AAPI: October 2022

DELHI, 20th OCTOBER 2022

Index of this Newsletter

INDIA

INDIA & THE WORLD

21. India is third largest market for Lladro
22.1. From India, For World
22.2. Beyond Bollywood & Yoga
23.1. Flipkart Big Billion Festive Sale: Flipkart has many firsts this festive season. Some hit the mark, others the sellers
23.2. India will pip US to become world's second-largest online shopper base
24. Air India announces 20 additional flights to UK, US
25.1. India is a Shining Star Amid Global Economic Uncertainty
25.2. Despite global slowdown, India's exports to top last year’s record US$ 420 billion

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DELHI, 20th OCTOBER 2022

NEWSLETTER, 20-X-2022

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. India: Vision 2047: why India could become the world leader in financial markets in 25 years

ET, 23 Sep. 2022

The market landscape has changed significantly in the last decade with technology playing an important role. Further, regulatory support for innovation has helped intermediaries expand their product offering and reach out to investors in remote areas. Clearly, for India’s financial markets the stage is set for a massive leap into an exciting period of growth and spread.

As we proudly celebrate Azadika Amrut Mahotsav, the achievements of 75 years of free India, the government is laying down the road map for Amrut Kaal, or the next 25 years up to the centenary of the country’s independence.

While the government has set some ambitious targets for the next two-and-a-half decades, the role of the financial sector — especially the capital markets — would be key in achieving them. But before we look forward, it would be pertinent to go back in history to analyse how our markets have evolved from a nascent stage to become one of the most dynamic and vibrant ones globally.

This can be attributed to the massive regulatory and governance transformation that has been undertaken over the past few years. It is heartening to note that the government is keen to remove bottlenecks and address issues impacting the ease of doing business.

The market landscape has changed significantly in the last decade with technology playing an important role in broad-basing the Indian markets. Further, regulatory support for innovation has helped intermediaries expand the remit of product offering and reach out to new investors in remote areas of the country. Capital markets is no longer confined to India’s tier-I cities but has reached geographies beyond tier-II and tier-III cities. At the same time, it must be appreciated that the regulatory enforcement regime has ensured that the interest of investors is safeguarded and intermediaries following unscrupulous practices are penalised.

Hence, the stage is set to leap into an exciting period of growth and spread of markets. In my view, India would be a global leader in financial markets by 2047. However, we need to intensify our efforts and move in sync with global developments to realise this ambition. There should be a coherent strategy to develop the markets and increase participation. Further, corporates should have ease of access to risk capital for new projects, development, and expansion.The government, regulators, and intermediaries have to work jointly to make this happen.

Now, let’s take a look at some of the most important areas that require our immediate attention.

Investment in technology infrastructure

New technologies have improved efficiency and speed of service, besides providing better customer experience. Exponential growth in information technology has prompted companies to leverage digitisation technology to transform the financial services industry through customer experience management. Digitisation of financial services is an ongoing revolution which needs to be adopted by broking firms to expand their product suite and client base. Brokers or financial intermediaries are no longer considered as financial companies but are looked upon as tech companies that provide financial solutions.

Application of technology is changing the way financial markets traditionally have functioned. Technology is affecting financial markets through various channels — be it technology-driven financial-market platforms for fundraising, online access to investment products, post-trade market for securities, or product and process. As scales and processes are growing, it is critical from a risk-management perspective to invest in regulatory technology, or RegTech.

Broking firms and the stock-market regulator have to work together to prepare the Indian securities market and regulatory framework for the adoption of fintech and RegTech solutions, while promoting market integrity, market development, consumer protection, business models, and market disruptions.

The next 25 years would see investment in technology for catering to clients and providing new services and products. We would also witness the evolution of Reg Tech to help broking firms in managing their compliances and regulators carrying out their functions.

Investment in human resources

The pandemic underlined the fact that organisations require more than just a plan for dealing with the unexpected. Even more pressing is the need to make a fundamental shift in mindset, where the drive to survive is replaced with a desire to thrive. In order to succeed, an organisation must become, and more importantly, stay distinctly human at its core. Today’s environment of extreme dynamism calls for a degree of courage, judgement, and flexibility that only humans and teams led by humans can bring.

Product innovation, design, sales, and customer service require new strategies and a focused approach. Firms will have to invest for talent acquisition and talent retention. If someone thinks that finance firms need only chartered accountants and MBA graduates, then that notion has to be discarded. Apart from human resources, in finance, the New Age firms need technocrats, marketing wizards, and strong compliance professionals to ensure that the firm is able to meet its desired growth objectives. Companies will have to change their human-resources strategy in sync with the expectations of their millennial employees who are no longer a number on the pay roll but growth partners.

Product innovation

A vibrant capital market needs to cater to the requirements of both issuers and investors. The availability of wide choice for consumers, spurred by a multitude of digital channels, is resulting in constantly changing customer expectations. This, in turn, is fuelling the demand for greater personalisation, or the ability to market, advertise, and even develop products or services that suit individual consumer preferences.

Additionally, financial intermediaries will also have to innovate smarter solutions for the industry to access capital markets. Our capital-raising regulations have undergone multiple changes during the last two decades or so to facilitate access to capital markets for corporates. However, with the usage of innovative concepts such as peer-to-peer lending, crowd funding, Dutch auctions, SPACs (special-purpose acquisition companies), investment banks will have to come up with out-of-the-box solutions to help their clients raise capital. The intermediaries should look to push up the value chain to remain relevant.

While moving ahead towards 2047, firms will have to continuously innovate to remain ahead of the curve to meet their clients’ expectations. At the same time, regulations will have to evolve to support such innovations, keeping investors’ interests in mind.

Awareness and financial literacy

Decades back, Indian equity markets were centred around Mumbai. But that is no longer the case. Today, we have more than 100 million demat accounts spread across India, which reflects the reach of our markets. Having said that, there is a big opportunity to go even deeper and widen the investor base.

But this cannot happen if the masses are not financially literate.

The Securities and Exchange Board of India (Sebi) has taken giant strides in increasing investor awareness and, as an industry, we have to supplement these efforts to educate the population more about financial markets and how it helps them secure a better future. Investors look up to firms to educate them more about financial products and it would serve our cause better if we can provide them more guidance on these products. A well-informed and educated investor is an asset to financial intermediaries.

Regulatory support

Sebi has been a dynamic regulator and has directed, guided, and supported the development of Indian markets since 1992. In order to achieve the objectives laid down in the government’s 2047 road map, the market regulator will have a key role to play. Regulatory infrastructure should be envisioned with the proposed changes and should incorporate the increased volume in its framework.

The next 25 years would be an exciting journey for the Indian financial markets in terms of the pace of change and development while only the nimble-footed payers would be able to cope up with this drastic transformation. It is great to see the building blocks in place as we prepare the blueprint for 2047.

(Vijay Chandok is the managing director and CEO of ICICI Securities since May 2019. He has been with the ICICI Group for close to three decades. Prior to his current assignment, Chandok served as the executive director on the board of ICICI Bank.)

1.2. Jal Mission can Avert 136.00 Infant Deaths a Year

ET, 12 Oct. 2022

Under the Jal Jeevan Mission, the government aims to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India.

The Jal Jeevan Mission (JJM), launched by the Indian government in 2019, if successful will prevent around 136,000 under-5 deaths per year provided that the water delivered through JJM is free from microbiological contamination, according to a paper co-authored by Nobel laureate Michael Kramer. The paper has been published by the University of Chicago.

“The Jal Jeevan Mission’s ambition to bring safe drinking water to all rural homes is likely to be highly valuable, preventing around 1,36,000 child deaths annually,” it said. “We hope to work with the ministry and assist in this effort by testing possible solutions to water quality treatment such as re-chlorination”.

Under the Jal Jeevan Mission, the government aims to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India. In 2019, at the inception of JJM, more than 50% of the population did not have access to safe drinking water in India.

As per the paper, although geogenic contaminants such as arsenic, fluoride and nitrate are widespread in certain regions of India, the most ubiquitous type of contamination is microbial and diarrhea is the third most common responsible disease for under-five mortality in India.

A recent meta-analysis of 15 randomised controlled trials, as part of the study, suggests that the expected reduction in all-cause under-5 mortality from water treatment is around one in four.

Further, cost-effectiveness analysis also suggests that water treatment is among the most cost-effective ways to reduce child mortality. “This implies that efforts to reach as many people as possible with safe water are likely to have very large net benefits,” it said.

2.1. National Logistics Policy: Integration of digital systems, online mechanism for secure exchange of documents key features

ET Gov. 19 Sep. 2022

One of the three main targets of the policy include creating a data-driven decision support mechanism for an efficient logistics ecosystem.

PM Narendra Modi at the launch of the National Logistics Policy (NLP) in New Delhi on Saturday.

A comprehensive action plan, integration of logistics-related digital systems, and an online mechanism for secure exchange of documents are key elements of the national logistics policy that was released by Prime Minister Narendra Modi on Saturday. The three main targets of the policy are reducing logistics cost in India to be comparable to global benchmarks by 2030; effort to bring India among the top 20 nations by 2030 in the Logistics Performance Index ranking, and creating a data-driven decision support mechanism for an efficient logistics ecosystem.

The vision is to develop a technologically enabled, integrated, cost efficient, resilient, and sustainable logistics ecosystem in the country for accelerated growth.

The policy aims at reducing the logistics cost from about 13 per cent of GDP to 7.5 percent of the GDP and generating jobs in the coming years. Special Secretary, Logistics Division, Amrit Lal Meena told PTI that the policy would provide a multi-modal digital connectivity solution.

The main parameters of the policy would include harmonisation and standardisation, trade and transport facilitation, digitisation and skill development.

The proposed action plan would include integrated digital logistics systems; standardisation of physical assets and benchmarking service quality standards, state engagement, human resource development and capacity building, export-import logistics, sectoral plans for efficient logistics, and facilitation of the development of logistics parks, the official added.

Under human resource development, the focus would be given to mainstream logistics in higher education; and the development of online training programmes. A task force would be formed with a mandate to identify action areas.

Under export-import logistics, the focus would be on addressing infrastructure and procedural gaps; and developing institutional mechanisms for trade facilitation.

Similarly, as part of the service improvement framework, the policy would talk about improvement in regulatory interface to enable seamlessness between sectors.

An empowered group of secretaries (EGoS), constituted under the PM Gati Shakti, would monitor and review the implementation of the policy. A service improvement group would be there for the resolution of user issues.

High logistics cost in India impacts both external and internal trade. The cost in India is estimated at 13-14 per cent of the gross domestic product against 9-10 per cent in the US and Europe and 11 per cent in Japan.

According to the Commerce Ministry, the sector is complex with more than 20 government agencies, 40 PGAs (Partner Government Agencies), 37 export promotion councils, 500 certifications, over 10,000 commodities, and a USD 160 billion market size.

It also involves 200 shipping agencies, 36 logistics services, 129 ICDs (Inland Container Depots), 168 CFSs (Container Freight Stations), 50 IT ecosystems, banks and insurance agencies.

2.2. A National Retail Policy, Please

ET, 19 Sep. 2022

It is critical that GoI fast-tracks the spadework on NRP to prepare this crucial cog in the economy’s wheel for the post-pandemic future.

In 2019, when the draft National Retail Policy (NRP) was announced, it was met with a lot of optimism. Aimed at creating a conducive business environment for retail trade by simplifying rules and regulations, the policy was seen as a harbinger for change. Today, the policy continues to be in limbo. The much-needed deliberations, needed for a strong and effective framework, are yet to start, never mind implementation.

It is critical that GoI fast-tracks the spadework on NRP to prepare this crucial cog in the economy’s wheel for the post-pandemic future. While ecommerce has grown by leaps and bounds, the retail sector Even as the Indian ecommerce market is expected to have an annual gross merchandise value of $350 billion by 2030 versus only $55 billion in 2021, the retail sector will not only hold its ground but it is expected to grow to $2 trillion by 2032. remains the backbone of the economy, particularly in the hinterland. Even as the Indian ecommerce market is expected to have an annual gross merchandise value of $350 billion by 2030 versus only $55 billion in 2021, the retail sector will not only hold its ground but it is expected to grow to $2 trillion by 2032.

There are over 63 million MSMEs in India that contribute around 29% of India’s GDP. According to a June 2022 Monster Employment Index, the Indian retail industry is likely to generate 2.5 crore new jobs by 2030. If India is to emerge as a $5 trillion economy by 2025, MSMEs and offline retailers must be given their due recognition.

India is a retail dense country, but it has multiple associations and various departments looking at the issues and opportunities for the sector. For all the challenges the sector faces, it requires one retail ministry or a centralised department that could exclusively represent this segment. Despite retail being one of the most important pillars of the Indian economy accounting for over 10% of the GDP, it still lacks an industry status and receives no special incentives or perks. An industry status will not only help regulate the sector, but it will also provide the requisite impetus to small players to get easier access to bank funds at low rates while ensuring better wages and employment conditions for the sizeable workforce.

Further, considering that small retailers need special attention and handholding, GoI should look to appoint a nodal officer or formulate a central regulatory body to help them establish brick and mortar stores. The banking system can also be leveraged for these small traders and unorganised retailers so that they have access to affordable funds. A special loan window can also be established under the Pradhan Mantri MUDRA (Micro Units Development & Refinance Agency) Yojana.

In the current scenario, 30-40 licences are required to start a retail operation including trade, weight and measurement, and GST registration. It is an arduous task to run pillar to post to get these licences. There is an urgency to bring in a system of single-window-clearance with faster clearances and extended validity for licences to stimulate the business ecosystem and facilitate the growth of small businesses.

Customers are increasingly deciding when to shop, how to shop and where to shop, be it online, offline or a mix of both. Amid this fast-spreading quick commerce, the traditional mom and pop stores are the ones facing the real heat. The competing environment of big discounts and ultra-fast home delivery is leading to low margins and higher delivery costs for most players, thereby translating into negative Ebitda for most ecommerce and quick commerce companies.

While the future is omnichannel, the choice to go out and shop from neighbouring stores will continue. It is here that both the government and large organised players must join hands to initiate skill development programmes for small retailers. A one-size-fits-all approach won’t benefit any stakeholder. The solution lies in policy diversification. The same set of regulations for both retail giants and small retailers may eventually lead to more distress and hurt the sector’s immense growth potential.

The writer is MD-CEO, METRO Cash & Carry India

3.1. Surge in Temp Jobs for Women as Companies Embrace Diversity

ET, 25 Sep.2022

India Inc’s increasing focus on gender diversity is manifesting itself even in the festive-season temporary hirings — and ecommerce companies are at the vanguard of this initiative.

iStockGlobal consultancy firm BCG, one of the top recruiters at IIMs, said it looks for a diverse talent pool while hiring from the campuses.

India Inc’s increasing focus on gender diversity is manifesting itself even in the festive-season temporary hirings — and ecommerce companies are at the vanguard of this initiative.

With multiple online sales underway and an unprecedented demand for temp workers this festive season, leading staffing firms including Randstad, CIEL HR Services, Quess and TeamLease Services told ET that companies are trying to be more inclusive and have a clear ask: to try and induct more women into temp roles.

“Women hiring in contract roles is a lot better now. Although the absolute number of requirements compared to men is not significant, in percentage terms, it has seen a 100%-plus jump,” said Aditya Narayan Mishra, CEO, CIEL HR Services. Companies are hiring women for various roles in the warehouse and supply chain to leverage the unique strengths they bring to the table. But delivery roles are yet to see more women as many companies still consider it a job suitable only for men.

However, many warehouse roles that were traditionally accessible only to men like picking, packing, loading, unloading and logistics operations are now open to both genders, said Mishra.

“The change is taking place slowly and going forward, we expect to see many barriers being broken,” Mishra said.

Staffing companies said Myntra, Flipkart, Amazon and Swiggy are among those actively trying to get more women temp workers on board. Flipkart, where the Big Billion Days sale is currently underway, has doubled the representation of women among supply chain employees from 5,000 to 10,000.

Myntra has hired 2,500-plus women across the supply chain — marking a 66% increase in temp hiring over last year — to cater to customers this season, the online fashion and beauty retailer told ET. “Onboarding more women this festive season is in line with Myntra’s commitment to fostering inclusivity across the board,” said a company spokesperson.

Swiggy and Amazon did not respond to ET’s queries.

Yeshab Giri, chief commercial officer, staffing, Randstad Technologies, Randstad India, said the company has witnessed increased demand for women in temp roles .

3.2. India's geospatial economy is expected to cross Rs. 63,000 crore (US$ 7.67 billion) by 2025 at a growth rate of 12.8% and to provide employment to more than 10 lakh people.

Press Information Bureau, Oct. 12, 2022

India's geospatial economy is expected to reach Rs. 63,000 crore (US$ 7.67 billion) by 2025 at a growth rate of 12.8%, and is also expected to provide employment to more than 10 lakh people mainly through geospatial start-ups, said Dr. Jitendra Singh, Minister of State (Independent Charge) Science & Technology; Minister of State (Independent Charge) Earth Sciences; MoS PMO, Personnel, Public Grievances, Pensions, Atomic Energy and Space. He was addressing the Second United Nations World Geospatial Information Congress (UN-WGIC) 2022 in Hyderabad on October 11, 2022.

