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International News From the Field: India

India’s PMI hit almost 55 as defense, energy, AI, and AM investments and growth strategies expand. The PLI scheme is drawing major investments in microchips, electric scooters, and 5G hardware. For more industry intel and other tidbits, read on.
Mar 22, 2022

India’s Purchasing Managers Index (PMI) hit almost 55 in February as manufacturing continues to expand with defense, renewable energy, artificial intelligence, and additive manufacturing investments and growth strategies. The Production Linked Incentive (PLI) scheme continues to draw major investments – most recently in microchips, electric scooters, and 5G hardware. For more industry intel and other tidbits, read on.

  • India’s manufacturing activities continue to expand with the PMI for February increasing to 54.9 from 54 in January. Manufacturing output and new orders grew at accelerated rates, supported by favorable demand conditions. The overall GDP growth for the fiscal year (April 2021 to March 2022) is expected to be around 8.9%.  

  • In 2021, India added a record 10 GW of solar capacity, registering a YOY increase of 212%. Cumulative installed solar capacity at the end of 2021 stood at 49 GW. Solar accounted for 62% of new power capacity additions in 2021.

  • According to the Renewable Energy Ministry’s 25-year vision document, India is targeting to meet 85% of its total energy requirement with renewable energy. By the year 2030, coal-based energy capacity is likely to rise to 267 GW from the present 210 GW. Subsequently, it would decline to 140 GW by the year 2047. This change would involve investments of around $800 billion to enhance renewable energy generation capacity to 1125 GW.    

  • Recently, India formalized the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates. It is a type of “free trade pact” which covers negotiations on trade in services and investments and other areas of economic partnership. Several of the UAE tech companies, like EDGE Group, are planning India-focused strategies to meet India’s defense needs and foster indigenous growth and manufacturing under the “Make in India” program. 

  • India announced a defense budget of $54.20 billion for fiscal year 2022-2023. $ 20.36 billion of the budget is allocated for capital outlay focused on the modernization of its military forces.

  • To foster a robust artificial intelligence ecosystem in India, the Ministry of Electronics and Information Technology (MeitY) is setting up centers for transformational artificial intelligence in collaboration with academia and private industry to develop AI-based solutions.  

  • The government is also planning to make India an additive design and manufacturing hub. Under the National Strategy on Additive Manufacturing (AM), the government intends to promote over 100 new startups, engaging over 100,000 people creating an ecosystem and developing over 500 AM products and 50 AM technologies on material, machine, process, and software to revolutionize India’s manufacturing and industrial production landscape through digital processes.     

  • Vedanta Group and Foxconn have signed a memorandum of understanding (MOU) to create a joint venture to manufacture displays and semiconductor chips in India. The group has discussed an investment of $15 billion over a five-year period and will avail themselves of India’s Production Linked Incentive (PLI) scheme.

  • Tata Power is collaborating with German-based RWE Renewable GmbH for offshore wind farm projects. India’s government has announced a target of 30 GW of power generation capacity for offshore wind installations by the year 2030.

  • Ola Electric is also taking advantage of the PLI scheme, committing an investment of $450 million over a five-year period to enhance production capacity of electric scooters in their Bangalore-based plant.

  • Reliance Industries has tied themselves up with Sanmina Corp. and will invest around $220 million for manufacturing hardware for 5G communications and cloud infrastructure to support the health care, defense, and aerospace industries.

  • Pinnacle Industries is investing around $260 million to setup an EV unit in Pune to produce their EKA brand of buses.

  • India-based Okinawa Aerotech is investing around $135 million to double its production capacity of EV scooters. This will increase capacity to 2 million units per year.       

Arun Mahajan
Director - Chennai Tech Center
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