The fragrance and flavour industry of the country is likely to grow around 12 per cent each year and touch over USD 5.2 billion in three to four years , an apex body of the industry said. This growth will be driven by factors like rising disposable incomes and changing consumer preferences, Fragrances and Flavours Association of India (FAFAI) president, Risabh Kothari, said. “The fragrance and flavour industry is growing very fast in the country. The present size of the industry is USD 3.7 billion in the country”, Kothari said.
The major user industries of this segment are food and beverages, personal care, homecare, pharmaceuticals and cosmetics, and these include major MNCs, domestic companies and small businesses, the FAFAI president said. Given the growing demand for natural and organic products, consumers are increasingly opting for them which present an opportunity for the fragrances and flavours industry, he stated. Coupled with this, consumers are willing to spend more on premium products with rising disposable incomes, Kothari said.
According to him, the personal care industry is growing at a rapid pace which also presents a good opportunity for this segment. However, Kothari said the biggest threat which this industry is facing is that of cheap imports dumped by overseas players owing to inverted duty structure.
A major ingredient for the industry is natural essential oils which attract higher import duty compared to fragrances, the end product. “We have sent several representations to the government to correct this anomaly by increasing duty on finished fragrance compounds which will protect the domestic industry”, he said. The present duty structure is detrimental to the domestic industry, Kothari claimed.
The first semiconductor fab will be announced in a few weeks, and India is poised for a vibrant chip industry in the next 3-4 years on the back of enabling policies and the government’s firm commitment towards growing the manufacturing ecosystem, Union Minister Ashwini Vaishnaw said on Tuesday.
Today, 99 per cent of mobile phones used here are made in India. This is in stark contrast to the situation 10 years ago when out of 100 phones, as much as 99 per cent were imported, the Minister for Electronics and IT said while a session at CII Partnership Summit 2023. “And now the ecosystem is also shifting to the country. When it comes to mobile phone manufacturing India is number two in manufacturing, and number three in exports,” the minister said.
This year, the mobile phone exports will touch USD 9.5 -10 billion, he added. To spur the supply side, major initiatives have been undertaken by the Centre, including a sharp focus on promoting the ecosystem and ensuring a clearly laid out policy framework that is stable and consistent, according to him.
The government is focused on creating and fostering the semiconductor industry and has been actively engaging with all stakeholders. The government is “committed to do what’s required to succeed”, the minister said.”…that is creating credibility, leading us to an inflection point where the first fab should be declared in coming few weeks and that’s just beginning,” Vaishnaw promised audiences.
Given the progress on all fronts in India’s semiconductor blueprint, “we should see a vibrant semiconductor industry in the coming 3-4 years,” he noted. India’s strategy of pursuing a combination of focused consumption and public investment path has led to sustainable growth and moderate inflation, the minister said.
Leasing activity in office space remained robust in January. However, a seasonality blip due to the global holiday season falling during the month led to some decline compared with December 2022, a report by JLL India said on Monday. The report further said the space take-up may remain sluggish in the upcoming months with headwinds faced in the technology sector.
The total monthly leasing activity for January stood at 3.2 million square feet with the typical January lull after the 2022 year-end leasing momentum causing a 56.4% month-on-month decline. However, it was still higher by 93.1% year-on-year. Fresh leasing, which included expansion and relocation-driven space take-up, accounted for 87% of all recorded transactions during the month. January is typically a low period as the holiday season for global corporates and future business planning take precedence.
Mostly deals that slipped due to certain reasons get concluded during this month, according to JLL India. In January, the three cities that saw the maximum leasing activity were Delhi-NCR, Chennai and Mumbai, accounting for 77% of such activity. In terms of number of transactions, Mumbai remained the most active market, followed by Delhi-NCR.
“As future business projections are made under the shadow of global headwinds and the tech sector, facing a period of course correction is likely to be slow in space take-up, we expect that rising office occupancies and growth in other occupier segments should keep the momentum steady,” said Samantak Das, chief economist and head of research and REIS, India, JLL. However, over the next two to three months, while the overall sluggishness is likely, there is an expectation of sustained trends of demand movement, he added.
The IT sector is currently facing slower employment and sluggish corporate growth expectations, and as a result, space take-up may be more benign as part of a course correction, the report by JLL India said. “Given the evolving global economic scenario, other occupier categories are anticipated to maintain steady state, although with a minor downward bias in the short-term.
The IT/ITeS category still remained the largest driver of overall market activity in January, accounting for 28% of total market activity, thanks to one large transaction and a few smaller ones. Whilst the actual numbers were identical m-o-m, BFSI and manufacturing made considerable advances in terms of share,” it added.
Schneider Electric, a European energy management company, is betting big on India with plans to invest `1,400 crore in the next two years to build five new factories. Currently, it has 30 factories in India, the company’s third-largest market and the largest talent hub with 34,500 employees.