Over 2,000 delegates, including 700 or more international delegates and participants from about 150 countries, are attending the 5-day conference.

More than 250 geospatial start-ups in India are showcasing the uses of geospatial technology in a variety of fields, including waste resource management, forestry, urban planning, and road mapping, said Dr. Singh.

An international GIS services market will be developed for the Indian geospatial industry with the help of geospatial science, technology, and skilled labour.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.1. Carmakers must not miss this hidden message in new fuel-economy norm: push EVs or go out of business

ET, 20 Sep. 2022

India will impose stringent penalties to reduce fuel consumption in new cars. Automakers will have to pay INR25,000-INR50,000 per car as penalty if they slip up on meeting the CAFE regulation. While this may bleed the companies, it will push green mobility and the third phase of the CAFE regulation will make EVs mainstream.

For the average Indian, mileage can make or break a car-buying decision. But for the government, a car’s mileage has a different meaning. A measure of carbon emission that is. And the policymakers are going to get stricter on this one. For, India is set to impose one of the most stringent, and most punitive, penalties globally to reduce fuel consumption in new cars.

Under the fresh set of proposed Corporate Average Fuel Economy (CAFE) targets, automakers will likely pay a minimum of INR25,000 per car as penalty if they slip up on meeting the regulation. And if the average fuel consumption for a company is above the CAFE target by just over 200 ml of petrol/diesel (two/thirds of a coke can) to cover 100km, the penalty will jump to INR50,000 per vehicle. This works out to be 3% to 6% of the average new car price and will have a huge impact on carmakers’ profitability. To be sure, the auto industry operates on slim margins. Maruti Suzuki and M&M made an Ebit per vehicle of INR27,000 and INR45,700, respectively, in the first quarter of FY23.

While doing a milder interpretation of the penalty, some in the auto industry suggest that there will be a flat INR5,000 penalty per gram (g) per vehicle if an automaker’s fleet average CO2 emission is deviating from its target by up to 4.7 g/km, and INR10,000 per g per vehicle if the carmaker’s emission is exceeding its target by above 4.7 g/km.

Bureau of Energy Efficiency (BEE), which is managing the CAFE regulations, is said to be seeking consultants to frame the final notification. BEE also wants help from consultants to make a framework, wherein carbon trading can start at a later stage. This will incentivise companies focusing on electric vehicles (EVs) and help them earn by selling carbon credits to entities that are below target.

The government rolled out CAFE 2, or the second edition of the regulations, in April 2022. But it lacks bite as we wrote here. This is set to change as the Lok Sabha has passed the Energy Conservation (Amendment) Bill, 2022 in August. The Rajya Sabha is expected to ratify the bill and make it into law in the coming winter session of Parliament. However, it is not clear if the penalty will be imposed retrospectively from April 2022 when CAFE came into force, or prospectively.

So, what is the government aiming for with this stringent policy under CAFE? Well, this could be one way to make way for EVs in the country and promote green mobility. But is the level of penalty way too high that it will hurt automakers’ profitability? For perspective, let us take a brief look at what the developed world is doing on this. Most countries have a more graded penalty mechanism. In fact, the penalty for non-compliance is a lot milder as a percentage of new car prices.

US imposed a penalty of USD14 for each 10th of a mile below the required fuel-efficiency level for each vehicle sold in 2022 up from USD5.5 in 2021. A deviation of average corporate fuel efficiency by a mile (say 50 miles per gallon or 21.25 kmpl versus the target of 49 miles per gallon or 20.82 kmpl) will mean a penalty of USD140 per vehicle. Given the average selling price of a vehicle in the US is USD45,000, the penalty is relatively mild at 0.3% of vehicle prices.
In EU, which the Indian regulation is following with a lag, if the average CO2 emissions of a manufacturer's fleet exceed its specific emission target each year, the manufacturer must pay – for each of its vehicles newly registered in that year – an excess emissions premium of EUR95 per g/km of target exceedance.
This translates into a penalty of around INR17,575 per vehicle for emissions lagging by 200 ml for 100km of run. Given mileage in India (Indian drive cycle in test conditions) is around 30% higher, the penalty moves to INR25,000. In essence, the Indian penalty is like the European penalty although an average new European car costs over 4.5x than in India. JLR, a laggard in fuel economy, made a provision of GBP 78 million for CAFE for sales in EU and the UK for 2021 and 2022, which was only around 1% of its annual revenue in this region.

"Even if you do 1g or 4g CO2 emission per kilometre over CAFE target, the penalty is same. Up to 4.7 g, [it is] INR25,000 and beyond that [it is] INR50,000. [There is] No pro rata and no incentive for improvement (from bringing deviation from CAFE target down from say 3gm/km to 2 gm/km). You will bleed if you don't comply," says CV Raman, CTO at Maruti Suzuki.

Companies can raise prices to offset this higher compliance cost. But does a hefty penalty serve the purpose?

Imagine a company, say X, can meet the CAFE target while company Y can't. So, company X immediately has a significant cost advantage (INR25,000 or INR50,000 per car) and can gain market share. Companies can't just pay minor penalties and go about their business.

The green push

The steep penalty even for a small deviation shows India doesn’t want to be a laggard in clean transportation but a leader. Since India, like other countries, will certainly make future CAFE regulations (CAFE III norms will come in 2027) even tighter, it will force carmakers to sell EVs in large numbers.

The current CAFE (phase 2) norms aim to get industry-wide average emissions to 113 g/km, down from 130 g/km in phase 1. Europe has already achieved CAFE emissions of 99 g/km in 2021 and has passed a law to bring it under 50 g/km by 2030. This means the average fuel efficiency of cars in India will have to more than double, more likely go up by 120%-130% from 2021 levels if India matches EU regulation of 2030.

Now, that kind of improvement is impossible with ICE (Internal Combustion Engine) engines or even hybrids. Only with plug-in hybrids and full battery-powered vehicles such targets are possible.

The government has made it amply clear that only zero-emission technology is the way to go. Prime Minister Narendra Modi while inaugurating Maruti Suzuki’s new plants in Gujarat and Haryana in August 2022 spoke only about EVs. The Centre recognises that India’s air pollution level is too high and calls for drastic action. So, the government is asking the industry to take short-term pain and move to technologies the western world is adopting.

Former NITI Aayog CEO Amitabh Kant has nudged both automakers and auto-part makers to look at EVs, as the future lies there. He pointed out that technological parity will lead to a synergy between domestic and export markets. On his part, transport minister Nitin Gadkari has pushed hard on leapfrogging from BS IV to BS VI emission norms.

Indian carmakers have read and understood the government’s green-mobility script and are devising a long-terms strategy to keep the average fuel economy within the policymakers’ comfort zone.

"Even if you do 1g or 4g CO2 emission per kilometre over CAFE target, the penalty is same. Up to 4.7 g, [it is] INR25,000 and beyond that [it is] IINR50,000. [There is] No pro rata and no incentive for improvement. You will bleed if you don't comply."

— CV Raman, CTO at Maruti Suzuki

It is no coincidence that Maruti is expanding its hybrid technology and introduced a more fuel-efficient K series engine. In Wagon-R, the new 1.0 litre and 1.2 litre powertrains deliver 16% and 19% higher fuel efficiency, respectively.

It is also no coincidence that M&M is set to launch the electric XUV 400 with a rated range of 450km. To ensure large volumes for the EV, the company is likely to price this under INR20 lakh. This will be a critical move, as M&M had 28% higher emissions in FY22 than the CAFE target (based on FY22 sales), the largest gap among peers as per automotive business intelligence provider JATO Dynamics.

Maruti will introduce its first battery electric vehicle (BEV) by 2025. In addition to BEVs, the company will deploy multiple technologies to meet CAFE regulations:

Reducing carbon footprint by enhancing fuel efficiency of ICE vehicles
Promoting CNG
Deploying hybrid electric technologies
Exploring bio-fuels like bio-CNG, ethanol, and flex-fuel vehicles.

Meeting the CAFE target

Companies will be forced to change their product mix to conform to new CAFE regulations. Tata Motors and Maruti are better placed and made more reference to CAFE in their latest annual reports, while M&M spoke relatively less.

“Through the use of the CAFE calculator, we regularly monitor production volumes and processes to ensure that organisational-level CAFE compliance (which will require us to produce enough fuel-efficient models to compensate for those models having higher CO2 emissions in g/km) is established at all times during the year,” says Tata Motors.

Raman says Maruti is trying its best to meet CAFE norms, but it will depend on actual sales in FY23. "We have added start-stop technology in K series engines, we are increasing sales of CNG and hybrid vehicles," he adds.

According to the company, the regulations in India on vehicle fuel economy, emissions and safety are becoming increasingly stringent and will soon be on par with those of the developed world. “This is resulting in an increase in the prices of vehicles and may affect demand, especially for mass-market or the entry-segment cars,” India’s number 1 carmaker says.

In the official tests, the fuel efficiency of the new Grand Vitara’s strong hybrid version came out at 27.97 kmpl, almost 10 kmpl higher than its competitors. The strong hybrid variant offers 26.4% lower CO2 emissions and 35.9% higher energy efficiency compared with its ICE variant. With such a healthy CO2 reduction per car and faster adoption in terms of number of cars, the strong hybrid technology is a very potent solution to reduce total fleet emissions of cars in India.

M&M is working on various powertrain and vehicle technologies such as friction reduction and electrification for further emission improvement to achieve the CAFE targets. CO2 emissions are measured during type approval testing at government-approved testing facilities, and the information is used to calculate the CO2 footprint of a company.

The bottom line

China, EU, and US are making big strides in EVs. Indian exports will benefit if the country builds technology for both local and global markets. Nevertheless, a graded penalty mechanism under CAFE may be better to incentivise gradual improvement.

On the other hand, if a company finds it's too tough to meet the fuel-efficiency target, it may just decide to pay the penalty or try a leapfrog into a technology such as EVs like what M&M is doing. M&M doesn’t have any strong hybrid vehicle.

Carmakers are used to incremental improvements and CAFE calls for a culture change. Automakers in India may learn from Europe and push harder on electrification.

We have seen more electric SUV launches of late in Europe and more so in the mid-SUV segment giving very interesting results. The mid-sized SUVs have emerged as the cleanest cars with CO2 emissions of just 65.4 g/km compared to 116 g/km for much lighter compact SUVs in EU-17. In fact, mid-sized SUVs are cleaner than small city cars and hatchbacks.

At this rate, CAFÉ 3 norms, which will kick in 2027, will surely make EVs mainstream in India by 2028.

5.1. Rajasthan launches 600 smart digital classrooms in govt schools

ET Gov. 7 Oct. 2022

The first phase of the Digital Initiative for Quality Education (DIQE) was launched in Bikaner district

In a smart-education push the Rajasthan government has launched a smart digital classroom of sorts by launching the first phase of the Digital Initiative for Quality Education (DIQE) in Bikaner district.

As part of the new e-education drive, the state education minister BD Kalla launched as many as 600 new smart classes across government schools in Bikaner district that are fitted with TV sets.

DIQE is part of the state government's plan to promote digital mode of education and connect all students with it, even in places facing a shortage of physical resources like books and teachers.

Bikaner divisional commissioner Niraj Kumar Pawan said, “This initiative is the brainchild of the district collector of Bikaner with the aim of connecting every child with quality education. In many schools of the state, a single teacher teaches several subjects as subject-specific teachers are not always available. In such a situation, these smart TVs will help as students will be taught using the modules prepared by the education department.”

Students will also have the option of revising the modules by replaying the lectures, he said. Smart TV sets have been installed in 600 schools, and the whole of Bikaner district will be covered soon, added Pawan.

The administration also plans to launch an initiative in which the local people and other donors can donate television sets to the schools. “We will start a campaign to encourage people to donate even one television set to schools on occasions such as their birthdays and anniversaries. We also plan to develop modules for coaching students for competitive examinations like JEE, NEET, IAS and RAS,” added Pawan.

5.2. Mr. Gautam Adani announces investment worth Rs. 65,000 crore (US$ 7.91 billion) in Rajasthan

IBEF, Oct. 10, 2022

Mr. Gautam Adani, the richest person in Asia, announced investment of Rs. 65,000 crore (US$ 7.91 billion) in Rajasthan over the next five to seven years to build a massive 10,000 MW solar power facility, expand a cement plant, and modernise Jaipur Airport.

Adani's ports-to-energy conglomerate is making investments in transmission lines for renewable energy as well as city gas infrastructure for selling CNG to cars and piped gas to homes and businesses.

The Adani group already has a sizable foothold in the state. It manages a thermal power plant, a solar park, and provides coal for the state's power plants.

The Adani Group, which began as a commodity trader in 1988 before diversifying into the ports, airports, roads, power, renewable energy, transmission, gas distribution, real estate, FMCG, cement, data centres, and media industries, is also placing one of the biggest bets in the world on the energy transition.

Additionally, it runs two plants that produce edible oils in Alwar and Bundi, as well as high-voltage transmission lines, a dry port container terminal in Kishangarh, and other facilities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. MSMEs contribute 30% to India's GDP, to grow further: Mr. Narayan Rane

IBEF, Sep. 19, 2022

According to Mr. Narayan Rane, Minister of Micro, Small and Medium Enterprises, the MSME sector, which accounts for one-third of India's GDP, has room for expansion in coming years.

“Today, there are more than 90 million MSMEs in the country. Of these, 15 million MSMEs are under GST”, said Mr. Sivasubramanian Ramann, CMD, Small Industries Development Bank of India (SIDBI).

The MSME sector will be essential to achieving the ambitious goal of a US$ 5 billion economy with a 25% contribution from the manufacturing sector. Accelerating investment into the sector will be important, in addition to the other facilitating measures launched by the government to support the industry, according to Mr. Vinod Pandey, Chairman, Assocham National Council on Global Value Chain.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

6.2. Sahyadri Farms secures European funding

Fruitnet, 28 Sep. 2022, Liam O'Callaghan

Nearly US$40m of investment will be used to expand processing capacity and drive sustainable development

Sahyadri Farms Post Harvest Care has raised Rs3.1bn (US$37.8m) of new investment from a group of European backers.

The Indian farmer-led company intends to use the investment to expand its processing capacity for fruit and vegetable-based products, set up a biomass plant to generate electricity from waste and enhance its infrastructure, including packhouses.

The impact-focused group of investors included Incofin, Proparco, Dutch entrepreneurial development bank FMO and Korys. Alpen Capital acted as exclusive strategic advisor to Sahyadri Farms for this transaction.

Vilas Shinde, founding farmer and managing director of Sahyadri Farms, said the company had come a long way from the group of ten farmers that came together in 2010 to collectively produce and export fresh grapes to Europe.

Now Sahyadri Farms is one of India’s leading fruit and vegetable export and processing companies servicing over 18,000 farmers, covering more than 12,000ha and nine crops

“The idea of Sahyadri Farms is to unite farmers and make them think like professional entrepreneurs. We are building a sustainable, scalable, and profitable organisation for all our stakeholders by making farming profitable and viable activity for each small and marginal farmer,” said Shinde.

Françoise Lombard, chief executive of Proparco, said her company was proud to become a shareholder of Sahyadri Farms alongside Incofin, Korys and FMO.

“This investment in a leading Indian agricultural company committed to a responsible approach will generate many positive social and environmental impacts,” said Lombard.

“First, nearly 15,000 farmers will be able to enter a modern supply chain, with access to regenerative farming practices and quality equipment, enabling them to increase yields and quality of their production, while reducing farm losses and the use of pesticides and fertilisers.

“Thanks to this investment, Sahyadri Farms will be able to implement concrete measures to adapt to climate change, but also to mitigate it by increasing its share of renewable energy production to more than 50 per cent, and finally, to implement its zero waste policy”.

7.1. What India’s farmers need: Fair practices in agri-produce markets, a collective bargaining power

ET, 29 Sep. 2022

For our farmers, while expenses are a certainty, income is never so. Traders enjoy a dominant position when it comes to pricing agriculture produce. Policymakers need to take cognisance of the issues in laws governing competition and price discovery in agri-produce markets, and act to correct the imbalance.

The political ruckus and the protests over the twin farm-marketing acts may be a thing of the past, but the pursuit for solutions to farmers’ issues hopefully continues until a satisfactory structure emerges. The issue of India’s farmers is not one of inability to sell their produce but about the price that they get — how fair it is in relation to their costs and efforts? Add to it the sudden price drops (often below the cost of production) when the crop is ready for harvest and so on.

Limiting the focus on non-MSP (minimum support price) items, policy changes by the governments have been towards offering freedom of choice to farmers outside APMC (Agricultural Produce Market Committee) markets. Some states moved to delist fruits and vegetables from the purview of the APMC Act, some waived APMC cess, and certain others repealed the APMC Act. Even after many years following these moves, there is little respite on issues like price instability causing immense pain for the farmers. There are also intermittent instances of some items turning unaffordable for poor sections of the urban consumers.

