India’s recession exit gains momentum on services, manufacturing

Source:, Feb 25, 2021

India’s economy looked ready to leave a sharp downturn behind in the new year, as business and consumer activity showed more signs of gathering momentum in January.

Two of the eight high-frequency indicators tracked by Bloomberg News improved last month, while five held steady and one deteriorated. That, for now, kept the needle on a dial measuring overall economic activity unchanged at 5 — a number arrived at by using the three-month weighted average to smooth out volatility in the single-month scores.

The January reading points to a solid start for the new quarter, building on nascent gains seen in the October-December period. Official data on Friday is likely to show that India exited a recession in the final three months of 2020, with economists in a Bloomberg survey forecasting a gross domestic product expansion of 0.5% from a year ago.

Business Activity

Activity in India’s dominant services sector expanded for a fourth straight month in January, with the pace of new work and business activity both quickening from a month ago. The Markit India Services Purchasing Managers’ Index came in at 52.8 from 52.3 a month earlier. A reading above 50 indicates expansion.

Manufacturing activity also continued to strengthen, with companies ramping up production at the quickest pace in three months, thanks to higher sales and new export orders.

Worryingly though, both input and output price pressures gathered steam and which will likely prevent headline inflation from easing sharply in coming months.


Exports regained more ground last month, backed by healthy performance of sectors such as engineering goods, gems and jewelry, iron ore and textiles.

Consumer Activity

Passenger vehicle sales, a key indicator of demand, rose nearly 11.4% in January from a year ago, with two-wheelers and utility vehicles witnessing robust demand. Surveys from the Reserve Bank of India this month showed that consumers perceived the current economic situation as being better than it was in November when a similar survey was conducted, and they expect improvement in their conditions in the coming year.

Demand for loans picked up a tad in January. Central bank data showed credit grew at around 6.5% from a year earlier. Liquidity conditions were little changed from December when advance tax payments led to a tighter cash position.

Industrial Activity

Industrial production rose 1% in December from a year earlier. Production of capital goods rose 0.6%, while infrastructure goods and manufacturing sector expanded in an encouraging end to the October-to-December quarter. Output at infrastructure industries, which makes up 40% of the industrial production index, contracted 1.3% in December from a year ago, a smaller drop than the 2.6% seen in November. Both data are published with a one-month lag.

DAC approves ₹13,700 crore for various weapons, equipment

Source: The Hindu Business Line, Feb 23, 2021

New Delhi: The Defence Acquisition Council (DAC), under the chairmanship of Raksha Mantri Rajnath Singh, on Tuesday approved capital acquisition proposals totalling ₹13,700 crore for various weapons, platforms, equipment and systems for the Indian Army, Navy and the Air Force.

“Three Acceptance of Necessities (AoNs) for an overall cost of ₹13,700 crore were accorded. All these AoNs are in the highest priority category of Defence Acquisition viz ‘Buy ((Indian-IDDM (Indigenously Designed, Developed and Manufactured)),” the Defence Ministry said in a statement.

All these acquisition proposals will be indigenously designed, developed and manufactured.

These will include, inter alia, platforms and systems designed and developed by the Defence Research and Development Organisation (DRDO), it said.

To meet the Atmanirbhar Bharat goals of the government on time-bound defence procurement process and faster decision-making, and to systematically work towards reducing the time taken for capital acquisition, the DAC also approved that all capital acquisition contracts (delegated and non-delegated) other than D&D cases shall be concluded in two years. “The Ministry, in consultation with the services and all stakeholders, will come up with a detailed plan of action for achieving the same,” it added.

As demand for India’s Covid-19 vaccines rise, export of general vaccines slides

Source: The Hindu Business Line, Feb 24, 2021

Hyderabad: Even as overseas demand for Covid-19 vaccines from India has been picking up, the export of other vaccines in general has declined.

As per data of Pharmaceutical Export Promotion Council’s (Pharmexcil) data, there was a dip in vaccine exports in the current financial year up to January, 2021.

Compared with $695 million of vaccine exports during April-January in the last financial year, it decreased to $648 million in the same period this financial year.

