India offers spectrum of opportunities: FM Nirmala Sitharaman tells CEOs

Source: Financial Express, 14 October 2021

India offers a spectrum of opportunities to investors and business firms, Finance Minister Nirmala Sitharaman told executives of top American companies, as she met and apprised them of various flagship programmes of the Indian government under the Atma Nirbhar Bharat. Sitharaman, 62, is currently in the American capital to attend the annual meetings of the International Monetary Fund and the World Bank.

On the sidelines of these events, she has been meeting a host of top American CEOs with footprints in India and who have shown interest in seizing the investment opportunities in the country.

In her meeting with Amway CEO, Milind Pant, the focus of discussion ranged in the areas of research and development, manufacturing automation, innovation and nutrition segment, the ministry said.

Initiatives like National Monetisation Pipeline recently launched the National Infrastructure Master Plan and a spectrum of opportunities at GIFT City in Gujarat was mentioned by the finance minister during her meeting. The minister underlined the presence and performance of the company in India since 1998 and its keenness to invest in the coming years.

During her meeting with B Marc Allen, Chief Strategy Officer of Boeing, the discussion was broadly in the areas of skilling, research and development, manufacturing automation, innovation and the aerospace sector.

She underlined Boeing’s collaboration in Make In India and Atma Nirbhar Bharat initiatives and the interest of the company to invest in the future.

During her meeting with Stanley Erck, CEO of Novavax, Sitharaman discussed important Indian initiatives towards healthcare reforms like research and development in medical science, health and well-being and the growing opportunities at GIFT City in Gujarat. She underlined the company’s interest to invest in India in the coming years.

In-depth: Is $1 billion cash enough to attract chip makers to set up fab unit in India?

Source: The Economic Times, May 19, 2021

The world is experiencing a massive shortage of semiconductors that are the foundation of our modern-day life. It seems to be a perfect time for India to attract global semiconductor firms to set up business here.

The Indian Government is reportedly working on a plan to offer around $1 billion in cash to every company that sets up a chip manufacturing unit in India. It may sound like an incentive enough, but semiconductor firms are not so easily swayed.

A case in point is the Government’s efforts to attract semiconductor firms in 2013 by offering zero customs duty on importing parts and machinery required for semiconductor facilities. Unfortunately, this didn’t appeal to the chip makers.

In December last year, the Government of India invited Expression of Interest from companies and consortium looking to set up new semiconductor units. Clearly, the country wants to build on the success of the Production-Linked Incentive scheme, which has led to a significant increase in device manufacturing. The chip-making capability will help India in climbing the value chain and also lead to the creation of jobs. The deadline for EOI was April 30, 2021, but there is no news whether the Government has received any interest from chipmakers.

Why is there a global shortage?

The global shortage, resulting from a surge in demand for electronic items after the outbreak of the COVID-19 pandemic last year, is pushing several countries to have their own chip-making facilities to bring down their dependency on the global supply chain. Pandemic led to an increase in worldwide chip sales from $412.2 billion in 2019 to $439 in 2020. Just the semiconductor sales in December 2020 were up by 8% when compared with December 2019. The COVID-19 pandemic also broke the supply chain and led several firms to hoard the raw material required to manufacture chips.

The global semiconductor industry is dominated by the US, South Korea, Japan, and Taiwan. The US leads the market with a 47% share, followed by South Korea at 19%. On the other hand, Japan and the European Union boast of a 10% market share each, and Taiwan and China have 6% and 5%, respectively, as per the recent Semiconductor Industry Association data.

Right from our mobile devices, gaming consoles, cars, televisions to consumer goods are powered by the semiconductor. This, coupled with the fact the global semiconductor supply chain was severely disrupted last year after the outbreak of the COVID-19 pandemic, means that a country must have its own chip-making facilities.

The demand for semiconductors is booming in India. To begin with, India is the second-largest smartphone manufacturer in the world after China, and chips are at the center of these devices. Further, several new-age technologies, like 5G, Internet of Things (IoT), and artificial intelligence (AI), are likely to drive the demand for chips in the years to come. In this context, it makes absolute sense to become Atmanirbhar (self-reliant) in this segment.

India consumed around $21 billion worth of semiconductors in 2019, according to India Electronics and Semiconductor Association (IESA). The consumption was growing at the rate of 15.1%.