In a liberalised scenario, the farmer has the choice between selling his farm gate and a private mandi or an APMC market. But the reality is that this does not bring better bargaining power to the farmer. Price signals are transmitted from APMC mandis, the single largest centres of agri trade in the country, and form a reference price for non-APMC trades as well. A farmer takes up a certain crop based on the prices at sowing. While expenses are a certainty, income is never so — even after policy liberalisation efforts.

The price-discovery challenge

As all agri products are perishable over days/weeks, the farmer is always in a hurry to monetise his yield. Otherwise, the value of his produce would drop with every passing day or week. This vulnerability conveys a huge advantage to the traders. Currently, in the APMC Acts, there is no coverage on price discovery beyond the mention of auctions.

Under normal circumstances, auctions are a good mechanism if the reserve price is determined by the seller. In APMCs, the reserve price is also determined by the buyers unilaterally based on their own views of supply-demand, denying farmers the rights to seek a certain base. It is often said that the farmer has a choice to decline the offer. But this seldom makes sense for the farmers with no better options around. As arrivals are seasonal — with huge volumes coming in short periods — prices in production markets remain depressed during the harvest season.

Once the goods change hands, it is not unusual to see prices spiking in the consumption city markets, as there are no regulations on price volatility. It is noticed every alternate year, or season particularly, in tomato, onion and potato. Instances of farmers throwing tomatoes on the highways and cold-stored potatoes not being evacuated, or being left to rot, are not uncommon.

Traders enjoy a ‘dominant position’, abuse of which can be taken up with the Competition Commission of India (CCI). However, the Competition Act being tailored to industrial and consumer goods markets, the dominant position enjoyed by the traders in agricultural markets is not finding a place in its definition. Although repeated instances of unremunerative, and volatile, prices to farmers are widely acknowledged, CCI has hardly found any case to adjudicate. Dominance of the traders is so glaring and obvious in agricultural markets, but it is not even recognised. It is believed that an open auction amongst a group of buyers is the best form of fair-price discovery. But here, the sellers remain mute spectators.

A collective bargain

A collective-bargaining initiative by a group of Khandesh region papaya farmers in December 2018 is an isolated instance, wherein farmers attempted to negotiate with the traders. The local administration did not offer any help as the matter was commercial in nature. With traders refusing to relent even after 10 days of talks, and as more and more areas were getting ready to harvest, farmers came under pressure and ultimately ended up accepting prices offered by the traders. In the absence of a legal framework to conduct such bargains, farmers were left powerless in the market.

It is pertinent to note that in Australia, vulnerability of farm producers is recognised by their competition-regulating authority, which permits formation and operation of Collective Bargaining Groups (CBG) of farmers to negate the weakness of small businesses and the dominance of large buyers. This allows the seller to participate in the price-discovery negotiations, unlike in an auction, amongst the buyers. Justifying the need for such provision, they argue that “in certain circumstances, a collective boycott may help the group achieve some of the benefits of collective bargaining. For example, attempts by small businesses to collectively bargain with a large customer or supplier, without the ability to threaten and/or engage in a collective boycott, can be ineffective where the target business refuses to negotiate with the group”.

Australian Dairy farmers come together under CBGs, which undertakes price negotiations with one or more large milk processors on the basis of quality and premiums for better grades.

In the US, the Agricultural Fair Practices Act of 1967, in its preamble of the Act observes as follows: “Because agricultural products are produced by numerous individual farmers, the marketing and bargaining position of individual farmers will be adversely affected unless they are free to join together voluntarily in cooperative organisations as authorised by law”. In the US, there are bargaining councils for tomatoes, almonds and so on.

The bottom line

Policymakers in India need to take cognisance of the present system that gives immense power to the buyers. They need to act and correct the imbalance. Indian legislations on agricultural markets need to include aspects of fair practices. They need to introduce regulations on price-discovery systems (bestowing the right to set reserve price with the producer), price volatility management, and market-surveillance mechanisms thereby protecting the integrity of markets and being fair to all market participants. This will help create a level playing field for both producers and buyers.

As a pilot, a Collective Bargaining Council (with necessary professional organisation and supporting consultative committees) can be considered for tomato, onion, and potato at a national level. The council should have a minimum mandate of setting reserve prices for auctions. Scope of work can be gradually extended to managing a system to monitor and moderate production patterns/swings of mandated crops through a network of Farmer Producer Organisations/ Primary Agricultural Credit Society. A set of price-volatility regulations and risk-management options, which can minimise the impact of price swings on the consumers, can also be considered at a later stage.

The APMC Acts and the Competition Act of 2003 require suitable enabling provisions for setting up of CBGs and mandate that outcomes at CBGs are binding on all licensed buyers/markets. This change will protect the interests of the farmers and restore their rights to place an ask price as producers enjoy in any market.

(Ravishankar Natarajan is a consultant in agri marketing with international development agencies and is engaged in projects in India and Africa. He has been CEO of Safal National Exchange and has CXO-level experience in the hybrid seeds industry and in international agri-commodities trade. He can be reached at moreagris@gmail.com.) (Originally published on Sep 29, 2022, 04:30 AM IST)

7.2. Bharat Forge in for More Parts Orders from N America, and a Boost for Shares

ET, 10 Oct. 2022

A sharp recovery in new orders for trucks in North America in September may lead to many investors raising their bets on Bharat Forge, despite the risk of macro headwinds the region is facing.

The emerging earnings upside due to likely higher exports of commercial vehicle components could help Bharat Forge shares break the tight range they have been trading in for the past six months and move the price-earnings multiple towards its long-term average.

The order inflow of Class 8 trucks — a gauge of heavy trucks order momentum — in North America more than doubled from a year earlier to 56,500 units in September, the highest for a month, according to ACT Research. This reading is diagonally opposite to the order inflow trajectory in the first eight months of 2022, where order inflows dropped nearly 50% year on year owing to several truck makers refraining from taking orders due to a shortage of components. The rebound now suggests strong pent-up demand, particularly from fleet owners who were unable to replace the trucks in their fleet in the past two years. A strong traction of orders would translate into increased production of trucks, which is likely to cross around 3,40,000 units for the current fiscal year, up around 10% from last year.

The order inflows of Class 8 have a direct bearing on the earnings growth of Bharat Forge — the CV segment accounts for nearly one-fifth of the company’s standalone revenue.

In the quarter ended September 30, the company’s revenue from the exports of components for commercial vehicles was nearly flat on-year. The Street, meanwhile, is expecting its CV segment export revenue to see low-single-digit growth in the current and next fiscal years. The rebound in the Class 8 truck orders may lead to an upward revision in analyst projections. Improved exports may help it top the ₹2,000-crore mark in CV segment revenue this fiscal year, compared with ₹1,700 crore last fiscal year. Furthermore, a weak rupee would boost the export revenue in local currency.

The company’s exports of passenger vehicle components are already in a sweet spot. Revenue in the segment had reached a record high in the June quarter, as the company expanded its product offerings and got into transmission and driveline components. These components were earlier manufactured by automakers in-house. Shipments in this segment is expected to generate 20-25% higher revenue in the current fiscal compared with last FY’s ₹564 crore. Together, exports of CV and PV components are expected to account for about one-third of the total standalone revenue of Bharat Forge.

The stock is trading 23 times the company’s one-year forward earnings per share, compared with its long-term average of 25 times. Bharat Forge’s P/E may move towards the long-term average with incremental revenue also emerging from its defence vertical and new business from electric vehicle makers.

8.1. Amazon India launches live streaming

AsiaFruit, 4 Oct. 2022, Liam O'Callaghan

Amazon Live is the e-commerce giant’s new live video and interactive shopping experience

Amazon India has announced the launch Amazon Live – a new livestreaming and interactive shopping experience – following the popularity of the format in other Asian countries.

Launched in association with the Amazon Great Indian Festival, customers will be able directly interact with content creators who showcase products, answer customer questions in real-time, run polls, and offer limited-duration deals.

With Amazon Live, Amazon.in will run 15 live streams every day from 10 am to 1 am. Over 150 content creators will be live streaming during the ongoing festival.

Kishore Thota, Amazon India’s director, customer experience and marketing said the company wanted to deliver an exciting experience.

“With Amazon Live launch, we want to make the shopping experience exciting and meaningful for our customers, while allowing brands to have a deeper engagement that resonates with today’s savvy shoppers,” Thota said.

“The launch comes at an opportune time for customers seeking to shop during the ongoing Amazon Great Indian Festival. Through Amazon Live, Amazon India aims to connect the influencers with customers at scale, enabling them to make informed purchases.”

8.2. Centre allots Rs 26k crore to install new 25000 telecom towers in 500 days

ET Gov. 6 Oct. 2022

The measure was being taken as connectivity was vital for Digital India and its reach to every corner of the country

Union IT and Telecom Minister Ashwini Vaishnaw said Rs 26,000 crore has been approved by the government to install new 25,000 telecom towers across the country in the next 500 days.

The minister said the measure was being taken as connectivity was vital for Digital India and its reach to every corner of the country, during the three-day Digital India Conference of State IT Ministers which concluded Monday, according to an official statement of the Ministry of Electronics and Information Technology (MeitY) on Tuesday.

Vaishnaw also congratulated all states and Union Territories (UTs) for their speedy on-boarding at PM Gati Shakti. Emphasising the motto of Sabka Saath and Sabka Vikas, he stated that the commitments from all states and UTs, large as well as small states, are vital in taking Digital India to a higher level and in realising the Aatmanirbhar Bharat and trillion-dollar Digital Economy.

MeitY had organised on Sunday three sessions on important aspects such as 'IT Rules, online gaming and data governance', 'Digital India Bhashini and digital payment', and 'MyScheme and Meri Pehchaan'. The demo on eligibility/profile-based service discovery at MyScheme was shown, MeitY said.

The Ministry organised five panel discussions on Monday. These were -- Attracting Startups to Tier 2 Cities and Sustaining Them, Use of Emerging Tech in Public Services, Making India Talent Nation, Realization of Digital Government in States and Make-in-India for the Globe - India as Semiconductor Nation. Some of the speakers in these sessions were MapMyIndia chief executive officer Rohan Verma, Wadhwani CEO Prakash Kumar, Nasscom President Debjani Ghosh, Tata Sons Senior Government Affairs Officer Tanmoy Chakravarty and Texas Instruments MD Santhosh Kumar.

On collaborations, MeitY Secretary Alkesh Kumar Sharma said start-up-friendly policies and incentives at the state level for creating a thriving start-up ecosystem. On emerging technology, he emphasised data-driven decision-making and data and process-driven innovations using artificial intelligence (AI), blockchain, drone and Internet of Things (IoT).

9. The dangerous lives of India’s construction workers

Mint, 11, Oct. 2022, Sumant Banerji

The construction sector is a huge employer but also one of the most unsafe. Are reforms a far-fetched dream?
Lack of safety mechanisms, blatant violation of laws, utter disregard for rights of workers at the bottom of the pyramid have created a deadly cocktail for construction workers

NOIDA: 35-year-old Pappu Singh lies in a hospital bed in Noida’s Sector 30, wondering if death would have been a better option. “At least my family would have received ₹5 lakh," he says. His eyes well up. “I am damaged for life now...good for nothing...a liability for everybody."

On the morning of 20 September, Singh was one of the 12 workers repairing a drain next to the boundary wall of Jal Vayu Vihar, a residential society in the city’s Sector 21. Weakened by overnight rain, the wall collapsed on them.

Sordid tale

Four workers, including three from Singh’s Vicholna village in Badaun district of Uttar Pradesh, died on the spot. Singh suffered a fracture on his right thigh and was operated upon on 26 September. The district authorities announced a compensation of ₹5 lakh for the deceased but besides the free medical treatment, Singh gets little else.

“Please do something for me. The future looks very dark," he pleads.

His tale is not an isolated one. It is one that cuts across thousands in the construction industry. Lack of safety mechanisms, blatant flouting of laws and a general disregard for the rights of workers at the very bottom of the pyramid have created a deadly cocktail. Workers such as Singh see no way out.

Barely 10 days after the Jal Vayu Vihar incident, on 30 September, Shamsher Rehman, another construction worker, fell to his death in a 40-feet deep pit at a construction site near Delhi’s Safdarjung Railway station. Rehman, who is from Bihar, was welding at the site when a huge pile of loose soil around him caved in, triggering his fall into the pit.

Similarly, in February this year, the collapse of a giant slab at an under-construction site in Pune’s Yerawada area resulted in the death of five workers. All of them belonged to Katihar district of Bihar.

In all the three incidents, the workers affected were migrants. They form a substantial chunk of the 50 million employed in construction activities, a sector that accounts for over 8% of the country’s GDP. As per the National Crime Records Bureau (NCRB), 1,630 workers lost their lives in 2021 due to the collapse of a structure. The number inflates manifold to over 17,000 when the cause of death is extended to falls. It makes working in the construction industry one of the most dangerous professions in the country. According to some experts, even this sobering tally is an underestimate.

“This is not even the tip of the iceberg. A vast majority of the workers in the construction industry are not registered. So, they don’t show up in the government records," says Chandan Kumar, national coordinator, Working People’s Charter (WPC), a coalition of organizations that works on labour issues in India.

The poor state of health and safety of workers in the sector is not due to a lack of adequate legal framework. At least a dozen acts, comprising over three dozen laws, seek to regulate the industry and empower workers by providing them with a safety net. The question: why don’t they work?

Weak enforcement

Prominent regulations include the Building and Other Construction Worker’s Act (BOCW Act 1996), the ESIC Act, the Employees Compensation Act, the Contract Labour Act, and the Industrial Disputes Act (see chart). The problem lies in non-compliance, across all levels.

“India is very good at formulating laws. It’s in the implementation that things go awry," says Kumar of WPC. “Workers can unilaterally lodge a complaint that should trigger an automatic investigation by the labour inspector with provision for strict penalty on companies if the charges are found to be true. But nothing of that sort really happens. At every construction site, there are some laws that are routinely flouted," he adds.

The biggest example is the underutilization of cess collected as part of the Building and Other Construction Workers Welfare Cess Act, 1996 (1% of total construction cost). “A large part of the cess lies unutilized in Maharashtra alone which should be used to provide some support to the workers," Kumar says. “At the national level, it will be much higher."

Data from the ministry of labour and employment shows over ₹43,000 crore—more than half the overall cess—is unspent in India.

Child labour is also rampant and most workers don’t get the minimum wages. A survey conducted by WPC earlier this year found that only 5% workers receive the minimum wages as stipulated by the government of Delhi. The reality in other parts of the country is likely even worse.

The government’s new labour code promises a number of reforms and seeks to move workers into the organized workforce so that benefits such as social security can be accessed. The four codes—on Wages, Industrial Relations, Social Security, and Occupational Health and Safety—will replace 29 existing labour laws, an attempt to also facilitate ease of doing business for corporates.

Of the four codes, the wage code was notified on 8 August 2019 and the three others, on 29 September 2020. However, since labour is a concurrent subject, the rules are required to be framed by both the Centre and the state governments.

“Only 12 states have published their rules for the occupational health and safety code so far," says Hemant Sethi, country head, British Safety Council, a non-profit body.

A question of costs

The main motivation for the industry to flout or not adhere to the laws boils down to two things—cost and a skewed demand-supply equation. The willingness of the authorities to look the other way only acts as an enabler.

Meanwhile, the structure of the industry, with thousands of sub-contractors under the primary project developer or builder, creates a smokescreen that comes handy in case of a mishap.

India has one of the lowest costs of construction in the world but not due to lower raw material prices—domestic steel and cement prices are benchmarked to global rates. Experts say it is the multi-layered contracting system (the army of contractors and sub-contractors can range between 200 and a 1,000 for a project) that pushes down costs.

In the process, critical parameters on health and safety, such as registration of workers, minimum wages, safety protocols or use of protective gear, are compromised. Everything adds to the cost and for a sub-contractor down the value chain, every penny counts.

“The practice of L1 (lowest cost bidder) in business puts the focus on cost and has a bearing on quality, health and safety. In the lowest cost estimate system, companies that do not have the necessary experience and financial capability are taking up projects beyond their means. As a result, tenders are being won at ridiculous costs—20-30% below estimates," says Vikramjiet Roy, managing director, Maccaferri India, an engineering solutions company.

“The aggressive competitive bidding has pushed costs down to unsustainable levels. It is almost 50-60% less than a comparable economy like Vietnam or Indonesia," Roy adds.

Contractors are thereby forced to make money by cutting costs in areas that are the easiest—quality, health and safety. While contractors are aware of the risks, they face competitive pressures. If one contractor does not meet the cost criteria, there are plenty others waiting to grab the opportunity. The market for contractors, in short, is not supply-constrained.

The same is true for workers and this mismatch is at the core of their safety woes.

“The worker doesn’t have a choice either on wage negotiation or safety aspects. There are too many unskilled and unemployed people in the country. So, supply is never an issue," says Roy. “When something happens, the big guy with the muscle gets away. It’s the small guy who pays the price."