“At the same time, over all pharma exports are showing double-digit growth. We expect vaccine exports to pick up soon as Covid-19 threat fades away,” R Uday Bhaskar, Director General, Pharmexcil told Business Line.

Covid vaccines

The demand for India-made Covid-19 vaccines, however, has been steadily increasing, Bhaskar said.

As per official data, over 25 countries had already received Indian vaccines and about 60 had already expressed interest and are in the ‘waiting list’.

India’s mass vaccination programme is currently on with two vaccines, Covishield of Serum Institute and Covaxin of Bharat Biotech which have attracted global attention.

According to Krishna Ella, Chairman and Managing Director, Bharat Biotech,the company is in the process of filing regulatory documentation in more than 40 countries.

According to a senior executive of the Hyderabad based vaccine-manufacturer, the general dip in the vaccine exports is a `one-time’ phenomena mainly due to `special’ circumstances created by Covid-19 pandemic for the last one year.

“There are gaps and discontinuities in general immunisation programmes in many parts of the world in the last one year on account of Covid and general restrictions. There has been drop in procurement from some NGOs too,” he said. Many experts at Asia’s biotech platform, which concluded here on Tuesday, stressed the need to continue general immunisation programmes along with measures to tackle Covid-19 to ensure the well being of people across the world.

India’s foodgrain production to rise 2% in 2020-21: Government

Source: Business Standard, Feb 24, 2021

New Delhi: India’s foodgrain production is estimated to rise 2 per cent in 2020-21 crop year to an all-time high of 303.34 million tonnes on better output of rice, wheat, pulses and coarse cereals amid good monsoon rains last year, the agriculture ministry said.

Crop year runs from July-June.

In the 2019-20 crop year, the country’s foograin output (comprising wheat, rice, pulses and coarse cereals) stood at a record 297.5 million tonnes (MT).

Releasing the second advance estimates for 2020-21 crop year, the agriculture ministry said foodgrain production is projected at a record 303.34 MT.

Agriculture Minister Narendra Singh Tomar attributed the rise in production to efforts of the farmers and scientists as well initiatives of the central government.

As per the data, rice production is pegged at record 120.32 MT as against 118.87 MT in the previous year.

Wheat production is estimated to rise to a record 109.24 MT in 2020-21 from 107.86 MT in the previous year, while output of coarse cereals is likely to increase to 49.36 MT from 47.75 MT.

Pulses output is seen at 24.42 MT, up from 23.03 MT in 2019-20 crop year.

In the non-foodgrain category, the production of oilseeds is estimated at 37.31 MT in 2020-21 as against 33.22 MT in the previous year.

Sugarcane production is pegged at 397.66 MT from 370.50 MT in the previous year, while cotton output is expected to be higher at 36.54 million bales (170 kg each) from 36.07 million bales in the previous year.

Centre announces Rs 15,000 crore PLI for pharma, IT hardware sectors

Source: Business Standard, Feb 24, 2021

Mumbai/New Delhi: The Cabinet on Wednesday approved the Production Linked Incentive (PLI) Scheme worth Rs 15,000 for high value products in pharmaceuticals and about Rs 7,350 crore over four years for information technology hardware products.

Pharma sector

The scheme for the pharma sector is expected to promote the production of high value products in the country and increase the value addition in exports. “Total incremental sales of Rs 2,94,000 crore (Rs 2.94 trillion) and total incremental exports of Rs 1,96,000 crore are estimated during six years from 2022-23 to 2027-28,” the government said. The scheme is expected to generate employment for both skilled and unskilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.

The duration of the scheme for pharmaceuticals will be from FY21 to FY29.

It has sanctioned a 10 percent rate of incentive (of the incremental sales value) for two categories of pharmaceutical products (including biopharmaceuticals, complex generics, patented drugs nearing expiry, bulk drugs, intermediates among others) for the first four years, and 8 percent for the fifth year and 6 percent for the sixth year of production.

Similarly, a 5 percent incentive has been announced for repurposed drugs, cancer drugs, psychotropic and cardiovascular drugs etc, which goes down to 4 percent in the fifth year and 3 percent in the sixth year of production under the scheme.