What further works in India’s favor is that a lot of chip designing is already happening here. While several firms, including Texas Instruments, NXP Semiconductors, MediaTek, AMD, have been designing chips in India, they don’t manufacture in the country.

Marine box demand boost for Indian makers

An acute shortage of marine containers since October 2020 due to a global equipment imbalance has severely affected Indian trade. However, it has also come as a blessing in disguise for it has led to an awakening — both in the government and in the trade — on the need for India to aggressively restart container manufacturing locally and be less dependent on China, which has a monopoly with over 90 per cent market share globally.

Local container manufacturing is also critical for the success of Centre’s AatmaNirbhar Bharat (self-reliant India) programme.

Container manufacturing is not new to India. As containerisation started to flourish two decades ago, Indian companies manufactured them locally. However, the momentum fizzled out as Chinese companies gained dominance due to cheap labour, availability of abundant raw material and the ability to scale quickly — all of which were largely missing in India.

But action is now being taken — albeit a bit late — to revive local container manufacturing. Earlier this month, Container Corporation of India (Concor) placed orders for 1,000 containers each from Braithwaite & Company Ltd and Public Sector undertaking BHEL.

Concor, which earlier always sourced containers from China, discovered that locally made containers were cheaper by about 25 per cent. Each container costs about ₹2.5 lakh. It is looking to source more from within India.

There are reports that Gujarat government is exploring a plan to make Bhavnagar a hub for container manufacturing.

Bijoy Paulose, Managing Director of the Chennai-based VS&B Containers, said the company annually procures around 4,000 boxes, and all from China. India once had container manufacturers such as Balmer Lawrie (Chennai and Kochi); DCM Hyundai (Chennai); Nathaniel and Transfreight (Mumbai) and HIM Containers (Kolkata). However, these companies all shut down 10-20 years ago. Only DCM is doing local containers in Delhi, he added.

China has a monopoly and can quickly undercut the prices and squeeze the Indian initiative unless the government looks at serious intervention to prevent dumping. There is an annual demand for nearly 4,000 boxes in India. India now has raw materials such as Corten steel needed for the manufacture of these containers. However, 25 years ago even screws were imported, he added.

In the backdrop of the Covid-19 pandemic, local production will benefit the domestic trade during any future disruption, said Sai Krishna, Assistant Vice President, ICRA Ltd, an investment information and credit rating agency. However, matching China on the costs will be a challenge for Indian container manufacturers, he added.

The government can help by providing exemptions for manufacturers on key inputs such as steel or steel scrap. The key to success will be to build scale, else on the cost front the initiative might not take off, he said.

According to Sunil Vaswani, Executive Director, Container Shipping Lines Association (India), the limited access to available containers is driving up the buying price of new containers since manufacturers charge a premium due to the high demand. A relaxation of 40.8 per cent import duty after 18 per cent GST on Corten steel and/or suspension of iron ore exports will help Indian container manufacturers. Favourable policy framework, cost/price competitiveness and quality will boost the business. This would not only help India become self-reliant in the sector but also give the world another option — which would help during the peak demand months of the year — for sourcing of containers, so far largely restricted to China.

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.”

Govt eases curbs on steel for highway construction to reduce cost

Source: Business Standard, Feb 14, 2021

New Delhi: Doing away with restrictive conditions for use of steel in highways construction, the government on Sunday announced that all kinds of steel will be allowed for highways provided these meet the quality parameters.

Earlier, the contract provisions required use of steel produced by primary/integrated steel producers only. The move is aimed at ensuring cost reduction in highways construction using steel.

“The Ministry of Road Transport and Highways has issued orders that all steel whether produced from ore, billets, pellets or melting of scrap – would be allowed to be used for National Highway construction, as long as it meets the standards required for specific grades of steel,” the Ministry said in a statement.

The steel proposed to be used would be tested in NABL-accredited laboratories as a third party check before approval. The move is based on the analysis and discussions with stakeholders and also technical opinion.

In view of the increase in steel prices, which can impact the cost of building national highways, Road Transport & Highways Minister Nitin Gadkari had suggested the need to re-look at all conditions which could be restrictive, without impacting the quality of material used for highway construction.

With this step, the supplier base for steel used in the construction of national highways would increase, leading to more competition and better price discovery by the markets, the statement said. This is also part of the continuous effort by the Minister to reduce costs through use of new technology, reducing restrictions on suppliers and making the procurement system transparent, it added.

