This year, India is predicted to have the highest GDP growth of any large country at more than 11%. The PMI is above 57, and business has resumed at almost pre-pandemic levels. The government continues to aggressively incentivize local manufacturing with the PLI scheme, revisions to FDI and defense policies, and major infrastructure programs. For more industry intel and other tidbits, read on.
India’s manufacturing PMI continued its robustness in January 2021, clocking 57.7, up from 56.4 in December 2020. Additionally, the International Monetary Fund (IMF) revised India’s annual GDP growth projection for 2021 upwards from 8.8% to 11.5%. The annual GDP growth for 2022 is projected to be around 7%. According to Nomura (NIBRI), India’s business resumption index was above 99.3 for the week ending Feb. 21, 2021, which is almost back to pre-pandemic levels.
To further stimulate the economy, the Indian government has announced their plan to invest $1.4 trillion in the infrastructure sector over the next five years for building new roads, bridges, seaports, airports, railways, and mass transportation. These investments, in turn, will create demand for manufacturing technology in sectors like commercial vehicles, construction machinery, cement, power, and more.
In the recently concluded Aero-India trade show in Bangalore, there was a strong push toward achieving self-reliance by promoting local manufacturing and exports in the defense and aerospace sectors. Thirty-four companies signed MOUs with the Karnataka government for projects worth over $400 million. Similarly, the Uttar Pradesh-based defense corridor attracted investments worth over $650 million. India is planning to invest $130 billion over the next five years to procure new equipment and modernize its defense infrastructure. As previously reported, FDI of up to 74% is now allowed in the defense sector.
The medical device sector is presently a $12 billion industry and growing at a CAGR of 15%. The industry is likely to grow to $50 billion by the year 2025. Earlier this month, the government approved many applications for manufacturing medical devices under the Production Linked Incentive (PLI) scheme. The approved companies include Siemens Healthcare, Nipro India, Wipro-GE, and Sahajanand Medical Technologies. The total committed investment by these four companies alone is $110 million.
Some recently announced projects and investments further illustrate the vast opportunities in India.
Tesla is in the process of acquiring land to set up their manufacturing plant on the outskirts of Bangalore. Tesla would complete assembly of their Model 3 at the facility.
Ampere Electric, a wholly owned electric mobility subsidiary of Greaves cotton, is investing around $100 million to set up an electric mobility scooter plant in Ranipet, Tamilnadu.
Hyundai is planning to invest $200 million to build EVs for the mass market in India.
Amazon is opening their first manufacturing line near Chennai to produce Fire TV devices in partnership with Foxconn-owned Cloud Network Technology.
JSW Energy is planning to invest $1.6 billion to build up capacity for 1800 MW of renewable energy.
Bharat Forge will make armored vehicles in India in partnership with South Africa’s Paramount Group.
Hindustan Aeronautics Limited (HAL) signed an MOU with Mishra Dhatu Nigam (MIDHANI) for the development and production of composite raw materials.
Thermo Fisher is setting up a manufacturing facility in Bengaluru to produce customized COVID-19 testing kits suited to local conditions.
For more information, contact Arun Mahajan (AMahajan@AMTonline.org).