For the scheme, the government has decided to divide the pharma firms into three groups based on their turnovers – Group A with global turnover of more than or equal to Rs 5,000 crore in FY20, Group B comprising companies with turnover between Rs 500 crore and Rs 5,000 crore and Group C with companies having a turnover of less than Rs 500 crore. A sub-category for micro-small and medium enterprises (MSMEs) will also be made under Group C.

IT Hardware sector

“Domestic value addition for IT hardware is expected to rise to 20-25 per cent by 2025 from the current 5-10 per cent due to the impetus provided by the Scheme,” the government said.

For the IT hardware sector, the scheme is expected to lead to total production of up to Rs 3,26,000 crore by five global and 10 national companies. The government also expects that out of the total production in the next four years, more than 75 per cent are expected to be exports of the order of Rs 2.45 trillion. The scheme will bring an additional investment in electronics manufacturing to the tune of Rs 2,700 crore, the Electronics and IT minister Ravi Shankar Prasad said on Wednesday, while introducing the scheme.

This is part of a previously planned expansion of PLI Scheme’s success in mobile devices and electronic components, medical devices and active pharmaceutical ingredients. The Cabinet had, in November, earmarked Rs 1.46 trillion for the incentives to be expanded into ten industries- automobiles and components, telecom equipment, laptops and PCs, air conditioners, electric batteries and so on.

Industry response

Pharma majors like Lupin, Cipla, Dr Reddy’s Laboratories (DRL) have already shown interest to participate in the PLI scheme. Lupin, for example, has already applied under the bulk drug API scheme, and is looking to participate in the second round as well. Nilesh Gupta, managing director, Lupin told Business Standard recently, “The existing PLI scheme and the second version of the PLI scheme are powerful. We are looking at opportunities in the second round. We are looking at some of the products that fits in with our business and our overall plans. We have put in applications in the first PLI scheme too, but we can participate more meaningfully in the second round.” India’s third-largest pharma company Cipla has also indicated that it will be interested in participating in the second phase of the PLI scheme.

Kunal Chaudhary, Tax Partner, EY India said the expansion of the PLI scheme for IT Hardware will not only enable India to become an electronics manufacturing hub for the world, but also promises a substantial increase in value addition which will further the components ecosystems.

Spurred by the incentives provided under PLI last year, global brands such as Apple Inc, through its vendors, and Samsung lined up to participate in the scheme, which offered incentives of 4 to 6 per cent for five years on phones priced over $200, provided companies commit to incremental investment and production every year. It considers 2020 as the base year.

The government hopes to find similar success in other areas by providing similar incentives for boosting manufacturing of mobile devices.

Last year, the government had announced a Rs 6,940-crore PLI scheme to boost local manufacturing of bulk drugs (raw materials to make medicines), as India imports almost 70 per cent of its requirement of bulk drugs. Then in November, the Cabinet gave a nod to a Rs 15,000-crore scheme for pharmaceutical products and now the finer print of the scheme is out.

The idea is two-pronged — one reduces imports of high-value products like patented drugs, cell-based or gene therapy products, etc while the other boosts local manufacturing to a scale that India becomes a net exporter of these products. The government last week launched the PLI scheme for telecom and networking products, with an outlay of Rs 12,195 crore over five years.

Essar Power to set up 90 MW solar plant in Madhya Pradesh for Rs 300 crore

Source: The Economic Times, Feb 24, 2021

Ruia-family run Essar Power Ltd will foray into renewable energy, setting up a 90 MW solar plant in Madhya Pradesh at an investment of Rs 300 crore, CEO Kush Singh said Wednesday. The entry into the renewable segment is part of a strategic decision to rebalance the power portfolio.

“The board of Essar Power Ltd, an investee company of Essar Global Fund (EGFL), has approved an investment of Rs 300 crore in a 90 megawatt (MW) PV Solar power plant in Madhya Pradesh, marking the fund’s foray into renewable energy,” he said.

The renewable energy venture comes close on the heels of EGFL investing in hydrogen power in the UK and coal gas in India.

The fund has overseen the completion of the deleveraging program of investee companies in the next two quarters.

It intends to repay the balance debt Rs 10,000 crore which is largely in the power portfolio.