India invites global defence, aerospace firms to set up manufacturing units

Source: Business Standard, Feb 03, 2021

Bengaluru: India on Wednesday invited global defence and aerospace companies to set up manufacturing units in the country taking advantage of various initiatives taken by the government in the field.

Prime Minister Narendra Modi said India offers unlimited potential in defence and aerospace.

“Aero India is a wonderful platform for collaborations in these areas. The Government of India has brought futuristic reforms in these sectors, which will add impetus to our quest to become Aatmanirbhar,” Modi wrote on Twitter.

Speaking at the inaugural ceremony of Aero India-2021, the country’s premier defence and aerospace show, at Air Force Station at Yelahanka here, Defence Minister Rajnath Singh invited global companies in the field to set up manufacturing units in the country by taking advantage of various initiatives taken by the government. Read the rest of this entry »

Govt eases 5G path by reducing notice period to 6 months for rolling out new tech by telcos

Source: LiveMint.com, Jan 28, 2021

New Delhi: The government on Thursday eased the path for 5G rollout in the country by reducing to six months the notice period for offering any new technology using the spectrum being put up for auction in March.

Earlier, the Department of Telecom (DoT) has asked telecom operators to give one year notice before starting any technology using spectrum across the seven frequency bands that will be offered in auction on March 1.

“In case of switching over to different technology while rolling out the networks for compliance of roll out obligations, information regarding the new technology should be given at least six months before any new technology base station is offered for testing,” the amendment in the spectrum auction clause released by the DoT said.

The government has announced plan to auction 2,251.25 Megahertz (MHz) of spectrum worth ₹3.92 lakh crore in seven frequency bands — 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz. Bharti Airtel has demonstrated 5G services in the 1800 Mhz band. Reliance Jio has claimed it is ready for rollout of the next generation technology provided it gets spectrum for the same.

Tamil Nadu signs 14 MoUs worth Rs 10,000 cr, to create 7,000 new jobs

Source: Business Standard, Oct 12, 2020

Chennai: In a move that would help create 7,000 additional direct jobs in the state, the Tamil Nadu government on Monday signed 14 memorandums of understanding (MoUs), for investments worth over Rs 10,000 crore, with companies including JSW Renew, Britannia, Apollo Tyres, Li-Energy for EV battery packs, Britannia and Hyundai Wia.

The largest of these investments has been committed by JSW Renew Energy Ltd, for Rs 6,300 crore to set up 810 Mw of hybrid renewable project in Tuticorin, Tenkasi, Tirunelveli and Tiruppur, and 50 Mw of captive wind energy project in Rameswaram district. The next biggest is Spain-based Mantra Data Center’s MoU for setting up of a data centre with an investment of Rs 750 crore.

The state also signed an MoU with US-based TPI Composites for a Rs 300-crore expansion of wind blade manufacturing.

In the auto space, Apollo Tyres signed an MoU to invest Rs 505 crore in an expansion project at its Orgadam facility. Li-Energy, meanwhile, will invest Rs 300 crore for EV battery packs, and South Korea-based LS Automotive PVt Ltd will put in Rs 250 crore to manufacture auto switches. Hyundai Wia will invest Rs 109 crore in a brownfield expansion for auto components. And Green Tech Motors & Services will invest Rs 90 crore for battery and BMS.

While FMCG major Britannia has signed an MoU to invest Rs 250 crore in an expansion project, real estate player Greenbase Industrial Parks will invest Rs 750 crore in developing an industrial logistics park. The rest of the MoUs are from other sectors.

Tamil Nadu is ahead of other Indian states in post-Covid investments. According to Projecx data, the state attracted Rs 23,331.85 crore across 132 new projects between July and September. According to Guidance Tamil Nadu, a nodal agency to promote investments in the state, Rs 15,128 crore worth of new investments across various sectors were signed in May, deals for another Rs 15,536 crore worth of investments were signed in July.

Big booster: Govt panel clears $100-billion mobile export proposals from global manufacturers

Source: The Economic Times, Sept 07, 2020

New Delhi: Applications by iPhone contract makers FoxconnPegatron and Wistron as well as Samsung, Karbonn, Lava and Dixon to export mobile phones worth around $100 billion from India have been cleared by the empowered group, said people with knowledge of the matter.