“India is integral to Schneider Electric’s progressive strategy, and the role of this hub will only grow manifold in the coming years,” said Jean-Pascal Tricoire, chairman and CEO, Schneider Electric.
The increased focus by companies on environmental, social and governance (ESG) and decarbonisation initiatives in the last two-three years has accelerated the demand for energy management solutions.
“Since last two years, people are really looking at the level of CO2 emissions and 80% of the CO2 emissions comes from energy. We help small, medium, and large companies to go through their entire decarbonisation journey by helping them on the strategic front as well as digital with a lot of software and data,” Olivier Blum, executive vice president, Energy Management Business, Schneider Electric, said in an interview.
According to reports, till date, about 4,500 companies in the world have publicly committed to achieving net-zero carbon emissions. “This is a big change compared to what it used to be…it is a big acceleration. What is interesting is that it is not just the large companies but also the medium-sized ones…we are focused and committed to helping these companies go through this transformation,” said Blum.
India is also the research and development (R&D) hub for Schneider Electric with 6,000 employees working on various R&D projects to build solutions locally for India and the world. India is also among the four hubs of innovation for the company along with the US, France, and China. According to the company, 80% of the solutions built in India are deployed in India, given the uniqueness of the market.
The company is also using emerging technologies to deliver the appropriate energy management solutions to its clients. “What will enable energy to become smart is digital. For instance, you can install a lot of hardware in a building, but what helps you to make it really more energy efficient is to capture the data and be able to use machine learning and artificial intelligence to help these buildings be completely self-managed…So digital is the biggest game changer to become the winner,” said Blum.
As part of its growth strategy in India, Schneider has also been betting on acquisitions. In 2020, Schneider Electric acquired Larsen & Toubro’s (L&T) Electrical and Automation business for `14,000 crore in an all-cash deal. The L&T unit made voltage switchgear, energy management systems, industrial automation systems, and metering solutions, among other products. As part of the acquisition, more than 5,000 employees of L&T’s electrical and automation business became a part of Schneider Electric’s team in India.
India is in a relative “bright spot” in the world economy, but needs to leverage its existing strength in services exports and extend it to job-rich manufacturing exports, a top official at the International Monetary Fund (IMF) said on Friday.
“India is a relative bright spot in the world economy today, growing at rates significantly,” IMF Deputy Managing Director Antoinette Sayeh said at an event in New Delhi.
“Macroeconomic policies are responding to the significant headwinds, with fiscal policy measures supporting vulnerable groups and monetary policy addressing persistently high inflation.”
India’s headline inflation moderated to an 11-month low 5.88% in November from 6.77% the month before. The Reserve Bank of India’s monetary policy committee has increased the policy repo rate by 225 basis points since May last year to reign in inflation.
Credit and finance for MSMEs: The credit outstanding of the industry segment registered a growth of 13.1 per cent year-on-year (YoY) in November 2022 from 4.4 per cent in the year-ago period due to robust credit growth in the MSMEs, higher working capital requirements, and capex, credit rating company CareEdge said. As of November 18, 2022, credit to the industry stood at Rs 32.9 lakh crore.
While micro and small industries saw 19.6 per cent growth in credit outstanding to Rs 5.6 lakh crore as of November 2022 from 15.3 per cent as of November 2021, medium industries recorded 29.7 per cent YoY growth with credit amounting to Rs 2.2 lakh crore as of November 2022 from 37.4 per cent growth as of November 2021. In comparison, large industries’ credit reported a YoY growth of 10.5 per cent to Rs 25.1 lakh crore from a drop of 0.6 per cent over a year ago.
Meanwhile, under priority sector loans, the total bank lending to the MSME sector, including credit MSEs and medium enterprises, in November, stood at Rs 18.26 lakh crore – 14.1 per cent of Rs 129.47 lakh crore overall gross bank credit deployed across sectors including food and non-food credit deployed during the month vis-a-vis Rs 15.24 lakh crore deployed in November 2021 – 13.6 per cent of Rs 111.62 lakh crore overall bank credit. Of Rs 18.26 lakh crore, Rs 14.57 lakh crore belonged to micro and small units and Rs 3.69 lakh crore to medium enterprises, according to the RBI data.
“The credit growth stayed robust in November 2022 amid the significant rise in interest rates. The growth was also broad-based across the segments and is likely to remain strong in FY23. Retail and NBFCs are expected to be key growth drivers for the fiscal year,” CareEdge said.
Since May last year, the Reserve Bank of India’s (RBI) monetary policy committee has increased the repo rate by 225 basis points (bps). The committee hiked the repo rate by 40 bps in May followed by 50 bps in each of the following three meetings and 35 bps in December. According to SBI’s Ecowrap report, the hike cycle will increase the interest cost for MSME and retail consumers by around Rs 68,625 crore with around 47 per cent of the loans benchmarked to external benchmarks (EBR).