Ray of hope

Millions of migrant workers walked back to their villages as the first lockdown in April 2020 brought all construction projects to a standstill. These workers were mostly abandoned by their contractors.

The reverse migration, widely captured in photos and videos circulated on social media, caused an uproar. Facing criticism, a clutch of companies came together to better understand the issues faced by informal workers. These were companies affiliated with national trade bodies like the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (Ficci).

This effort took the shape of a ‘social compact project’ managed by Mumbai based non-profit organization Dasra along with two other NGOs—Udaipur-based Ajeevika Bureau and Ahmedabad- based Centre for Social Justice.

The project seeks to identify the work force that is invisible, even to the large corporate that employs them, because of the industry structure we spoke about earlier. The project now covers 40 large corporates as well as supply-chain companies. It claims to have mapped over 50,000 workers in less than two years—a tiny drop in the ocean but a start nevertheless.

“Health and safety standards in projects run by large companies are much better. They understand the reputational risk of an unsavoury incident. But the key learning for us is that even the best of them is unaware of exactly how many workers engage in their chains through invisible sub-contractors, increasing the challenge of ecosystem-wide compliance," says Sonvi Khanna, associate director at Dasra.

The project uses a toolkit comprising 30 parameters on which it rates the companies. For instance, companies are evaluated on the number of its temporary and permanent workers, gender profiles, health of workers, and wages among others. Feedback on loopholes found is communicated to the company.

“This is just a start but one we feel confident of. The journey is going to be long, with constant co-solutioning and co-ideation between industry and worker organizations. We are working to onboard 150 large corporates and trigger impact for one million vulnerable workers over the next four years," Khanna says.

Other experts also feel that creating a rating system could make a difference—similar to how cab drivers are rated by users on cab aggregator platforms. A poor rating can mean loss of business.

“A star rating for contractors could be one solution," says Vinayak Chatterjee, co-founder and chairman, Feedback Infra. “The rating could be based on many factors including the health and safety track record of the workers. The rating could also be one of the parameters in the tendering process. There is no guarantee it will work, or if everybody will agree to come on board. But, it is worth a try," he adds.

Nonetheless, change will not come in a jiffy.

Back at Jal Vayu Vihar in Noida, a heap of debris is the only sign of the tragedy of 20 September. As at a crime scene, the police have cordoned off the area but only 200 metres ahead, similar construction work on the drain continues. Just like Pappu Singh, the workers are all migrants toiling away to make ends meet.

“It was their bad luck. Their time had come," says Bablu, a construction worker, remembering the fateful morning. “Not that we are lucky. Else, we would not be here."

Bablu wouldn’t give his surname, or age. He looks rather young. Possibly, he is a teenager who should be in school. But losing this job is not an option for him, or any other migrant working on the drain. They know the safety hazards. They simply ignore the writing on the wall.

10. All India Institute of Ayurveda partners with Japan's NIAIST for research collaboration in traditional medicines

ET Gov. 10 Oct. 2022

The All India Institute of Ayurveda (AIIA), the apex institute of Ayurveda in India under the Ministry of AYUSH, and the National Institute of Advanced Industrial Science and Technology (NIAIST), Japan have signed an MoU for academic establishment. NIAIST is a reputed and one of the largest public research organizations in Japan, focusing on technologies and on 'bridging' the gap between innovative technological seeds and commercialisation, according to an AYUSH media release on Friday.

The MoU was signed by Prof. Tanuja Nesari, Director, AIIA and Dr Tamura Tomohiro, Director General, Department of Life Science and Biotechnology via the online mode.

With the signing of this MoU, AIIA aims to promote its research activities both on a national and international stage. The partnership will enable both countries to promote research collaboration and building capacities in the field of the Indian Ayurvedic system of traditional medicines. All these activities will be executed in support of the Ministry of Ayush, it said.

The scope of activities that are intended by the partners includes research activities in the field of Ayurveda including studies in design and execution with the purpose of developing evidence-based guidelines for integrating Ayurvedic principles and practices with conventional medicine, evolving safety standards and protocols for the use of Ayurveda in Japan in conformity with medical guidelines, exchanging scientists, researchers and staff as determined by the collaborators on a project-to-project basis, students’ participation in collaborative activities to achieve excellence in Ayurveda towards achieving scientific advances, tools and techniques, the ministry said.

AIIA already signed MoUs with the European Academy of Ayurveda, Bernstein, Germany; Western Sydney University, Australia; Graz Medical University, Austria; College of Medical, UK; London School of Hygiene & Tropical Medicine, UK and Federal University of Rio de Janeiro, Brazil.

The event was attended by Renu Wadhwa, Prime Senior Researcher, Head AIST-India DAILAB, Department of Life Science and Biotechnology, whose efforts have been instrumental in making this collaboration a reality. Other dignitaries who were present virtually at the occasion were Dr. Manoj Nesari, Advisor, Ministry of Ayush; Dr. Chiba, Director, AIST, Japan; Dr Ohmiya Yoshihiro, Principal Senior Researcher, AIST; Dr Sunil Kaul, Invited Senior Researcher, Dept. of Life Science & Biotechnology AIST; Mrs. Sheila Tirky, Representative of MoA.

- INDUSTRY and MANUFACURE

11.1. Can PLI make India the world’s factory? Not before these old creases are ironed out

ET, 19 Sep 2022

An unprecedented INR1.97 lakh crore Production Linked Incentive push seeks to make India a manufacturing powerhouse and reduce dependence on imports. The overwhelming response to the scheme marks the changing contours of India’s factories and instills hope. But some old niggles such as infra, logistics, incomplete ecosystem, et al. persist.

For Padget Electronics, a subsidiary of Noida-based contract manufacturer Dixon Technologies, September 9, 2022, would always remain a red-letter day. It was a moment of exuberance as Padget Electronics became the first company to receive INR53.28 crore disbursement under the government’s Production Linked Incentive (PLI) scheme.

Launched in April 2020, when the Indian economy was stuck in the closed lanes of Covid-19 lockdowns, the INR1.97 lakh crore (approximately USD25 billion) PLI scheme is the cornerstone of the government’s Atmanirbhar Bharat push, which aims to boost domestic manufacturing. It offers cashbacks as incentives linked to manufactured goods sales. All major economies are manufacturing powerhouses, but it’s the missing link in India’s growth story.

India lacks a complete manufacturing ecosystem and mostly relies on imports — from Active Pharmaceutical Ingredients (API) to make drugs to motors, chips, lenses, and cameras that go into drones and CCTV gear to air-conditioning compressors to display panels for television sets and mobiles. The list goes on. What gets the local-manufacturing tag is mostly assembly of imported kits. Besides, in the last 20 years, there’s been no major Indian brand, particularly in electronics, that came out of the local factories.

Can the PLI scheme change this?
Can it make India self-reliant in drugs and component manufacturing?
Is the capital outlay under the scheme enough?
Does India have the supply chain to support large-scale manufacturing?

The encouraging signs amid old niggles

The PLI scheme aims to bring alive local manufacturing, reduce dependence on imports, and create an entire value chain of product manufacturing. Post-covid supply-chain disruptions and changing geopolitics (countries are now looking more inwards to de-risk themselves from global shocks) have made PLI very timely and attractive. In fact, so buoyed is the industry that it now is looking at PLI 2.0 to cover additional sectors. The current scheme ends in 2025.

“Almost everything we manufacture is from global brands and global design. How will we create, say, tomorrow’s Lenovo or Intel from India,” asks Satya Gupta, founder and CEO, EPIC Foundation. EPIC is a not-for-profit organisation founded by HCL founder Ajai Chowdhry along with fellow HCL founder Arjun Malhotra and semiconductor industry veteran Satya Gupta. It was launched with the aim to revive the Indian electronics industry by creating Indian products and Indian brands.

PLI offers financial incentives to boost manufacturing and attract large-scale investments. It is output oriented and gives out incentives based on performance and not promises. So, if a manufacturer makes, say, USD1 million of incremental sales of goods under PLI, he can get USD50,000 as cashback.

In drones and aerospace, 23 companies qualified for PLI, in automobile and auto components 90, white goods saw 42 and 61 textiles manufacturers qualified for PLI sops.

The questions over raw material-component making, capital outlay

The need for PLI can be seen across sectors. Almost all of them depend on imports of ingredients or components to make products. For instance, Indian pharma is the third largest in the world by volume and fourteenth largest by value. India contributes 3.5% of the total drugs and medicines exported globally. But India is dependent on imports of basic raw materials that are used for making finished dosage formulations (like tablets, solutions, ointments, etc.) that contain an active drug ingredient along with other ingredients. According to the department of pharmaceuticals, bulk drugs comprised 63% of pharma imports in 2018-19.

A Torrent Pharma spokesperson says, “India needs to evolve from a manufacturing hub to innovation hub as well.” The company qualified under PLI Scheme II, which aims to provide incentives of up to INR1,000 crore. A Glenmark Pharmaceuticals spokesperson adds, “A major challenge that the pharma industry faces is the number of incentives offered to multinational companies to set up manufacturing facilities for high-value products. India cannot match China’s 20%-30% cheaper manufacturing costs and final product pricing, without these incentives (PLI).”

In the domestic electronics hardware, local makers lack a level playing field vis-à-vis competing nations. The sector suffers disability of around 8.5% to 11% on account of lack of infrastructure, inadequate local supply chains and logistics among other bottlenecks.

In new areas like drones, it is even worse — all components from air frames, motors, cameras, radios are imported. Neel Mehta, co-founder and director, Asteria Aerospace, says, “We are expecting a 2X-3X growth in the industry year-on-year from here. PLI along with liberalised drone rules are a stepping stone to realising the vision of making India a drone hub by 2030.” Asteria Aerospace is among the 23 companies shortlisted by the government in this sector for PLI benefits.

But for new players entering a sunrise sector like drones, getting into manufacturing, despite PLI, is an uphill task. Archit Gupta, CEO, Atom Drones, says, “PLI is a challenge. They look at past history and turnover. Besides QCI (Quality Control of India) certification to clear a drone takes at least six months and they need detailed documents on each part used in the drone — battery, radio, airframe, camera, etc. Companies are assembling imported kits and that’s not exactly manufacturing.”

There are also questions over capital outlay under PLI. Is that enough for capital-intensive sectors?

In sectors like steel, the PLI outlay of INR6,300 crore is `peanuts’, says head of one of the leading steel producers in the country, requesting not to be identified. India wants to manufacture 300 million tonne steel by 2030, up from 120 million tonne per year at present. The additional 180 million will need an investment of around INR20 lakh crore by the steel sector. “PLI for steel is like a token amount. We can’t do much with it,” says the person quoted above.

In fact, he believes the May 23, 2022, decision of the government to impose a 15% export duty on steel will actually curb fresh investments in India in steel making as exports become dearer compared to other countries and the local market is not big enough to absorb all the output. In 2021-22, India produced 118 million tonne steel of which 103 million tonne was consumed locally.

The gaps in supply chains

All sectors may not see PLI as the cure-all for the problems that plague local manufacturing. But on the whole, the industry believes PLI has attracted global players like Pegatron, Foxconn, Wistron and others and they will bring their supply chains which will eventually lead to the development of the much-talked-about ecosystem comprising components.

Nitin Kunkolienker, director, Synegra EMS, a maker of networking and telecom products says, “Capex needed for component manufacturing is very high. Besides, there’s no demand aggregation which makes it unviable. We must think differently.”

PLI incentivises the final products but misses out on creating ``supply-chain benefits’’, as pointed out by industry experts. Cargo handling, containerisation remain not only patchy but expensive compared to other countries, leading to higher costs of products made locally compared to other countries.

Sharma from Panasonic Life Solutions has an idea to aggregate demand. “Electronics cuts across all verticals. We can look at creating large manufacturing parks for, say, production of PCBA (printed circuit board assembly). Consolidation of demand can happen here, and this will eventually help India become cost competitive.”

While things are improving, manufacturing still has to cope with delays in construction, tardy delivery of projects, time-consuming approval processes and so on. Also, in regions that have emerged as strong manufacturing belts — like Tamil Nadu have a strong presence of automakers, smartphone makers and textile units — land is getting expensive for new players. It could be INR3 crore-INR4 crore per acre in manufacturing hubs of Tamil Nadu, compared to places in Madhya Pradesh where the industry can get it at INR40 lakh-INR50 lakh per acre but has to worry about other issues like scarce water.

Logistics also leaves much to be desired. “Our best port does not even compare with the top 10 ports in China. This adds to the freight costs. If we can reduce it over time by 10%, it will be a huge incentive,” says an industry leader. On September 17, Prime Minister Narendra Modi launched the National Logistics Policy, which seeks to address the challenges faced by the transport sector and bring down the logistics cost from 13%-14% of GDP at present to 9% over the next five years.

PLI and beyond

The current PLI scheme ends in 2025. The industry is already asking for more. Dixon’s Vachani is looking forward to a component-focused PLI 2.0, which could check some of the disability factors in electronics manufacturing. Mehta of Asteria Aerospace says, “PLI 2.0 should incentivise development of drone software, promote drone-as-a-service (DaaS) to make the industry self-sustainable.”

PLI is the first big step in helping manufacturing gather steam. Sharma of Panasonic says, “PLI is like crutches given to the industry. Industry must also up its game.”

Ali Akhtar Jafri, acting director general at hardware industry body MAIT, says, “Lot of the current manufacturing depends on getting components from outside. The next PLI should focus on components and sub-assemblies and aim to reduce the bill of materials (BoM) to make manufacturing globally competitive.”

Much of the outcome of PLI will start trickling in from early 2023 as companies shift gears from tedious paperwork and approvals to executing the projects. PLI has already created around 450,000 jobs and the government expects that eventually 6 million additional jobs will be created. The PLI scheme has a lot of creases to iron out, but at least it has prompted India’s factories to get going.

(Graphics by Mohammad Arshad)

11.2. An INR6,940 crore PLI scheme aims to secure Indian pharma’s supply chain. Here’s a progress report

ET, 20, Sep. 2022

Dependence on imported ingredients poses a huge risk for India’s pharma industry. In 2020, the government came up with a production-linked incentive scheme to encourage indigenous manufacturing of these critical products. With the highest-ever financing allocation for the pharmaceutical sector, there is no doubting the intent of the scheme. But two years on, is the initial promise intact?

K Anji Reddy, the late founder of Dr. Reddy’s Labs, was known for his cheeky humour. Decades ago, when a German trader wryly asked if he could match the quality of products from drugmaker Boots, the scientist-turned-entrepreneur in his inimitable style quipped, indeed, he just needed to add impurities to the product.

Dr Reddy struck a fine balance of science and astute business sense. His desire to end the dominance of global giants was distinctly clear. Entrepreneurs like him paved the path for India to earn the badge of the “pharmacy of the world”. Besides being the source of low-cost drugs to over 200 countries, the pharmaceutical industry saved India from the dependence of imported medicines by global drugmakers.

During the 1980s, products such as penicillin, streptomycin, and Vitamin B12 were manufactured in India. From the 1990s, business dynamics took a dramatic turn, as China began taking a monstrous form. By 2020, over 80% of such products – APIs (active pharmaceutical ingredients), intermediates, and key starting materials (KSMs) – were coming from China.

Enormous scale made China an invincible power, enabling it to set prices at will. Wherever they saw competition, the Chinese resorted to dumping that suffocated the industry to a slow death.

To bolster their position as reliable suppliers of generic drugs, Indian drug makers saw economic value in importing raw materials from China. But it was a trap that ultimately resulted in the Indian manufacturers letting go of a fully integrated manufacturing capability.

Concentrated in one source, supplies became a risky affair. A crackdown on polluting pharmaceutical firms in and around Beijing in the build up to the 2008 Olympics impacted supplies of medicines across the world. By 2012, the world was talking in hushed tones about the need for a China alternative, termed as the “China plus one” strategy. In 2014, India’s national security advisor cautioned that dependence on imported APIs was a national security risk.

But it was too late.

When the pandemic broke out, with China as its centre, it exposed the perils of a heavily skewed dependence on one country. India had to take extraordinary steps like banning exports of certain medicines used to treat Covid-19 patients. However, the country managed to scrape through since Indian companies had an inventory stockpile of 60 to 90 days.

But this time, the emergency pushed the government to take steps. A production-linked incentive (PLI) scheme with an outlay of INR6,940 crore over a span of six years was announced to encourage indigenous production of APIs, their intermediates, and KSMs. The intent is clear. The PLI scheme has the highest-ever financing allocation among all the schemes launched for the pharmaceutical sector. But two years on, is the initial promise intact?

PLI: What’s the deal?

There was enthusiasm that the PLI scheme would attract investments in the industry, both from within India and outside. The incentives aimed to address supply issue of 53 critical APIs and KSMs, and based on the proposals, 41 molecules were shortlisted.

The scheme was open only for manufacturers of critical products in India, and the eligibility was subject to a threshold of incremental investment in manufacturing of the identified KSMs, APIs, and drug intermediates.

For chemical-synthesis products, the incentive was fixed at 10% on incremental sales for five years. For fermentation-based products, the incentive was 20%. The scheme would work on a transfer mechanism, with companies gradually getting back the incentive amounts as production from their newly established facilities go on stream.