“The strategic plan to rebalance our energy portfolio is in line with our move to an asset-light structure. In a series of calibrated steps, this shift will allow the company to bring down its debt from the current level of Rs 10,000 crore to Rs 3,000 crore through restructuring and monetisation of existing assets and further investments in this green portfolio,” Singh said.
Riding on success in unconventional energy generation such as coal-bed methane (CBM) and the hydrogen generation programme at its Stanlow refinery in the UK, Essar’s foray into renewable energy will also be a precursor to an exit from coal.

“Along with the ongoing hydrogen generation programme in our Stanlow refinery, UK, we have kicked off our transition to a new phase of investment-led growth, with the energy portfolio taking the lead,” said Singh.

“We have taken this step in line with the major thrust given by the Government of India in promoting and achieving the ambitious target of an installed capacity of 450 gigawatts of renewable energy by 2030.”

The proposed power plant is a solar photovoltaic project to be set up in Bhander, in the Datia district of Madhya Pradesh across 105 hectares of land and will be executed in two parts – 33.7 MW and 56.17 MW.

Electricity generated from this plant will be evacuated at 132 kV level and is proposed to be connected to the Bhander substation, which is located at approximately 5 km and will be supplied to industrial consumers within Madhya Pradesh.

The project is expected to be completed by June 2022.

Essar Power has a current operating capacity is around 3,185 MW.

EGFL has invested about Rs 32,000 crore in the power portfolio including 12000 crore of equity.

It has also invested in the transmission business by constructing a 465 km interstate transmission system, which spans three states.

The other two businesses of the fund’s energy portfolio are also making impressive progress both in India and the UK. Essar Oil Exploration and Production Ltd (EOGEPL) is the country’s largest unconventional energy player.

India’s electronic makers gear up for a blockbuster launch season

Source:, Feb 23, 2021

India’s top smartphone and consumer electronics makers said they are gearing the highest number of new product launches this year in four years as supply of components have improved and are almost back to pre-Covid levels.

LG, Samsung, Xiaomi, Panasonic, Realme, Vivo and Godrej Appliances are all planning one of the highest numbers of new model launches this year, company and industry executives said.

New launches took a backseat last year due to poor component supplies owing to global surge in demand for electronics that neither the companies nor component makers could forecast.

At The Economic Times CEO Breakfast presented by Accenture, hear a group of CEOs on 25th Feb brainstorm on how retail organisations are preparing their comeback strategy following the pandemic.

Containers from China were getting held up with Indian custom authorities in ports and airports for scrutiny after border clashes and a fiscal quarter was lost due to lockdown and overall innovation pipeline slowing down due to the pandemic.

The shortage was particularly severe for semiconductors used in smartphones, laptops and televisions, which too has started to ease now with component and chip makers expanding capacities, taking into account the increased demand in 2020, the executives said.

However, television panel shortages still plague entry-level sizes.

Godrej Appliances business head, Kamal Nandi, said component issues are clearly no more a challenge with vendors increasing production due to a fantastic last quarter. “As a result, new launches will get a massive boost this year,” he said.

Smartphone maker Realme India CEO Madhav Sheth said the pent-up demand of 1.5 to 1.7 times the usual post-lockdown has normalised and demand is now back to pre-Covid level. “The component supply situation for smartphones has also become normal,” he said.

India’s largest appliance maker, LG Electronics India’s vice president, Vijay Babu, said it will roll out the highest number of innovations since the last 4-5 years in categories like AC, washing machine and refrigerator. The new models are launched on the health and hygiene platform due to the pandemic.

Realme will be launching multiple 5G smartphones across price points, personal care products like trimmers, wearables and TWS audio products. Vivo too has lined up the highest number of new smartphone launches as has Xiaomi, which has plans to enter new categories like appliances, industry executives said.

Godrej will launch three times the number of new products in 2021 at around 150 compared to last year and almost 10% more than in 2019.

Llyod India CEO Shashi Arora said there is still a shortage of television panels with prices going through the roof, especially for 22-32-inch models. “This is likely to continue till March at least,” he said.

The consumer electronics industry recorded decade high sales of home appliances in July-December and one of the highest ever in the Diwali quarter as per data by market researcher GfK India. For smartphones, the value growth was the highest since 2011 in the same period, the researcher said.