“The empowered committee has approved all applications estimated to export around $100 billion (Rs 7.3 lakh crore) worth mobile phones under the production linked incentive scheme (PLI) and all the applications will be placed before the cabinet probably this week,” a senior government official told ET.

Members of the empowered committee include the Niti Aayog CEO along with the secretaries of economic affairs, expenditure, revenue, the Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT) and Directorate General of Foreign Trade (DGFT). Five of the applicants are overseas ones, seven are Indian and another six are in the components manufacturing scheme, officials said.

Apple’s contract manufacturers and Samsung have submitted production estimates of phones worth $50 billion each in the next five years, according to the applications, said people with knowledge of the matter. Exports will be slightly lower in each case.

Scheme was Notified in April
“The extraordinary response to the PLI shows enormous trust of the global community in India’s manufacturing capability and leadership of Prime Minister Narendra Modi,” Communications & IT minister Ravi Shankar Prasad told ET.
The PLI scheme, which aims to make India a manufacturing hub for smartphones, was notified in April. Apple’s contract manufacturers started producing its latest handset models, the iPhone 11 and iPhone SE, shortly after that in India. The scheme is aimed at attracting manufacturers looking to move out of China amid Sino-US trade tensions, and even looks to draw companies from manufacturing hubs such as Vietnam. While Foxconn and Wistron already have plants running in India, Pegatron — Apple’s second-largest contract manufacturer — is looking to set up its factory and is talking to states such as Uttar Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh.

Meanwhile, Samsung, which now exports phones worth about $2.5 billion from India, is all set to ramp up its production to handsets worth $50 billion in the next five years. Of this, $40 billion will comprise devices with a factory price of more than $200.

“Samsung exporting $2.5 billion out of India — of this, 97% was in the below $200 segment. By putting this floor price of $200 for eligibility in the PLI scheme, we have incentivised them to make high-value phones in the country and now they will be vacating this space of less than Rs 15,000 factory price for Indian players to occupy,” said the first official cited above. “This is an important stage as it will ensure that Indian players are able to climb up the learning curve and start making world-class smartphones to compete globally.”

The five global applicants are Samsung, two units of Foxconn, Wistron and Pegatron. The domestic ones are Lava, Dixon, Micromax, Padget Electronics, Sojo, Karbonn and Optiemus. According to government data, 22 companies had applied for the Rs 41,000-crore PLI scheme.

Govt plans mega sops to attract local, global cos to coal mining

Source: The Economic Times, May 18, 2020

New Delhi: The government is likely to offer major rebates on revenue share to winners of commercial coal block auctions in order to attract investments from local and global miners. This follows the announcement on Saturday by finance minister Nirmala Sitharaman on liberalising commercial coal mining as part of the Rs 20-lakh crore Atmanirbhar Bharat stimulus. Companies that start early production from the blocks will be offered 50% rebate on revenue share payable to the government. The rebate will start from the day of production till the scheduled commencement date of mining agreed at the time of awarding of the block, sources said.

Similarly, a rebate of 50% of revenue share is proposed to be given on coal produced in excess of the scheduled target in a financial year. A further rebate of 20% is proposed on coal used for gasification or liquefaction, they said. “The rebate rates have been increased substantially considering the need for investments in the country as being sought under the Atmanirbhar Bharat stimulus,” aperson in know of the development told ETon condition of anonymity. Earlier the government’s revenue share was proposed to be reduced by 10% if the winning bidder starts the mine a year earlier than the agreed timeline and by 20% if production starts two years ahead of plan. The Union Cabinet this week is likely to consider the revenue-sharing model of auction for coal and lignite mines. The coal ministry expects to start auction of about 50 coal blocks, including some large mines, within 10 days of Cabinet approval.

Given the easy entry and exit norms, the government expects participation from Indian companies such as Hindalco, Jindal Steel & Power, JSW Energy, Adani Group and Vedanta, and global miners like Peabody, BHP Billiton and Rio Tinto. The government also proposes to increase the tenure of Coal India contracts for raw coking coal to up to 30 years as an import substitution measure.
The revenue-sharing model is based on recommendations of an expert committee headed by former chief vigilance commissioner Pratyush Sinha that was formed after the fourth and fifth rounds of auctions received atepid response from the industry. Ramanuj Kumar, partner, Cyril Amarchand Mangaldas said doing away with eligibilty criteria and introducing revenue share is expected to attract more players in coal mining. “However, getting investors for partially explored blocks may prove challenging,” he said.