointly designed, developed, and industrialized by the two companies at TVS’ Hosur facility. The bikes will be sold in India as well as exported to other countries.

  • Kaynes Technology is investing around $350 million to establish a semiconductor assembly and test facility near Hyderabad.

  • U.S.-based companies Krypton Solutions and Texas Instruments are planning to invest around $100 million to establish a printed circuit board fabrication unit in Karnataka.

  • Voltas is planning to invest around $150 million to manufacture air conditioning compressors at their Chennai plant. Additionally, Voltas is also setting up commercial refrigeration production in Gujarat and initiating semi-automatic washing machine manufacturing in its Sanand plant.

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

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Author
Arun Mahajan
Director - Chennai Tech Center
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