Sales of air-conditioners grew 25%, refrigerators 15%, microwave ovens 39% and washing machines 24% by the number of units sold between July to December, while smartphones grew by 11% in value, said GfK, which tracks actual sales.

Manish Sharma, president & CEO, Panasonic India said in the backdrop of the PLI schemes, we are seeing a lot of activities in MSME space where companies are looking to set up component manufacturing ensuring maximum backward integration to drive the vision of self-reliant India.

“At Panasonic too, we are taking significant steps towards this whether by setting up backward integration or helping MSME’s with technical know-how,” said Sharma.

Vivo India director (brand strategy) Nipun Marya said after a challenging year, the company is hopeful that the market will rebound in 2021.

“We are already seeing a surge in demand amongst the consumers and witnessing positive growth in the industry and economy…For our product strategy, we shall continue to provide smartphones across price points that are best-in-segment when it comes to design and camera features. We shall remain invested in India for the long-run, and continue to sell devices that are made in India,” said Marya.

India adds 3.2 GW solar capacity in 2020; lowest in 5 years: Report

Source:, Feb 23, 2021

NEW DELHI: India added 3,239 megawatt (MW) solar capacity in 2020, down 56 per cent from the previous year, according to a report.  The adding of 3,239 MW of solar capacity was the lowest addition in five-years-time, Mercom India Research said in its report on Tuesday.     

“India added 3.2 GW or 3,239 MW of solar capacity in 2020, a 56 per cent decline year-over-year (YoY) compared to 7,346 MW installed in 2019,” it said adding the country’s total solar installed capacity was at 39 GW gigawatt (GW) as of December 2020.   

The large-scale solar projects accounted for 78 per cent of installations with 2,520 MW, registering a 60 per cent year-on-year (y-o-y) decline. The addition of the remaining 719 MW rooftop installations was also down 22 per cent compared to the installation in 2019.      

Andhra Pradesh, Rajasthan, and Gujarat were the top three states for large-scale solar capacity additions, representing around 51 per cent of 2020 installations.      

“India’s solar installations in 2020 were the lowest in five years. While other top solar markets in the world have experienced positive growth, India, which had one of the most stringent lockdowns in response to the pandemic, took a while to get back up and running.

However, we expect the industry to experience significant positive growth in 2021,” said Raj Prabhu, Chief Executive Officer of Mercom Capital Group.     

According to the report, besides COVID-19, another significant bottleneck in the market has been the difficulty facing government agencies to get distribution companies (DISCOMs) to sign power sale agreements (PSA). This has left about 17-18 GW of projects without a PSA. Other short-term challenges included the rise in module prices, increased shipping and freight charges in the range of 500 per cent-800 per cent, and a surge in raw material costs.       

“As a result, the average large-scale solar project costs increased slightly by 2 per cent quarter-over-quarter (q-o-q) in Q4 (October-November) 2020. However, project costs were 2.5 per cent lower compared to the same quarter in 2019,” according to the report.    

On its outlook for 2021, the report said it expects the industry to experience positive growth in 2021. Mercom India Research is forecasting over 10 GW of solar installations in 2021.      The rooftop solar market is experiencing a turnaround, with installations improving significantly over the second half of the year. Fourth-quarter was the strongest for rooftop installations, and the report predicts momentum to continue into Q1 (January-March) 2021.

MPEDA, NCDC join hands to boost marine exports

Source: Financial Express, Feb 24, 2021

In a bid to improve exports of marine products, the state-run Marine Products Export Development Authority (MPEDA) has signed an MoU with the National Cooperative Development Corporation (NCDC). Under this arrangement, MPEDA-related entities and NCDC will jointly formulate programmes to boost infrastructure created for primary production and post-harvest management of marine products for exports.

MPEDA and its societies will share a list of all clusters in various states with NCDC, which may help them achieve scale and aggregation. It would also facilitate exports by the cooperatives assisted or identified by NCDC. The MoU comes at a time when marine exports have come under pressure in the aftermath of the Covid-19 outbreak. Marine exports dropped almost 17% on year between April and December to $4.5 billion, at a slightly faster pace than the fall in overall merchandise exports in the wake of the pandemic, showed the commerce ministry data.