The world is embroiled in a chip war, and Budget comes at the perfect time for India to prove it’s a serious contender to dominate wafer manufacturing in the world.
The world’s supply chain has yet to recover from the adverse effects of Covid-19. In fact, it was the pandemic that kick-started the chip shortage. The long-reaching effects of the pandemic — including new outbreaks, labour challenges and geopolitical uncertainties — further fueled the agony for the component that is used in just about anything from televisions to cars.
Now, the latest outbreak in China that has crippled most of its activities has also forced the factory floor to hit a pause on massive investments aimed at building a chip industry to compete with the US. Amidst this, the supply chain continues to be extremely disrupted and there are no signs of recovery in the near term.
In such a scenario, India’s continued effort to incentivise local chip manufacturing can go a long way, not only for domestic needs, but also to grow as an exporter.
Currently, almost all the semiconductor demand in India is met by imports from countries such as the US, Japan and Taiwan.
In this sector, India has a significant human-capital pool, which is currently concentrated in design, in the absence of an end-to-end manufacturing base. In other words, India may have the expertise in designing chips, but the lack of fab pushes it to depend on imports.
“The biggest advantage that India has is the entire design ecosystem. We have around 24,000 design engineers working in India. So, that’s a huge ecosystem. That means the talent is there, how to apply the talent, that application process is there. So, that is what gives us a very big advantage,” said Ashwini Vaishnaw, Minister for Railways, Communications, Electronics & Information Technology.
Renewed boost to PLI In December 2021, the government approved a Rs 76,000 crore production-linked incentive (PLI) scheme, a first of its kind, to boost semiconductor and display manufacturing in the country.
The move is aimed to help India strategically make the most of the global shortage of semiconductors, to boost manufacturing and reduce import dependency.
However, there are some loopholes that the government needs to address.
Setting up even a small-scale fabrication facility costs billions of dollars. When factoring in the introduction of the more recent technological developments, the cost will shoot up further. In addition to this, fabrication units consume enormous quantities of clean water and require a stable power supply.
“Even if the PLI scheme gives a fiscal support of 50% of the cost of establishing at least 2 greenfield fabrication units, not much of the current scheme’s outlay would be left out for other aspects like display fabrication units, testing facilities, packaging facilities, chip design centers, etc,” write Rajeev Singh and Abhishek Malik, Deloitte Touche Tohmatsu India LLP.
Attracting the Bigwigs The Ministry of Electronics and IT (MeitY) is also said to be working on an incentive scheme, with a likely financial outlay of around Rs 10,000 crore to Rs 12,000 crore, to promote domestic manufacturing of high-end components that could go into products such as smartphones, servers and personal computers.
The objective of the components incentive scheme is to develop a complete ecosystem of electronics manufacturing in India, officials aware of the details of the plan told ET. The move may further help attract global majors such as Apple to deepen local production, say experts.
“The scheme may offer incentives on production of components as well as capital support for setting up production facilities. The final contours of the scheme are still to be finalised, but we are aiming to come out (with the policy) by next financial year (starting April 1),” an official said on the condition of anonymity.
The government has already indicated that it would be open to joint venture (JV) partnerships with the Chinese firms for high-tech components, which will enable the likes of Apple to further expand manufacturing in India. The incentive scheme for components will aid companies located in geographies such as Taiwan, Korea and Japan to relocate or set up new units.
Budget Support On its part, the electronics industry has written to the government asking for an extension in the promotion of the manufacturing of electronic components and semiconductors (Specs) scheme by five years, as well as an increase in the outlay to at least Rs 10,000 crore, from the current Rs 3,000 crore.
Under Specs, the government is offering financial incentives of 25% on capital expenditure for manufacturing electronic components, semiconductor or display fabrication facilities, assembly, testing, and capital goods that comprise the downstream value chain of electronic products.
“As the scheme was launched for three years, the sunset period of Specs will be in March 2023, which means the industry will not be able to take the benefits beyond this time,” the Indian Cellular and Electronics Association has submitted in its recommendations to the government, according to a Mint report.
India’s first chip factory Construction of India’s first chip manufacturing plant is slated to begin next month as part of the country’s drive to become a bigger semiconductor hub.
International semiconductor consortium ISMC’s $3 billion semiconductor chip-making plant has given Karnataka the lead in cornering investments under the government’s $10-billion incentive scheme for semiconductor companies.
Along with ISMC, Taiwan’s Foxconn and India’s own Vendanta have lined up to build their own fabrication plants in Gujarat. Also in the works, a $3.2 billion semiconductor park in Tamil Nadu proposed by Singapore’s IGSS Ventures.