For example, if the rate is 10%, it means up to 10% of sale value would be given back to the manufacturer. The idea was to help offset capex. So, if a manufacturer achieved incrementally INR100 crore higher sales per year, the government would give it back INR10 crore per year.

The PLI path so far

Out of the INR6,940 crore allocated, around INR4,600 crore was earmarked for fermentation-based products and INR2,340 crore for chemical synthesis products. Under the fermentation-based category, it was expected that two companies per product would benefit from the incentives, while four companies per product would benefit under the chemical-synthesis category.

But the response to the scheme thus far has been muted. Here’s some data:

In all, 239 applications were received in two rounds from an industry that has over 3,000 firms. Of these, records show only 61 were selected in the initial rounds. By December 2021, 11 beneficiaries had withdrawn, bringing down the number to 50.
The original guidelines had set the maximum number of beneficiaries at 136.
No beneficiary was selected in five of the 41 products notified for the scheme.
The total committed investment was INR3,685 crore, but 49 approved applicants invested INR775 crore till December 2021.
According to a report by Infomerics, an accredited credit-rating agency, production of 35 APIs began at 32 plants across India by March 2022.
Analysis of export-import data from 2019-20 through 2021-22 reveals that while imports of some molecules (products) have slowed down, others registered a decline, and some have increased.

Where from here?

Here are a few noteworthy issues to highlight at this juncture:

Early days: It is a reasonable expectation that the investments may take 12-18 months to conclude. That would mean the manufacturing of many of the products may not commence until 2024. Only then can an assessment be made about the scheme’s success. Given the pressing need for an alternative to China, at least some of the manufacturers who have opted for the scheme will stand to benefit.

Technology focus: The PLI scheme focuses on reducing imports for fermentation-based products. The cost drivers for this category are technologies such as strain design, fermentation process, and down-stream processing. Fermentation technology has a long gestation. Given that two essential inputs for fermentation — sugar and electricity — are more expensive in India than in China, there may be some challenges to keep the costs competitive.

Intent versus outcome: The PLI scheme is aimed to end or at least reduce India’s dependence on Chinese imports. But experts argue that formulation companies could end up depending on local companies for certain products, which in turn may inflate the healthcare bills for patients.

The scheme allows up to four companies to produce a particular raw material. However, data shows that for more than 20 products, only one firm has been selected. This, in practice, will defeat the purpose of the scheme and merely shift the economic benefit for a particular drug to one company. For instance, Honour Labs has been selected as the only company to produce the popular anti-hypertensive and cardiac drug valsartan, HIV drug lopinavir, and epilepsy drug levetiracetam. Similarly, RMC Performance Chemicals is the only player that will have the benefit of PLI for blood thinner aspirin.

There is a real danger that the aim of the PLI scheme will not match the outcome, as the player to benefit may simply be an Indian company instead of a Chinese supplier.

Futuristic innovation: The PLI scheme focuses on generic synthetic drugs, whereas the future is expected to be dominated by biotech products. Given that eight out of the top 10 drugs of the world are based on biotechnology, there should have been a greater allocation for biologics, biosimilars, and cell and gene therapies in the PLI scheme. It is hoped that the government will come up with a separate PLI scheme for biotech products that will enable private enterprise to take higher capital risk and bring high-technology pharma products to Indian consumers.

The PLI scheme is a step in the right direction, but it is too early to judge its real impact. Ultimately, access to fermentation technology and operational excellence will decide the competitive advantage offered by India.

The national strategy of Atmanirbhar Bharat has been making the right impact. Hopefully, the pharmacy of the world will also get back in good health for a marathon run.

(Sanjay Chaturvedi is executive director and CEO of IOL Chemicals and Pharmaceuticals. The views in this article are personal.)

12.1. Investors Seek Safety in a Stable Pharma Amid Recession Fears

ET, 29 Sep. 2022

Pharma companies are likely to benefit from easing price erosion pressures in the US, monetisation opportunities in complex generics, and secular growth potential in branded formulations.

AgenciesTarget price: Rs 504Stop loss: Rs 586The weekly chart of Aurobindo Pharma is continuously in a lower low lower high price structure and every rally gets sold off so far since May 2021. Major averages of 20 and 50 weeks are also sloped downward. The prices are continuously below both moving averages. The short-term (20) moving average is below thelong-term (50) moving average. The differences between both the averages are getting widen with every passing week. It also indicates that the trend is strongly bearish.(Vishal Wagh, Research Head, Bonanza Portfolio)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Pharma was often passed over by investors seeking multi-bagger returns when money was cheap and stocks were surging. But now the pocket, bracketed as a defensive play against the vagaries of global macros, is drawing its share of smart money on expectations that sales would climb — at least in high single digits — and cause margins to expand.

The Nifty Pharma index, which has underperformed in the past year, gained 1.05% in the past week when the Nifty and most other sectoral indices declined between 4% and 10%.

Pharma companies are likely to benefit from easing price erosion pressures in the US, monetisation opportunities in complex generics, and secular growth potential in branded formulations.

“The faltering economy, high valuations, and inflationary pressures have hurt the risk appetite of the stock market. Investors are looking for safety, and sectors like pharma that are defensive and have a reliable business outlook present a solid chance,” said Vinod Nair, head of research at Geojit Financial Services. “Things are returning to normal for the pharma sector with a stable outlook, while rupee depreciation will provide a short-term advantage to some of them with good exposure to dollar revenues.”

Foreign portfolio investors pumped in nearly ₹1,737 crore in pharmaceutical stocks during the first fortnight of September, the highest inflow after sectors such as financials, FMCG, and autos.

Stocks such as Divi’s Laboratories, Ipca, Dr Reddy’s, Cipla, and Alkem Laboratories have gained between 2% and 4% in the past week. The sector was in a consolidation phase in the past year due to a decline in business growth post-Covid, and valuations dropped about a fifth.

“Companies with large US exposure are trading at a discount, owing to growing pressure on prices and uncertainty around growth execution,” said Vishal Manchanda, analyst, Systematix Shares and Stocks. “We believe there is light at the end of the tunnel, and US performance can only surprise on the upside.”

His top picks are Sun Pharma, Cipla, Dr Reddy’s, Ajanta Pharma, and Indoco.

“The pharma sector is more or less recession-free as the demand hardly depends on the recession,” said Vishal Wagh, research head, Bonanza Portfolio.

Stocks such as Sun Pharma, Dr Reddy’s, Torrent, Zydus Life, Laurus Labs, GSK Pharma, Ipca, and Pfizer may give returns between 12% and 30% in a year, as per Bloomberg consensus estimates.

12.2. TaMo Disrupts EV Market with New Tiago

ET, 29 Sep. 2022

Tata Motors, the country’s biggest automotive company by revenues, Wednesday sought to democratize the adoption of electric vehicles (EV) by introducing the Tiago at a price point sufficiently disruptive for mainstreaming the powertrain hitherto associated largely with luxury cars.

The first 10,000 buyers of the Tiago EV will pay between ₹8.49 lakh and ₹11.79 lakh ex-showroom for the various variants, drastically narrowing the price differential between EVs and cars powered by traditional fossil fuels. Tata Motors, already the biggest in India’s EV space, expects the share of the powertrain to be in double digits of total before FY23 winds down, with incremental buyers for the new Tiago EV leading the march.

Tata Motors is set to close FY23 with sales of 50,000 units. People aware of the plans said it has planned an output schedule for 100,000 EVs in FY24, with a vision of 30% EV penetration by 2025-2027.

Available in two different powertrains of 24 kWh and 19 kWh of Ziptron battery, the Tiago EV offers a range of 315 km and 250 km, respectively, per charge. Tata Motors claims that in comparison with a petrol-driven hatchback, the EV can help a buyer save about ₹60,000 to ₹70,000 on running costs annually, assuming the person drives 1,000 km every month.

Tata Motors will come out with new Altroz EV and Punch EV in the coming year or so, expanding the choices for EVs in the sub-₹15 lakh segment and increasing the addressable market.

Shailesh Chandra, MD, Tata Passenger Electric Mobility, told ET the Tiago EV will help the company take electrification to the masses. “We think the EV powertrain could account for a third of our total Tiago sales. Apart from expanding the portfolio, we are also opening up many new markets and the coverage will now cross over 170 locations, which will bring in a lot of incremental buyers,” said Chandra.

13.1. Govt sweetens chip incentive scheme

Mint, 22 Sep. 2022

Fiscal support of 50% of capex will be given for setting up compound semiconductors, silicon photonics.

NEW DELHI: The Union cabinet on Wednesday sweetened the financial incentives scheme for semiconductor and display manufacturing, aiming to expedite investments in these segments.

The cabinet approved fiscal support of 50% of project cost for semiconductor fabs across all technology nodes and display manufacturing and raised the fiscal support for compound semiconductors, packaging and other semiconductor facilities to 50% from 30%. The ₹76,000 crore scheme for chip and display facilities was first announced in December 2021.

“Under the modified programme, a uniform fiscal support of 50% of project cost shall be provided across all technology nodes for setting up of semiconductor fabs," a cabinet statement said.

“Given the niche technology and nature of compound semiconductors and advanced packaging, the modified programme shall also provide fiscal support of 50% of capital expenditure in a pari-passu mode for setting up compound semiconductors/silicon photonics/sensors/discrete semiconductors fabs and ATMP/OSAT," it added.

Under the original scheme, the government offered financial support of up to 50% for companies making semiconductor fabs of the more advanced 28 nanometres (nm) or lower; support of up to 40% to companies making semiconductor fabs of above 28nm to 45 nm; and support of up to 30% to companies making semiconductor fabs of above 45 nm to 65 nm.

By providing financial support of 50% of the project cost for setting up display fabs, the government has also removed the cap of ₹12,000 crore per fab.

Fiscal support of 50% of capex will be given for setting up compound semiconductors, silicon photonics, sensors fab and semiconductor ATMP (assembly, testing, marking and packing) facilities or OSAT (outsourced assembly and testing) facilities, in the country. This was earlier limited to 30%.

Minister of state for electronics and information technology Rajeev Chandrasekhar said the government harmonized the sops to be offered to all manufacturers to broaden the horizon for manufacturers willing to come to India as well as open up the addressable market for the chips being made locally for mass and niche products.

“Our initial instinct was that we wanted to be in the leading edge (nodes) because that was the understanding; that was the volume market; but we have realized that there are many manufacturers who were also looking at trailing edge nodes, and we have also come to the conclusion that the Indian market is as lucrative for trailing edge nodes, which are 50-55% of the market, especially in automotive, power, telecom, low-end desktops, laptops. We don’t want to lose out on that," he said.

He expected investments of over ₹2 trillion to come to India on the back of the policy. The semiconductor incentives policy will remain an open pipeline for firms till the time the full corpus of incentives of $10 billion is exhausted, he added.

The minister said the corpus itself could be increased if more proposals were approved under the scheme. “If we need to increase the amount of money to further catalyze the semiconductor ecosystem, the government will certainly consider that," Chandrasekhar told reporters.

Industry executives welcomed the changes. “This seminal modification will energize various sectors to include electronics, automotive, defence and aerospace. This will further accrue large investments by companies to set up chip design and manufacturing facilities in India," said Anurag Awasthi, vice president of public policy at India Electronics and Semiconductor Association.

13.2. Cabinet Okays ₹19.5kcr More for Solar Module PLI

ET, 22 Sep. 2022

The Cabinet approved an additional ₹19,500 crore funding on Wednesday for the production-linked incentive (PLI) scheme for manufacture of high-efficiency solar modules.

The Cabinet approved an additional ₹19,500 crore funding on Wednesday for the production-linked incentive (PLI) scheme for manufacture of high-efficiency solar modules. The government expects this cash support to catalyse investment worth ₹94,000 crore in a sector that’s highly dependent on imports, creating domestic capacity of about 65 GW of fully and partially integrated solar photovoltaic modules.

The Cabinet also cleared the National Logistics Policy and approved changes to enhance the incentive structure for manufacture of semiconductors, display fabs and compound semiconductors.

The government has issued letters of award to Reliance New Energy Solar, Adani Infrastructure and Shirdi Sai Group for the ₹4,500-crore first tranche of PLI on National Programme on High-Efficiency Solar PV Modules.

Renewable energy secretary Indu Shekhar Chaturvedi said the Cabinet-approved bid design will lead to a capacity of 29 GW of fully integrated manufacturing plants, 18 GW plants integrated from wafers to modules, and 18 GW integrated over cells and modules plants.

There are four stages in module making — polysilicon, wafers, cells and modules. India's existing 15 GW production facilities have no polysilicon or wafer production capacity.

The PLI encourages all the stages — allocating Rs 12,000 crore for fully integrated polysilicon to wafers to cells to modules capacity, Rs 4,500 crore for three-stage integration of wafers to cells to modules, and Rs 3,000 crore for integration across cells and modules.

The combined module manufacturing capacity under both PLI tranches is expected to be 74 GW, in addition to 6 GW outside PLI schemes.

The incentive scheme is expected to create direct employment for 195,000 persons and for 780,000 indirectly, apart from replacing Rs 1.37 lakh crore of imports, the government said.

PLI will be disbursed for five years after commissioning of solar photovoltaic (PV) manufacturing plants on sales of high-efficiency solar PV modules.

Chaturvedi said the government has taken a number of measures, including introducing customs duty, to encourage domestic module manufacturing and there are signs that this is picking up, he said.

The country will need 280-300 GW solar energy capacity to achieve the targeted 500 GW of renewable energy generation by 2030. “For the remaining years up to 2030, our domestic requirement will be 30-35 GW of modules,” Chaturvedi said, adding the commissioned capacity will meet domestic as well export requirements.

Tata Power managing director Praveer Sinha welcomed the move, saying this will help in import substitution and indigenisation of solar equipment.

Effective April 2, the government imposed a 25% customs duty on solar cells to promote domestic manufacturing under the Aatmanirbhar Bharat initiative.

The Cabinet cleared modifications to the Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India, providing a uniform 50% fiscal support to all the three schemes under its umbrella. The Cabinet also removed the Rs 12,000-crore incentive cap for the display fabs scheme, indicating full fiscal support to any eligible investment.

The three separate schemes for the manufacture of semiconductors, display fabs and compound semiconductors earlier had varying 30-50% incentives. In the scheme announced in December last year, advanced nodes such as 28 nm stood to attract higher incentives than others such as 65 nm.

Vedanta and Foxconn have proposed to set up a semiconductor plant in Gujarat, along with two other applicants.

“After today’s modifications, the semiconductor policy is extremely competitive and attracts investments across the spectrum, which is silicon, compound and fabs,” said Rajeev Chandrasekhar, minister of state for electronics and IT.

The logistics policy seeks to bring about efficiency in logistics services and will complement the PM Gati Shakti National Master Plan.

“The vision is to develop a technologically enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem for accelerated and inclusive growth,” the government said.

The targets include a reduction in logistics costs to global benchmarks and a top 25 ranking in the global Logistics Performance Index by 2030, as well as creating a data-driven decision support mechanism for an efficient logistics ecosystem.

14.1. Reliance Retail Plans ‘Fast Fashion’ Stores to Take Fight to Zara

ET, 22 Sep. 2022

Reliance Retail is planning to launch a new clothing and accessories brand store chain to compete directly with fast fashion brands Zara and H&M in India.

Reliance has acquired the brand from Delhi-based Pure Drinks Group in a deal estimated at about ₹22 crore, said two people aware of the development.

Reliance Retail is planning to launch a new clothing and accessories brand store chain to compete directly with fast fashion brands Zara and H&M in India. “The new format, internally called Regalia, will be spread across 20,000-30,000 square feet, and the company could open six stores initially. They have finalised their store locations in Mumbai and Gurgaon (Gurugram) and have also signed properties in Hyderabad and Bangalore,” said two people privy to the launch.

The name of the brand will be announced at the time of the launch. The company will start store fitouts in some cities and the brand is expected to be launched from Bangalore during Navratri or Dussehra.

According to a retail consultant, Reliance has finalised Airia mall in Gurugram and High Street Phoenix in Mumbai and is looking for similar size stores in Delhi. Fast fashion is the fastest growing segment in apparel and lifestyle retail globally, and H&M and Zara have been runaway successes in India in the category associated with designs that move quickly from the catwalk to the showroom. “International brands have the advantage of a certain cachet, which has allowed them to gain disproportionate visibility, both in terms of share of mind and share of space in prime locations in the larger cities, which has allowed them to grow rapidly,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight. “However, the market can certainly accommodate more fashion brands. Reliance will need to not only create a viable product-retail mix but connect with the aspirational aspects in the consumer's mind to compete with the international brands,” Dutta said.

Reliance Retail is the largest fashion and lifestyle retailer in the country with a network of nearly 4,000 stores across segments from ethnic and value fashion to luxury brands. While rival Tata has partnered Zara and launched an affordable fast fashion brand Zudio, Reliance runs Marks & Spencer stores in India and recently partnered Gap. The new brand is expected to have mid-premium pricing and will bank on a young consumers’ segment. Reliance did not respond to an email seeking comment.