Having recorded an impressive jump of 25% in FY18, marine exports started declining over the past two years in both FY19 and FY20, before the pandemic wrought havoc. MPEDA chairman KS Srinivas said: “We have identified ample scope for working jointly in the interest of export promotion of marine products for bringing better value to the stakeholders through a variety of activities, including export focus, in line with the policies of the government.”

India’s smartphone market set to cross Rs 2-trillion mark in 2021

Source: Business Standard, Feb 23, 2021

New Delhi: Buoyed by renewed surge in the demand for smartphones and rising device costs may push the local smartphone market beyond the record Rs 2-trillion mark in 2021.

While disruptions from the Covid-19 pandemic led to the market size shrinking for the first time last year, in 2021, the market is expected to touch unprecedented levels — both in terms of volume and value.

In 2020, the local market recorded a fall in the number of units shipped, as shortage in supply of components and the lockdown brought the market to its knees during the first half of the year.

“Stay-at-home mandates, remote learning, travel restrictions, and manufacturing shutdowns led to a sluggish first half (shipments declined 26 per cent year-on-year, or YoY),” observed the International Data Corporation (IDC).

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets.

Total shipments recorded its first fall — declining 2 per cent to 150 million units, from 153 million in 2019.

However, it is the fall in the average selling price (ASP) of handsets that impacted the market size more than the fall in volume numbers.

According to estimates, the ASP for smartphones last year came down 5 per cent YoY to Rs 11,200. Since their introduction in the market in 2010, ASP for smartphones before 2020 have never recorded a fall in the Indian market.

Resultantly, in 2020, the total market size shrank to Rs 1.68 trillion, from Rs 1.77 trillion in 2019.

According to experts, a poor economic outlook played a key role in this decline.

“Mass-market consumers were less inclined towards upgrading their handsets. Most of the volumes were driven by purchases that were absolutely imperative,” said Navkendar Singh, research director at IDC.

Salary cuts, job losses, and subdued consumer sentiment — a large section of consumers opted for cheaper options that were just enough to serve the purpose. It was a major paradigm shift from the earlier trend where mass-market consumers were driving ASP up, even as they were willing to spend more on smartphones as a lifestyle barometer.

In 2021, however, with a significant jump in ASP and higher volumes, the market is estimated to touch Rs 2 trillion. From its previous high of Rs 11,600 in 2019, the ASP for smartphones is now estimated to breach Rs 12,300.

A clutch of factors is set to push the market up. Since the economy snapped out of the lockdown mode, sales have grown by leaps and bounds. According to analysts, prevailing travel restrictions have rendered an urgent need for devices supporting activities such as entertainment, work from home, and remote learning, resulting in a demand for more devices per household.

While in the September quarter, the shipments grew 17 per cent YoY, in December, it recorded a whopping 21 per cent rise — setting new records for both quarters.

IDC now estimates that in 2021, the smartphone market will grow in high single digits, taking the total shipment beyond the 160-million mark.

Unlike last year, when need-based cheaper options had led the market, this time around it will be “driven majorly by upgrading consumers”, said IDC. This, coupled with the rise in 5G devices across the price range, is expected to boost the average price of smartphones.

Despite uncertainty around the launch of 5G services, the shipment of 5G-enabled smartphones crossed 3 million in 2020.

According to Madhav Sheth, vice-president, Realme and chief executive officer, Realme India & Europe, “The handset market will witness a strong supply ecosystem for 5G-ready smartphones in 2021.” The firm is planning to launch 5G devices in the affordable segment.

Nipun Marya, director-brand strategy, Vivo India, said the company will launch 5G devices “across categories at various price points”.

In recent quarters, Chinese device manufacturers have driven the 5G market by rolling out aggressively-priced devices. Flagship launches by market leader Xiaomi at under Rs 20,000 have already brought the war on the doorstep of the affordable segment. “As more 5G devices enter 2021, the ASP for smartphones is expected to rise. We expect vendors to launch 5G devices at multiple price points, backed by aggressive promotions,” said Upasana Joshi, associate research manager, IDC India.