Risk Protection India needs to bat for a multi-nation Supply Chain Resilience Fund to protect the supply chain from geopolitical risks, Deloitte’s Singh and Malik highlight.
Countries like the United States already have such safeguards in place.
While the United States restarts manufacturing at leading-edge nodes (<5 nanometers), Quad should fund specialised trailing-edge fabs (45 nanometers and above) in India, Japan, or Australia.
Over the past few years, the Centre has been increasing import duties. Such policies could significantly hamper India’s semiconductor prospects.
“Reduction of import taxes could go a long way in building a strong plurilateral semiconductor ecosystem, as a fab in India will still be deeply connected with the world — buying equipment from some countries and selling chips to others,” they add.
Wipro has allowed its employees to unionise in Europe. It has become the first IT company in India to do so, as reported by the Times of India (TOI). The employees will be allowed to set up a European Works Council (EWC) and encourage debates on their issues.
Wipro’s employees that have been allowed to unionise belong to 13 countries including France, Sweden, Finland and Germany. In Europe, the company has over 30,000 employees.
The EWC will be led by elected or appointed employee representatives from the European Union (EU) and the European Economic Area (EEA). The chair sponsorship will continue to remain with Wipro’s CEO for Europe and a team of regional business heads.
“The key purpose of the EWC is to build an inclusive and sustained working relationship with employee representatives of all countries, to share and deliberate on matters of transnational interest and enlist the voice of people. This is a progressive arrangement, maintaining the best of European standards and ways of working,” Wipro told TOI.
The first meeting of the body will take place in 2024. The report added that the EWC will elect its chairman and the select committee members in the meeting. Also, Wipro employees will be consulted on the progress of the business.
The BEML’s demerged non-core businesses entity, BEM Land Assets Ltd, is expected to be listed in the next one month, a step toward divestment of the engineering major.
The government seeks strategic divestment of 26 per cent post BEML demerger process of non-core assets.
“Listing of demerged land company will be in a month’s time. The valuation process is on. After listing, disinvestment process will be started,” BEML chairman and managing director Amit Banerjee said.
He was speaking on the sidelines of CII-organized Global Mining Summit 2022.
He told PTI that the main assets of the demerged entity will be some total 550 acre of prime land in Bangalore and Mysore.
The existing BEML shareholders have been given shares in the new demerged entity in a 1:1 ratio.
State-owned BEML was focusing on defence and the metro railway business.
Banerjee also mentioned that BEML, which currently has a 90 per cent localisation rate for defense trucks, in light of the government’s outlook on make in India.
Banerjee said, operating margins had squeezed due to high input cost. The margins had declined 250 basis points from pre-COVID levels.He said the company was focusing on exports due to better margins.
Shares of Timken India soared 10 per cent to Rs 3,210 per share in Thursday’s intra-day trade after the company plans to set up new manufacturing facility at Bharuch, Gujarat, in order to manufacture Spherical Roller Bearings (SRB), Cylindrical Roller Bearings (CRB), and other components.
At 11:07 am; shares traded 8 per cent higher at Rs 3,164, as against 0.21 per cent decline in the benchmark index. In the past six months, the stock price of Timken India zoomed 71 per cent, as against 14 per cent rally in the S&P BSE Sensex.
“The financing of capex will be done through internal accruals. The expected commercial production will begin from January 2025. The manufacturing plant at Bharuch, Gujarat wherein primarily Tapered Roller Bearings (‘TRB’) and its components are manufactured, another new facility will be set up in the same premises to manufacture SRB, CRB and components, which will enhance manufacturing capacity of the company,” the management said.
Moreover, the company said that the addition of new capacity would enhance manufacturing capacity. SRB and CRB, meanwhile, will be used in industrial applications, where there are heavy load and moderate speed like wind turbines, gearboxes, mining and construction equipment.
Timken is working at maximum capacity utilisation in India. The company, at present, does not manufacture SRB and CRB in India. SRB and CRB are mainly imported from Timken group companies across the world and sold in India.
Therefore, analysts at ICICI Securities believe that since SRB and CRB have a good market in India, indigenization would help Timken to expand its EBITDA margins.
“The company has begun the new financial year with a full pipeline of outgrowth initiatives, and anticipates that industrial markets and customer demand will remain strong. The government’s pledge for an ‘Atmanirbhar Bharat’ and budget allocation in infrastructure will encourage bearing manufacturers to ramp-up local manufacturing capability,” the company added.
That apart, reports suggest that the global bearing market will register a CAGR of 9.1 per cent between 2014 and 2025 (Source: Grand View Research, Inc., Report).
“As per the market research, global bearing market touched ~$60 billion in FY21, with India contributing around 3 per cent of the overall global bearing market. Since bearings are an integral component of all equipment, the ever so rising demand is a derivative of its diversified application in the global manufacturing sector, which is mainly the automotive and industrial sector,” the company said.
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