The company is looking at stores spread across two floors but most of the premium malls in metro cities are fully occupied, making it difficult for them to create large space. Reliance is also in talks to partner LVMH for its beauty chain Sephora, which at present, is run by Arvind Brands.

“The company is aggressively looking for space for the new brands as well as new international brands they are planning to partner,” said another person.

“As per company policy, we do not comment on market rumours and speculations,” an Arvind Fashions spokesperson said.

14.2. Apple begins production of iPhone 14 in India

Mint, 27 Sep. 2022

BLOOMBERG: Apple Inc. began making its new iPhone 14 in India sooner than anticipated, after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks.

The US tech giant made the announcement on Monday, weeks after the marquee device’s 7 September unveiling. It had worked with Foxconn Technology Group, its most important production partner, with the original goal of assembling iPhones in Chennai about two months after global launch, Bloomberg News reported in August.

The partners quickened the process after resolving supply chain issues, which helped production go smoother than expected, people familiar with the matter said, asking to remain anonymous discussing internal procedures.

Apple, which long made most of its iPhones in China, is seeking alternatives as Xi Jinping’s administration clashes with the US government and imposes lockdowns across the country that have disrupted economic activity. At the same time, Narendra Modi’s administration is keen to make the country into a viable competitor to China in technology and production capability, especially as Western investors and corporations begin to sour on Beijing’s track record.

“India is now an attractive location for manufacturing as it offers better labour cost structure while Apple is looking to reduce geopolitical risks," said Jeff Pu, an analyst with Haitong International Securities. “To turn India into a major manufacturing site, Apple will help India accelerate its production timeline."

“We’re excited to be manufacturing iPhone 14 in India," Apple said in an emailed statement Monday without discussing production timelines. A Foxconn representative declined to comment.

Apple-partners such as Foxconn, which makes the majority of the world’s iPhones, typically begin assembling the device in India about six to nine months after Chinese factories. That’s partly because more time is needed to secure and ship critical components to a supply chain less accustomed to the process. Assembling iPhones often entails coordination between hundreds of suppliers and meeting Apple’s infamously tight deadlines and quality controls.

Still, analysts such as Ming-Chi Kuo of TF International Securities Group have said they anticipate Apple will eventually ship new iPhones from both countries at roughly the same time, a milestone in Apple’s efforts to diversify its supply chain and build redundancy.

Matching China’s pace of iPhone production would also mark a major achievement for India, which has been touting its attractiveness as an alternative.

15.1. PepsiCo to set up plants in Gorakhpur, Chitrakoot, Amethi & Prayagraj investing Rs 3740 cr, to generate 5650 jobs

ET Gov. 24 Sep. 2022

“The ease of doing business policy framework designed by the state government is highly acknowledged.”

Providing fillip to the industrial development in Purvanchal and Bundelkhand regions of the state, the government of Uttar Pradesh has been successful in attracting investment in beverages industrial units in Gorakhpur, along with Amethi, Prayagraj and Chitrakoot. The company has proposed to invest Rs 3,740 crore in total in all the four plants with about 5,650 expected job opportunities.

Varun Beverages Ltd, all India franchisee of PepsiCo, has been allotted land in Gorakhpur, along with Amethi, Prayagraj and Chitrakoot through fast-track mode for setting up their units under mega projects category for producing carbonated soft drinks, fruit pulp or juice based drinks.

Chief Executive Officer, Invest UP, Abhishek Prakash said, “Our policy of fast-track land allotment and promotion of mega projects in the State are proving to be significant enablers in attracting investment in regions hitherto with sparse industrial progress.”

Giving the details of upcoming projects, Additional Chief Executive Officer, Prathamesh Kumar informed that Varun Beverages Ltd has been allotted 45 acre land through fast-track mode in Narkatha village of Gorakhpur Industrial Development Authority area on Thursday. The company has proposed to invest Rs 1071.28 crore in Gorakhpur plant with around 1,500 expected employment avenues.

Moreover, the investor had also been allotted land in Chitrakoot, Amethi and Prayagraj recently. With allotment of 68.6 acre land in Bargarh Industrial Area-Chitrakoot, Varun Beverages Ltd has proposed to invest around Rs 496.57 crore with estimated jobs to the tune of 1,000. Around 24.7-acre land has been allotted in in Saraswati Hi-Tech City, Naini-Prayagraj and the investor has proposed to invest Rs 1052.57 crore with 1,500 employment opportunities, while 26.1-acre area has been allotted in in Trishundi Industrial Area-Amethi, where proposed investment is Rs 1119.59 crore with 1,650 expected jobs. Additional land will be allotted in phases.

Kamlesh Kumar Jain, Executive Director and COO of Varun Beverages Ltd said that the UP government has been continuously focusing on industry-friendly initiatives and industrial growth in the state. “The ease of doing business policy framework designed by the state government is highly acknowledged,” he added.

15.2. Backed by robust services exports, it’s time for India to accelerate manufacturing

ET, 29 Sep. 2022

While the services sector can do the heavy lifting, India needs to nurture manufacturing well as it is one of the paths to gainfully employing more people, thereby moving up from low per-capita income levels.

Manufacturing has been one of the key pillars for countries as they move up the per-capita income ladder. India’s experience has been one of underutilised potential as compared to other successful economies.

Manufacturing when utilised for exports has been a powerful tool for growth for economies like the Asian tigers including Taiwan and South Korea. This intuitively makes sense because it is easier to generate growth by exporting to richer countries than to sell within your own if the domestic demand is not adequate. Take the example of the services industry. Would Bengaluru have become a leading metro without IT exports? There would have been no dollars earned from the large Fortune 500 clients to trickle down into the city and transform it.

Hence, it’s important to understand the role of manufacturing, some trends in manufacturing growth across countries, and why it is imperative to seize the day.

Premature de-industrialisation

Professor Dani Rodrik at Harvard Kennedy School has done a very interesting analysis. In his paper, Premature De-industrialisation (November 2015), he looks into the industrialisation trends across countries over a time period.

Most countries go through a phase where an increasing number of people get employed in manufacturing and then a hump arrives, after which manufacturing contribution in a country’s GDP declines. The other side of the coin is where most countries see services contribution increases as economies become more mature.

Most readers would agree with this.

A finer material point to emerge is that as we have moved forward over the last few decades, the peak for manufacturing as a percentage of GDP or employment has trended lower. Simply put, countries had it easier earlier, on average, in achieving higher degrees of industrialisation. The early bird got the worm -- higher per-capita income levels.

A quote from the above-mentioned paper should help illustrate this:

“Industrialisation peaked in Western European countries such as Britain, Sweden, and Italy at income levels of around USD14,000 (in 1990 dollars). India and many sub-Saharan African countries appear to have reached their peak manufacturing employment shares at income levels of USD 700.”

As per the paper, developing countries run the risk of having a stunted or shrinking manufacturing sector, not reaching the levels achieved by developed countries before them. They call this ‘premature de-industrialisation’.

- SERVICES (Education, Healthcare, IT, R&D, Tourism, etc.)

16.1. Users to Get 5G at Most Affordable Rates in World, says RIL Chairman

ET, 2 Oct. 2022

Reliance Industries Ltd (RIL) chairman Mukesh Ambani said consumers in India would have access to top-grade 5G services at the most affordable rates in the world as Sunil Mittal-led Bharti Airtel became the country’s first telco to launch the next-gen mobile broadband service in eight cities. Bharti chairman Mittal said it was a proud moment for Airtel to be the nation’s first telco to launch 5G services exactly 40 years after the company had entered the telecom sector as a maker of push-button phones.

Kumar Mangalam Birla, chairman, Aditya Birla Group — a co-promoter of loss-making Vodafone Idea (Vi) — batted for continued policy support from the government to drive the 5G mobile broadband revolution. He added that Vi would begin its 5G rollout shortly, but did not give a timeline.

The three top industrialists were speaking at India Mobile Congress 2022 on Saturday.

Addressing delegates on the opening day of IMC-2022, at which Prime Minister Narendra Modi was present, Ambani underlined RIL telecom arm Reliance Jio Infocom’s commitment to deliver 5G services to every town, taluka and tehsil in India by December 2023.

“India may have started a little late, but we will finish first by rolling out 5G across the length and breadth of the country,” Ambani said at IMC-2022.

Ambani added that most of Jio’s 5G technology has been developed in India, and hence carried the stamp of Aatmanirbhar Bharat.

Mittal said Airtel was launching 5G services in eight cities on October 1, including New Delhi, Mumbai, Varanasi and Bengaluru, adding that it would roll out the next-gen wireless broadband services in most cities by March 2023 and across the entire country by March 2024. “It’s a proud moment for me as it was back in October 1982 that I saw push-button phones in Taiwan, following which Airtel started manufacturing them in India, and now the same Airtel is the first telco to launch 5G services in the country,” Mittal said at the marquee telecom event.

He added that Airtel teams are working very hard to roll out 5G services speedily across India.Mittal said Jio had earlier prompted speedier 4G rollouts in India and forced Bharti to literally play catch up, something that has propelled Airtel to be the first in 5G.

In the recently concluded auction in August, Jio spent Rs 88,078 crore on 5G airwaves, while Airtel and Vi bought 5G airwaves worth Rs 43,084 crore and Rs 18,799 crore, respectively.

For its 5G rollout, Airtel has opted for the non-standalone (NSA) mode, which is more evolved now with over 90% of global 5G traffic running on such networks. Jio, the sole holder of 700 MHz spectrum, has chosen the standalone (SA) mode for its countywide 5G rollout. The SA mode is a superior version of 5G but its device ecosystem is yet to evolve fully.Loss-making Vi has been unable to set any 5G rollout schedule as it faces challenges in finalising contracts for network gear supply and tower tenancy, with vendors pushing it to clear 4G-related dues and fork out advance payments for fresh contracts.Birla said Vi would soon begin rollouts soon as it has taken steps towards development of the 5G ecosystem, use cases for enterprises and consumers.

“The government has made critical policy interventions, boosting investor confidence in the sector, and as we move into the 5G era, we hope to receive continued policy support to drive the 5G revolution in this digital decade,” Birla said at IMC. He said Vi had nearly 240 million users connected to its networks, with 50% of them in rural India, adding that the company’s network has been constantly upgraded to be capable of smooth migration to 5G.

Ambani batted for a strong BSNL, saying the government’s recent efforts to strengthen the state-run telco would maintain the balancing presence of a government entity in this very strategic sector.

He added that India can become the world’s leading digital society and a $40 trillion economy by 2047, up from $3 trillion today, by harnessing the combined power of demography and digital technologies. “5G can power India’s emergence as the world’s intelligence capital… It will help India become a major exporter of high-value added digital solutions and services,” the RIL chairman said.

Mittal said India is fortunate to have a prime minister who’s technology savvy.

“It’s my belief that there is no global leader like Mr Modi today who both understands technology and knows how to use it.”

16.2. 5G is Here. See the Changes it will Ring In

ET, 9 Oct. 2022

As telecom players gear up to launch 5G services across the country, many use cases – from a 5G-connected ambulance to a robot for delivering medicines and food to the patient’s bedside - could become a reality in India over the next few years. Mansi Taneja explains.

What are the 5G use cases being developed in India?

The showstoppers at the recently concluded India Mobile Congress (IMC) in New Delhi included 5G-connected ambulances, a cattle tracker, smart office solutions and cloud gaming. The idea behind a 5G-connected ambulance was to deliver critical/initial care to patients during the ‘golden hour’, or the first 60 minutes before a trauma or injury when prompt medical attention can often save lives. The ambulance will allow realtime transmission of a patient’s vitals and other health data from the vehicle directly to the hospital, from where doctors can instruct paramedical staff. For mobile users, enhanced mobile broadband and cloud gaming could be initial use cases. Cloud gaming will attract enthusiasts as it will do away with the need for a gaming console as games could be played on a 5G-enabled smartphone.

What are Indian telcos doing?

Reliance Jio Infocomm has launched a 5G-connected ambulance with Medulance, an emergency medical response service provider. Bharti Airtel has demonstrated a 5G-connected ambulance use case in partnership with Apollo Hospitals and US-based networking gear maker Cisco. The ambulance is equipped with cameras and smart devices that allow real-time, two-way audio and video communication, highdefinition footage transmission, location tracking, and real-time streaming of patient health data to a doctor over a high-speed 5G network.

When will 5G services begin?

During the launch of 5G services on October 1, Prime Minister Narendra Modi experienced several 5G use cases first-hand. He could drive a car remotely and witness augmented reality/virtual reality (AR/VR) through wearable devices. Airtel became the first telecom player to launch 5G services in eight cities, while Reliance Jio has also announced a beta launch of 5G in four cities. Both telcos will gradually expand their 5G network coverage across India level by the end of 2023. Vodafone Idea has not yet announced the date of its 5G launch. What are the challenges? The ecosystem around 5G mobile handsets, enterprise use cases and devices has yet to fully develop in India. “The initial phase will be a lot more on enhanced mobile broadband. Most of the operators will launch a fixed wireless access device. This will be the most popular thing in the short run,” said Peeyush Vaish, partner and telecom sector leader, Deloitte India. “There’s going to be a very, very big uptake from a B2B perspective on 5G but that is far away,” Vaish added. The 5G network’s ultra-low latency and ultra-high reliability will enable consumers to enjoy enhanced 4K video, cloud gaming, XR applications and live sports. The adoption of 5G, however, hinges on a developed and affordable ecosystem. Internet of Things (IoT) devices are another area of concern. India has a good and affordable smart-watch ecosystem which is likely to benefit from 5G services, but advanced IoT use cases such as smart cars at affordable prices are still in the future, said Aniket Dani, director, Crisil Research.

What are global 5G use cases?

According to telecom network gear maker Ericsson, the following are a few global implementations in the enterprise segment. Telefónica, Ericsson and Mercedes-Benz are building the world’s first 5G mobile network for automobile production at its “Factory 56” in Sindelfingen, Germany, which will be the blueprint for all future vehicle assembly facilities worldwide. Ericsson and Volvo Cars have carried out a successful test handover of connected cars between two mobile 5G networks in different countries at the AstaZero test track in Sweden. Telia in Sweden will build and manage a dedicated 5G-ready mobile network for mining company Boliden at Aitik, the world’s most efficient open-pit copper mine in the north of Sweden. Ericsson and Ooredoo showcased an immersive sports demo that was broadcast live to a virtual stadium at Mall of Qatar where consumers experienced the VR and immersive experience of the match remotely.

17.1. Hospitality Sector Expects Occupancies to See a Big Jump

ET, 11 Oct. 2022

Initial estimates shared by hospitality industry insiders suggest occupancies and rates in September exceeded those for August, pointing to the increasing likelihood of further steady gains in both metrics through the year-end festive season.

Preliminary data shared by industry tracker STR with ET suggests that September was a marginally better month than August with occupancies and rates improving by 3% and ₹200, respectively.

“It is mostly upwards from here barring the Diwali period for business hotels. Business seems to be layering up quite well for leisure locations. Lead times for the majority of business locations are very short,” said Karan Mahesh, account manager for Central and South Asia at STR. This assessment is based on forward-looking data for 15 domestic sub-markets, providing STR sufficient visibility into occupancy and future rates.

"In comparison with August, more than 70% of major markets in India have grown in revenue per available room (RevPAR) but that is mostly seasonality and the nature of business-led organic growth,” said Mahesh.

Business visibility exists three months into the future for some leisure locations.

“In leisure destinations, there is business on books and spikes in occupancies are visible even 90 days in advance, whereas 25-30% of inventory at some business destinations is being picked up before a couple of weeks of arrival,” he added.

Compared with the pre-pandemic 2019 September levels, leisure locations of Himachal and Uttarakhand have recovered the most (almost double their 2019 RevPAR levels) mostly due to an average daily rates led growth, as per STR.

Mandeep S Lamba, president for South Asia at HVS Anarock, said following a seasonal dip in August, the Indian hotel industry’s performance bounced back in September, with an estimated 64-65% occupancy rate across the country, 4-5 percentage points higher than August and comparable with September 2019 levels.

17.2. Centre to set up separate export promotion council for medical devices, Government News

ET Gov. 22 Sep. 2022

The EPC will be established with headquarters in YEIDA, Greater Noida, Uttar Pradesh, with regional offices in AMTZ - Visakhapatnam, Andhra Pradesh and Hyderabad in Telangana.

The Central government on Thursday has decided to set up a separate Export Promotion Council (EPC) for Medical Devices, to boost exports of medical devices.

"Based on the detailed deliberations in the meetings held by the Department of Commerce (DoC) .. with regard to the creation of an EPC for Medical Devices, and the suggestions/responses received from stakeholders in the medical devices sector, approval of DoC, GoI is hereby conveyed to the setting up of an EPC for Medical Devices," an official memorandum issued on Wednesday by the government said.

The EPC will help exporters in promoting their products in international markets through various promotional activities including organising and participating in international trade fairs, buyer-seller meets, in line with the foreign trade policy of India. The Council may also organise awareness campaigns regarding the assistance available for the MSME exporters under various government schemes.

The EPC will be established with headquarters in YEIDA, Greater Noida, Uttar Pradesh, with regional offices in AMTZ - Visakhapatnam, Andhra Pradesh and Hyderabad in Telangana.

The government said it will provide Rs 3 crore initial financial support, free office of around 5000 sqft area at the upcoming Medical Devices Park Common Facility Centre (CFC), Greater Noida and required secretarial staff. Till the completion of the CFC, YEIDA shall provide suitable office space in their current building. The regional office at AMTZ, Visakhapatnam will be set up by the end of 2023 and the Hyderabad one by end of 2025. The AMTZ and Telangana government will facilitate establishment of regional offices in their respective states.

The EPC for medical devices will be under the administrative control of the Department of Pharmaceuticals, which is a part of the Ministry of Commerce and Industry. It will be administered by a committee of administration (CoA) that have both the nominated and elected members from the government and medical device industry.

India currently exported Rs 23,766 crore of medical devices in FY22, which was up from Rs 19,736 crore from previous year.

"This will help bring in coordinated inter ministerial policy measures for unleashing the huge export potential and investment potential of over Rs 80,000 crore for manufacturing medical devices for the global market in our quest to be one of top five preferred supplier base of medical devices," said Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry (AiMeD).

The Pharmaceutical Export Promotion Council (Pharmexil) has been a huge success in helping to boost the pharmaceutical exports of India to close to $25 billion in FY22.

18.1. India Breaks into Top 40 on Global Innovation Index

ET, 30 Sep. 2022

India, for the first time, made it to the top 40 countries at the Global Innovation Index (GII), led by improvement in information and communication technologies (ICT) services exports, venture capital recipients’ value, and finance for startups.

India’s six-notch jump to 40th spot in the 132-nation GII in 2022 from 46th rank in 2021 made it to the topmost innovative lower middle-income economy in the world, overtaking Vietnam, the World Intellectual Property Organization (WIPO) said on Thursday.

The GII reveals the most innovative economies in the world, ranking the innovation performance of 132 economies.

“Türkiye and India enter the top 40 for the first time, placed 37th and 40th, respectively. India overtakes Viet Nam (48th) as the top lower middle-income economy for innovation,” WIPO said.

As per the report, India continues to lead the world in the ICT services exports indicator with the first rank while holding top rankings in other indicators, including Venture capital recipients’ value (6th), Finance for startups and scaleups (8th), graduates in science and engineering (11th), Labour productivity growth (12th) and domestic industry diversification (14th).

“India's continuous rise in GII rankings is due to the progressive initiatives by the government and industry working together,” said commerce and industry minister Piyush Goyal. Goyal said India’s rank in 2015 was 81 and it is at 40th position this year.

Highlighting that middle-income economies like China, Türkiye and India continue to change the innovation landscape,, WIPO said, “India’s innovation performance is above average for the upper middle-income group in almost every innovation pillar, with the exception of infrastructure, where it scores below average”.

18.2. Cisco Hopes to be Third-time Lucky in Local Making

ET, 6 Oct. 2022

The company’s earlier two attempts to manufacture in India failed due to the lack of ecosystem. “We had set up a factory in Pune with Jabil four-five years ago, but it was shut down after one year due to lack of ecosystem as everything was to be imported. But I think those things are improving now,” said Kaul.

After two unsuccessful attempts at manufacturing telecom products in India, US network gear maker Cisco is hoping to be third time lucky. The company is planning to start manufacturing in the country soon through either of its contract manufacturers, Foxconn or Jabil, for the local and overseas markets. “We are seriously awaiting manufacturing in India. This is our third attempt. I believe this time when we put our stake on the ground, it will be for good. We will Make in India for the world, not only for India,” Sanjay Kaul, president, Asia Pacific & Japan, Cisco, told ET.

Cisco currently depends on imports to supply its products to all the three private telecom operators – Reliance Jio, Bharti Airtel and Vodafone Idea – as well as state-run BSNL.

It has manufacturing units across the globe, including China, Mexico and Vietnam.

But with the government's push towards manufacturing, the situation is turning positive in India. For instance, there is a production-linked incentive (PLI) worth ₹12,195 crore for telecom equipment manufacturing and global players such as Nokia and Ericsson are already making products under the scheme. Samsung has been the latest entrant as part of the scheme.

“Make in India will thrive if you have an ecosystem – nowadays, if you take an average product, for example a router, it has got 400 components in it – and that ecosystem available in India will really motivate us to make it here,” said Kaul.

19.1. SIA in Talks with Tatas to Merge Their JV Vistara with Air India

ET, 14 Oct. 2022

Singapore Airlines (SIA) is in talks with its partner Tata Sons to merge their joint venture Vistara with Air India. The N Chandrasekaran-led Tata Group aims to build a large aviation entity to take on local and international competition.

“In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India, a subsidiary of Tata,” the premier Asian carrier said in a filing to the Singapore Stock Exchange. “The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India,” it added.

In the statement, Singapore Airlines, however, said that “no definitive terms have been agreed upon between the parties”. “There is no certainty or assurance whatsoever that (a) any definitive agreement will be entered into or (b) the potential transaction will materialise or proceed to completion arising from these discussions. Even if a transaction were to materialise, it would be subject to the relevant regulatory approvals, amongst other matters.”

SIA’s statement comes two days after Tata Sons chairman N Chandrasekaran said the group will consolidate its airline business to “one airline with two platforms”.

Tata Sons won a bid to buy Air India for $2.4 billion last year and took it over in January this year. The conglomerate now has four airlines under its wing: Air India; AI’s low-fare regional international subsidiary Air India Express; Vistara — its JV with SIA; and AirAsia India.

The group plans to merge AirAsia India into Air India Express to create a single budget airline entity. Air India and Vistara will make a full-service entity. If Vistara and Air India merge, they will have 18.2% share of the domestic aviation market, going by figures from the Directorate General of Civil Aviation for August.

Singapore Airlines owns 49% in Vistara and it’s not clear what the share structure will be after the merger.

“Unless the Tatas come up with a completely fresh identity, it will most likely mean that Vistara is subsumed into the Air India brand,” said a senior airline executive at a rival carrier.

If Singapore Airlines remains invested in the JV, there will possibly be a global synergising of networks, which gives the airline a larger access into Indian traffic. Both SIA and Air India are part of the global Star Alliance.

SIA has been a reluctant partner in Tata’s Air India deal, and according to people in the know, unwilling to merge its venture with Air India in the past.

In interviews, Vistara’s CEO Vinod Kannan has maintained Air India is as much a rival for Vistara as any other airline — local or international. But in June, he said the airline has been planning synergies with Air India on engineering and other resources.

19.2. Home-grown multi access IoT device a showpiece of Indian technical competencies harmonised to global standards

ET Gov. Sep. 2022

IoT/ M2M will enable use-cases in multiple industry verticals and will be a true enabler for industry 4.0.

Union IT minister Ashwini Vaishnaw on Monday launched Sensorise SenseIT Energy's MAID (multi access IoT device) at the India Mobile Congress (IMC) 2022.

MAID is a make in India IoT solution and is launched under the Atmanirbhar Bharat drive. It showcases Indian technical competencies harmonised to global standards.

"IoT/ M2M will enable use-cases in multiple industry verticals and will be a true enabler for industry 4.0. Sensorise with its Remote Provisionable eSIM and MAID device is uniquely positioned to synergise with the M2M ecosystem," Vijaya Kamath, CTO, Sensorise, the group company of Rosmerta Group in M2M/IoT communications vertical, said in a statement.

The minister also inaugurated the VoICE Atmanirbhar Pavilion, comprising 22 member companies.

Sensorise is the market leader in IoT enabled mining and automobiles solutions and is a privileged member of VoICE group as it significantly bridges the gaps in infrastructure, technology and services with diligent contribution to standards, policies & regulations to drive M2M adoption in India.

"The launch of 5G in Indian Mobile Congress 2022 has reinforced our strategy of communications fuelling the rapid adoption of M2M IoT across industry verticals. Sensorise & Rosmerta Group are uniquely poised to fulfil this vision," said Karn Nagpal, President, Rosmerta Group.

(With IANS inputs)

20.1. Pegatron Opens Chennai Facility to Make iPhones

ET, 1 Oct. 2022

Taiwanese electronics manufacturer Pegatron has inaugurated a manufacturing facility off Chennai to make iPhones, another addition to Apple's India capacity for iPhones dominated by Foxconn and Wistron that roll out top-end phones for the India market.

Taiwanese electronics manufacturer Pegatron has inaugurated a manufacturing facility off Chennai to make iPhones, another addition to Apple's India capacity for iPhones dominated by Foxconn and WXistron that roll out top-end phones for the India market.

Tamil Nadu chief minister MK Stalin and Union minister of state for electronics and information technology Rajeev Chandrasekhar inaugurated the factory located inside the Mahindra World City near Chennai. According to a state government press release, ₹1,100 crore of investment has gone into the Pegatron facility.

Recently, Apple said Foxconn's Chennai facility will begin making the latest release from the iPhone line-up, the iPhone 14, bridging the gap with its largest manufacturing base China. On a larger scale, Taiwanese manufacturers are diversifying rapidly to other Asian destinations amid stringent anti-Covid policies in China, and the ripple effect of Taiwan's geopolitical tensions with China.

In a press note, the Centre had said Tamil Nadu has received large investments from Foxconn, Dell, Ascent Circuits, and Bharat FIH (the India-focussed Foxconn entity making phones like Xiaomi), under the production-linked incentive scheme to ramp up capacities.

20.2. Apple Set to Make AirPods, Beats in India, says Report

ET, 6 Oct. 2022

Apple is asking its suppliers to move some AirPods and Beats headphone production to India for the first time, Nikkei reported on Wednesday, in what could be another win for New Delhi in its push for local manufacturing.

Apple iPhone assembler Foxconn is preparing to make Beats headphones in India and hopes to eventually produce AirPods in the country as well, the report said, citing sources.

Luxshare Precision Industry, a Chinese supplier to the iPhone maker, and its units also plan to help Apple make AirPods in India, according to the report.

However, Luxshare is focusing more on its Vietnamese AirPods operations for now and could be slower than its competitors in starting meaningful production of Apple products in India, the Nikkei newspaper said.

Apple did not immediately respond to a Reuters’ request for comment.

The tech giant has been shifting some areas of iPhone production from China to other markets, including India, where it started manufacturing iPhone 13 earlier this year, and is also planning to assemble iPad tablets. The company announced last week its plans to manufacture the latest iPhone 14 in India.

A Bloomberg News report from Tuesday said iPhone exports from India crossed $1 billion in five months since April and are set to reach $2.5 billion in the 12 months through March 2023.

Apple’s latest move is part of its gradual diversification from China, the Nikkei report said. India and other countries such as Mexico and Vietnam are increasingly turning important to contract manufacturers supplying to American brands amid Covid-related lockdowns in China and simmering tensions between Washington and Beijing.

India and the World

21. India is third largest market for Lladro

IBEF, Sep. 23, 2022

After Japan and the US, the Indian market has surpassed Spain to become the legendary Spanish porcelain brand Lladro's third-largest market, as a dramatic uptick in sales in 2022 propelled the India business into one of the fastest-growing in the globe.

"We had 33% growth in 2021, and for 2022, we anticipate 35–37% growth. Global growth this year has been 15% higher than last year's pace," affirmed Mr. Fernando Gallego Cruz, Director of Global Sales at Lladro SA.

The company, which has its headquarters in Valencia, Spain, intends to open three additional stores in India during the next 18-24 months as part of its growth story. The company currently runs seven outlets across the nation, with Delhi NCR, Mumbai, and Bengaluru leading the way in terms of brand contributions, followed by Kolkata, Hyderabad, and Chennai.

In the last six to seven years, the India business, which now accounts for 10-12% of Lladro's global revenue, has doubled.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

22.1. From India, For World

ET, 2 Oct. 2022

YouTube creates more local innovations aimed at global markets, a la Shorts

YouTube is eyeing more India-first innovations, a senior executive said, citing its short-video format Shorts, which was developed in the country and scaled up for the rest of the world. YouTube Shorts was Google’s answer to Meta-owned Instagram’s Reels and Chinese ByteDance-owned short-video app TikTok. “We hope to do a bunch more (India-first innovations), but Shorts probably is one of our most telling product features that has gone in that direction,” Ajay Vidyasagar, regional director, APAC, YouTube Partnerships told ET on the second anniversary of the short-form feature of the video streaming platform. Vidyasagar said that “there are a bunch” of additional India-first innovations, but Shorts was where the company had gone the whole distance in establishing such an algorithm.

Since inception, YouTube Shorts has grown to a community of more than 1.5 billion monthly logged-in users globally. It generates 30 billion views per day, four times more than last year. Shorts was first introduced in India in September 2020, a few months after TikTok was banned following border hostilities with China. It was subsequently expanded to over 100 countries in July last year. The feature is part of the main YouTube app and allows users to create and share short vertical videos of up to 60 seconds.

Vidyasagar said the distinguishing feature of Shorts - as opposed to other short-form formats like Reels or TikTok - was that YouTube was a native video platform, unlike Instagram which pivoted from being a photo sharing platform to offering more video content. “We came into this business to help truly democratize content creation and distribution,” he said. “Having done Shorts for the last two years, we see that we have a dual engine running - a bunch of creators who come primarily to do Shorts and could later do mid- and long-form and on the other end, an enormous army of creators who’ve been doing long-form and mid-form, who are now beginning to also do short-form.”

YouTube is the only destination where creators can produce all forms of content while building a community and earning money from multiple revenue streams, Vidyasagar said.

“The multiformat creator moves seamlessly between different video formats on YouTube to connect their community with the right content at the right time, creating an infinite flow of content combinations to maximize their creativity, reach and revenue,” he added.

ET reported last week that YouTube was expanding the platform’s monetization system, the YouTube Partner Program (YPP), to allow more creators to join it, introducing new ways for creators to earn revenue through Shorts and opening up ads monetization for those who feature music in their videos.Starting early next year, Shorts-focused creators can apply to YPP by meeting a threshold of 1,000 subscribers and 10 million Shorts views over 90 days, the company said. These new partners will enjoy all the benefits YPP offers, including ads monetization across Shorts and long-form YouTube videos. This is another option to the existing criteria where long-form creators can still apply to YPP when they reach 1,000 subscribers and 4,000 watch hours. Creators can choose the option that best fits their channel. Vidyasagar said Shorts has helped YouTube reach deeper into India’s hinterland.

Creators who represent the true flavour of their districts or regions are having their moment in the sun, for instance, The BusTubers of Kerala or the hyperlocal street foods of Wayanad. Content has been generated from across the country, with creators engaging with fans in Marathi, Punjabi, Haryanvi, Bhojpuri, Bengali and other languages. Content is also being created in various dialects from towns such as Thrissur, Palakkad, Kanyakumari and Ballari, to Sivagangai, Madurai, Malappuram and the Godavari region.

“India is a country within countries and our ability to create engines of engagement in sub-locales within the country is something unique to India,” he said. “What’s trending in North India is very different from what’s trending in TN or Kerala or in Assam. The hyperlocalisation of trending is something that I think Shorts is leading the way in showing what that can be for users, and teaching us and our algorithm what that can be, from a platform standpoint.” Infotainment style content that seeks to both inform and entertain viewers has also become popular. Creators are leveraging these kinds of Shorts to connect viewers to helpful and purposeful information, ideas and inspiration.

22.2. Beyond Bollywood & Yoga

ET, 6 Oct. 2022

Last month, the ministry of external affairs (MEA) issued a press note (bit.ly/3ygqZhM).It identified the priorities of the next G20 forum, the powerful global high table that frames the collective responses to challenges impacting the world economy, once India inherits the presidency on December 1.

Last month, the ministry of external affairs (MEA) issued a press note (bit.ly/3ygqZhM). It identified the priorities of the next G20 forum, the powerful global high table that frames the collective responses to challenges impacting the world economy, once India inherits the presidency on December 1.

G20 is composed of both developed and developing countries, which between them account for 85% of the global GDP, 75% of international trade and two-thirds of the global population. Given the dysfunctional state of most multilateral bodies, G20 is now the go-to institution in the world.

Among other objectives, the walk-up identified a very interesting priority, ‘Digital public infrastructure and tech-enabled development in areas ranging from health, agriculture and education to commerce, skill-mapping, culture and tourism.’ Clearly, the emphasis here is on India’s new calling card — digital public goods (DPGs) — that is rapidly gaining eyeballs and expanding its global footprint.

This was not an isolated reference by the foreign office. Earlier, addressing a gathering hosted by the Observer Research Foundation (ORF), former foreign secretary and serving G20 coordinator Harsh Shringla made a strong pitch for the need to showcase India’s success with DPGs. He began by highlighting the innovations, ‘Our startup sector, a world beating digital public goods and industrial policy, focused on technological innovation and growth show that we are capable of creating tech models that balance the need for global integration and priorities at a national level.’

And then he signalled India’s plan during its upcoming presidency, ‘At the G20, this model must be internationalised… The world needs new and innovative approaches to tackle today’s complex challenges. Digital technologies present us with the tools to deal with some contemporary challenges.’ Implicitly, Shringla and the MEA are acknowledging that India’s soft power arsenal has a new inclusion: DPGs.

Traditionally, India’s soft power has been defined around yoga, cuisine, Bollywood and, more recently, contemporary Indian art. Little over the last decade, with the launch of Aadhaar, India has begun to acquire international attention for its prowess in creating public digital infrastructure to deliver public good.

It has successfully created digital building blocks using Aadhaar as the foundation to create a public digital rail — on which anyone, government or private sector, can build applications to scales as staggering as one billion.

These protocols have been used to create the Unified Payments Interface (UPI), which powered the fintech revolution in India and democratised payments — from a mere 1,000 in 2016, the average transactions a month have grown to a little under 7 billion.

Similarly, CoWin was used to deliver 2 billion jabs using the principle ‘One Nation, One Jab’. Not only did it permit an orderly rollout of India’s vaccination project but it also ensured that no one, particularly migrants, was excluded. Its phenomenal success in delivering 2 billion vaccines has led to 50 countries showing interest in signing up for a similar system to roll-out their vaccination drives.

On September 30, India launched its most audacious digital economy plan to reimagine digital commerce when it rolled out the Open Network for Digital Commerce (ONDC) in Bengaluru. It seeks to hit the reset on digital commerce, similar to the manner in which UPI completely upended the payments business by allowing interoperability — by which we can pay each other in real time using any wallet as long as each of us is on the UPI network — at an extremely low transaction cost.

In short, ONDC seeks to revisit the way sellers and buyers connect with each other in digital commerce, making it that much more accessible and inclusive. At present, these cohorts can engage with each other only by being on the same platform, which are closed and dominated by few.

India has also soft-launched two other initiatives that seek to:

Catalyse credit through the Account Aggregator framework.

Democratise credit through the Open Credit Enablement Network, such that even sachet loans can be availed at bank rates. At the moment, these are procured mostly by those at the bottom of the pyramid at usurious rates.

India’s unique concept of digital commons, as opposed to the walled garden approach adopted by most global platforms that make users captive, is rapidly finding takers, especially in Europe. Of the nine platforms in the world with billion-plus users, five operate from the US and the balance from China. The idea of DPGs is to ultimately make all these platforms interoperable, thereby democratising the ability of customers to discover, engage and fulfil their needs.

All these projects allow for scale by lowering the entry cost and barriers. Now, other countries are looking to adopt the same strategy to deliver public goods without depending on proprietary software systems. India has already begun to institutionalise its play on DPGs. Earlier this year, it joined the Digital Public Goods Alliance (DPGA), a multi-stakeholder initiative seeking to accelerate the use of DPGs to achieve sustainable development goals in low- and medium-income countries.

G20, therefore, would be the next logical step to cement and showcase India’s new soft power.

23.1. Flipkart Big Billion Festive Sale: Flipkart has many firsts this festive season. Some hit the mark, others the sellers

ET, 2 Oct. 2022

Flipkart has introduced several new features and sales strategies this festive season. But some sellers complain that the company, which is generally gung-ho during this period, has gone hyper-aggressive this time.

An overhaul of its mobile app, a precursor sale event to the flagship Big Billion Days (BBD), and a non-participation penalty for sellers. Flipkart has pulled out all stops to drive sales amid concerns that a shift in consumer preference to offline retail and the overall muted sentiment, coupled with inflationary pressures, could dent e-commerce volumes this festive season.

Major e-commerce players, which hold several sale events for four months starting August, consider the performance during this period as a key indicator of their growth and standing in the market. The four weeks between Navaratri and Diwali account for nearly a fifth of the annual GMV (gross merchandise value) for e-commerce players.

Flipkart, arguably the pioneer of this sale fest, has always been gung-ho about this event. This time around, some sellers are complaining that the Walmart-backed e-commerce giant has been demonstrating a certain amount of hyper-aggression.

For instance, Flipkart has imposed a non-participating fee for sellers who don’t offer promotions and discounts during the BBD sale. They also allege that Flipkart has been lowering the selling price of products to entice new customers without consulting the sellers.

As Flipkart is expected to clock its biggest-ever BBD sale this year, some of its strategies seem to have worked, while others have hurt sellers.

An early start to BBD

For the first time, Flipkart launched an “Early Big Billion Days” sale this year, which it held from September 10 to September 21 as a precursor to the flagship BBD, which kicked off on September 22. According to industry sources, the move was meant to bring in momentum and push sales without having to give a lot of discounts. It was also aimed at improving capacity utilisation, as this could help address the order pile-up during BBD, thereby ensuring orderly fulfilment.

But despite its best efforts, Flipkart has faced customer backlash for cancellations on iPhone bookings, partly due to a demand-supply mismatch, as well as a glitch that allowed consumers to book iPhones above INR50,000 on COD (cash on delivery), which the platform usually doesn’t offer. The company said in a statement that “less than 3% of all orders (for iPhones) had been cancelled by sellers due to anomalies”. There was even an incident in which a customer reportedly received bars of detergent soap instead of a laptop.

Besides streamlining order fulfilment, the early run-up to the sale was meant to help the smaller brands record higher sales since customers usually chase discounts by top brands during BBD.

“It could show some nervousness on part of Flipkart, given the weaker consumer demand this year, and they wanted to build momentum for BBD,” says an industry participant.

Sellers have had a mixed response to the early event.

According to an electronic-accessories seller, it did help increase sales volumes even before BBD. “Usually, sales are dead a few days before BBD since many consumers postpone their purchases for the main event. But this time, we saw some traction,” he says.

But some other sellers say they hardly got any spike in sales before the main event.

According to consultancy firm Redseer, e-commerce marketplaces hold up to three sale events leading to Diwali, though the first one is usually the largest and accounts for more than 60% of the total sales during the festive period.

Flipkart has already informed sellers about the next sale event starting on October 4.

The app upgrade

Flipkart went for an overhaul of its shopping app ahead of the festive season. Having introduced a separate tab for the grocery category earlier this year, the company has been undertaking significant design changes on the mobile app for several months.

The new features launched ahead of the festive season include a ‘Brand Mall’ mode that a user can opt to turn on or off, at the top of the app. “The idea is to offer an easier discovery of products from popular brands and allow users to switch between premium and value modes while shopping,” Bharat Ram, senior vice-president for user activation and retention at Flipkart, said in an interaction with ET Prime earlier this month.

Some other new features include an image search option, live commerce through influencer-led interactive video content, as well as a virtual try-on feature. “There is a fresh look for consumers who come to the app in the festive season,” Ram said.

“We continually make changes, but before BBD, there is a step function change,” he added, clarifying that the upgrade was only on the company’s flagship app and not on other platforms such as in-house fashion portal, Myntra.

Ram added that the ‘Brand Mall’ mode was introduced keeping in mind value-conscious customers, especially from smaller towns.

The company also said that nearly 65% of the customers joining Live Commerce on its app are from tier-II-plus cities.

Attracting new customers has been the key for e-commerce marketplaces, as they have been witnessing saturation in the growth of the urban consumer base.

An estimated 50 million-55 million shoppers made purchases online in the first four days of the sale events, according to Redseer. The number was 62 million for the entire nine-day sale last year.

Flipkart said early trends indicate that the overall consumer sentiment has been positive. It added that the event witnessed an “unprecedented” number of 1.6 million concurrent users per second on the app.

Penalty for non-participation

E-commerce platforms have been known to pressurise sellers into offering deep discounts during annual sale events. But Flipkart has gone a step further this time.

The company is not letting sellers easily opt out of participating in the sales this year. The e-commerce giant told sellers that there would be a “nominal fee” of INR5 for orders received during the festive period, which could be waived off for sellers who participate in the sale.

In a communication to sellers earlier this month, Flipkart said that “non-participating sellers” would be charged a “BBD premium fee” of INR5 on orders received during the “Early BBD sale” and the flagship BBD sale.

Flipkart added that it would bear the costs involved in the festive events only for participating sellers.

“Ahead of the Big Billion Days, Flipkart Marketplace has taken up a few initiatives to help sellers maximise their growth and profits. For this, we are charging a nominal one-time fee (INR5) to all sellers for the festive period. The fee could be waived off for all sellers who fulfil certain objective criteria,” Flipkart said in a statement to ET Prime.

While the company clarified this will be a “one-time fee”, several sellers have said the communication to them from Flipkart’s team was that it would be charged per order.

Though a nominal amount, the fee has enraged many sellers who have called out Flipkart for “threatening” them into participating in the sale event.

The price play

Another major grievance of several sellers has been instances of Flipkart slashing the prices of products, without consulting the sellers, to win new customers.

“While we have given a price to Flipkart for a product, they are applying some coupons at their end and lowering the selling price for the product for new customers. This is not acceptable. They can add the coupon at checkout, but they cannot change the selling price without consulting us,” a seller says.

This could also go against the FDI (foreign direct investment) regulations, which state that the marketplace cannot influence pricing, an industry member points out, adding that the platform corrected the issue for sellers who reached out.

Usually, price wars heat up during festive sales and sellers are under pressure to match the price across all platforms.

According to Redseer, the number of online sellers doubled to 1.1 million this festive season from last year. According to merchant-onboarding platform SellerApp, the average discounts offered by sellers were around 27% this time, though several brands were seen offering up to 70% discounts.

The bottom line

This is an important festive season for Flipkart. From being an event dominated by Amazon and Flipkart earlier, it is now one in which both companies are facing increased competition from the likes of Meesho, Reliance’s Ajio and JioMart, as well as beauty-segment leaders such as Nykaa, which also held their respective sale events.

Surprisingly, rival Amazon has stayed away from similar strategies such as major app upgrades or early sales before its “Great Indian Festival”. The arch rivals are known to emulate each other’s strategies during such sale events. But this time, Flipkart’s approach seems to be markedly different.

Amazon did, however, slash its platform fees by 50% for new sellers joining the platform. The company also globally announced it will be hosting a second event for Prime customers in October though reports suggest that it may not hold the sale in India.

But regardless of competition, Redseer suggests that close to 85% of the sales worth INR24,500 crore in the first four days of the sale were still cornered by Amazon and Flipkart.

In the remainder of the event, at the end of which sales are estimated to touch INR41,000 crore, Flipkart and Amazon are expected to garner most of the consumer spend. And that would mean that there is no threat to their duopoly yet.

23.2. India will pip US to become world's second-largest online shopper base

IBEF, Oct. 13, 2022

According to a report by Bain & Company, India's e-commerce business might overtake the US to become the second-largest consumer base in the next one to two years with 190 million online buyers.

The estimated US$ 40 billion Indian e-retail sector is expected to grow to US$ 50 billion in 2022 and continue to develop at a 25–30% annual rate over the following five years, with a continuous rise in user base.

Behind China and the US, India currently boasts the third-largest online consumer base worldwide.

Massive headroom in terms of smartphone penetration (36% in India compared to 63% in China and 76% in the US) and rising wealth (US$ 2,000 per capita in India vs. US$ 12,000 in China and US$ 69,000 in the US) will boost consumption and raise per-shopper spending, in addition to already cheap data pricing.

Future e-retail growth will continue to be driven by customer addition. By 2027, it is predicted that India would have 400–450 million internet shoppers. While just 180–190 million of these consumers made online purchases in 2021, the majority of them are already in the digital funnel—450–500 million of them accessed Social Media.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

24. Air India announces 20 additional flights to UK, US

FORTUNEINDIA.COM, Sep 30, 2022

This is part of the carrier's ongoing endeavour to reclaim its position as a leader on the international aviation map.

Aiming to bolster its international footprint, Air India on Friday announced 20 additional flights every week to Birmingham and London in the UK and San Francisco in the US. This is part of the flag carrier's ongoing endeavour to reclaim its position as a leader on the international aviation map. The additional flights will be introduced in a phased manner from October to December. With five additional flights a week to Birmingham, nine to London and six to San Francisco, Air India will be able to offer over 5,000 additional seats every week to customers and ensure ample choice in terms of connectivity, convenience, and cabin space.

Air India's current schedule of 34 flights every week to the UK will now go up to 48 flights. Birmingham will receive an extra five flights per week, three from Delhi and two additional from Amritsar. London will receive nine additional weekly flights, of which, five are from Mumbai, three from Delhi and one from Ahmedabad. Altogether, seven Indian cities will now have non-stop Air India flights to the UK's capital. Flights from India to the US will increase from 34 to 40 per week.

Air India will now connect Mumbai with San Francisco with a thrice weekly service, and reinstate a three-times-weekly Bengaluru operation. This takes Air India's San Francisco offering from 10 to 16 weekly, with non-stop service from Delhi, Mumbai and Bengaluru. Commenting on the development, Campbell Wilson, CEO & MD, Air India, said: "As Air India reinvents itself under the Vihaan.AI transformation programme, adding frequency and improving connectivity from major Indian cities to more international destinations is a significant focus.

This sizeable frequency increase to the US and the UK, as well as the addition of new city pairs and improved aircraft cabin interiors, comes just 10 months after Air India's acquisition by the Tata Group. It is a clear signal of our intent, and an early step towards a much bigger aspiration." In addition to leasing new aircraft, Air India has been working to restore existing narrow-body and wide-body aircraft to the operating fleet. Prior to the expansion described above, the airline has already enabled frequency increases between Delhi and Vancouver, as well as the addition of numerous domestic services.

25.1. India is a Shining Star Amid Global Economic Uncertainty

ET, 3 Oct. 2022

India will be the ‘shining star’ of the global economy that faces a decade of volatility amid war, inflation and supply chain disruptions, although New Delhi could make implementation of projects easier to attract more overseas investments, Christian Sewing, CEO, Deutsche Bank, told ET.

Large pockets of the tightly knit global economy will likely have to go through a round of pain as central banks drain liquidity and raise interest rates to fight inflation because not doing so could damage economies beyond repair, he said.

“I’ve seen India developing over time – a development this country can be proud of,” Sewing said in an exclusive interaction. “A lot of other countries, in particular from Europe, are looking at India and seeing a real opportunity. There’s always room for further improvement. But if I look around the world, India is a shining star. We want to invest and grow here. It’s a vibrant market.”

Sewing joins top global financial chief executives, such as Jane Fraser of Citigroup and Jamie Dimon of JPMorgan, in appreciating India’s ability to reap the benefits of a shift in globalisation patterns where multinational companies are diversifying supply chains away from China amid rising geopolitical risks.

Although the country’s population, market and infrastructure remain major draw cards, many believe that India has a long journey ahead before it becomes as attractive as its northern neighbour in drawing global manufacturing companies.

Inflation remains the biggest risk, the Deutsche Bank CEO said, adding that central banks have to tackle it on priority even if that means compromising growth prospects for a few quarters or years.

“We need to go through a period of pain, but the quicker we fight inflation, the earlier we will come out of the recession,” said Sewing. “Otherwise, you will get a wage-price spiral, which takes two or three years to overcome and that gets dangerous.”

While the financial markets may be roiled due to a spike in yields and speculation about the viability of institutions, Germany’s biggest lender remains surefooted and robust following years of clean-up after the Global Financial Crisis.

“We are doing very well. In the first half of 2022, we achieved our highest profit since 2011,” said Sewing. “What are the strengths of Deutsche Bank? A clean balance sheet, cost discipline and focus on the business side to compete where we are good at. The pride to work for Deutsche Bank is back. We are in a business where the only assets you have are your clients and your people.”

25.2. Despite global slowdown, India's exports to top last year’s record US$ 420 billion

IBEF, Oct. 12, 2022

After reaching US$ 420 billion last year, India's exports are expected to reach a new record as a result of the One District One Product (ODOP) initiative of Prime Minister Mr. Narendra Modi, which has caused several states to quadruple their exports. Exports of finished or intermediate goods, encouragement from the Production Linked Incentives schemes, and multi-year high commodity and food prices have also contributed to this export growth, said SBI in its most recent Ecowrap report.

State-level exports indicated Gujarat topped the list in FY22 with exports of US$ 126,805 million, up 366% from US$ 27.16 million in FY19. This was followed by Maharashtra’s US$ 73,120 million exports in FY22, jumping 218% from US$ 22,986 million in FY19 and Tamil Nadu’s 192% in exports from US$ 12,033 million in FY19 to US$ 35,169 million in FY22, the report noted. Haryana's exports increased by more than 314% to US$ 15.55 billion.

Several other states tripled their export growth from FY19 levels. In comparison to FY19, Bihar experienced growth of about 400% in FY22.

India's exports are on track to surpass US$ 420 billion in the current fiscal year, with US$ 229 billion in exports so far in FY23's first half.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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Wednesday 19 October 2022

NEWSLETTER, 20-X-2022

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)

NEWSLETTER, 20-X-2022

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

- AGRICULTURE, FISHING & RURAL DEVELOPMENT

- INDUSTRY and MANUFACURE

- SERVICES (Education, Healthcare, IT, R&D, Tourism, etc.)