India’s recession exit gains momentum on services, manufacturing

Source: LiveMint.com, 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

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.

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

Source: ETRetail.com, 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.

Indian media, entertainment to see 27% revenue growth in FY22: Crisil

Source: Business Standard, Feb 23, 2021

New Delhi: Indian media and entertainment (M&E) sector is expected to witness a strong 27 per cent growth in revenue to around Rs 1.37 lakh crore in 2021-22, after contracting 26 per cent this fiscal, according to ratings agency Crisil.

Segments such as digital and television (TV) will have relatively shorter time to bounce-back to pre-pandemic levels while print, films, outdoor, and radio would take longer.

Crisil Ratings Ltd Director Nitesh Jain said advertisement and subscription revenues contribute nearly equally to the overall M&E sector’s topline, but since the former correlates strongly with economic growth, the pandemic has had a bigger impact on it.

“Next fiscal, with strong economic rebound on the cards, ad revenue should grow 31 per cent on-year and subscription revenue around 24 per cent,” Jain added.

The TV segment contributing around half of the sector’s topline has recovered fully and will report healthy growth next fiscal. Ad revenue saw a sharp contraction initially, but recovered swiftly thereafter, aided by airing of new content, sports events such as the Indian Premier League and a buoyant festive season, Crisil Ratings Ltd said in a statement.

“As for subscriptions, TV was resilient even during the peak of pandemic as people remained indoors,” it added.

The print segment, which contributes a fifth of the M&E sector topline, is recovering, though at a much slower pace, and should be able to rebound fully only by the end of next fiscal, it added.

“Print is losing share in ad revenue mainly to the digital segment. Circulation too, especially for English language, could see a loss of 8-10 per cent, because of increased preference for e-papers in metros. However, print companies are rebooting their cost structure and accelerating digital adoption to stay relevant,” the ratings agency added.

Stating that digital has emerged as the medium of choice, Crisil Ratings Ltd Associate Director Rakshit Kachhal said the pandemic accelerated adoption of over-the-top (OTT) platforms, online gaming, e-commerce, e-learning, e-papers and online news platforms.

“This has meant the focus of advertisers has shifted from traditional to digital media. We expect the digital segment revenue to grow 14-16 per cent annually over the medium term. Its share of M&E sector revenue is expected to double to around 20 per cent by fiscal 2024 compared with last fiscal,” Kachhal added.

Credit profiles of large media companies would be unaffected due to strong balance sheets, liquidity and the revenue rebound, while mid-sized and small ones could see stress, Crisil Ratings citing an analysis of over 80 of them rated by the agency.

Accordng to Crisil Ratings, films segment that contributes a sixth to the sector topline, is one of the most impacted segment but occupancies in theatres should improve with the vaccination rollout and a strong pipeline of content.

“However, this segment is likely to remain impacted even next fiscal due to social distancing norms and fear of closed spaces,” it said, adding that other traditional media such has radio and outdoor, are seeing persisting pain, and will likely take much longer to recover.

This is because commuting as well as ad budgets for micro, small and medium enterprises the key drivers for these segments will remain restricted even in fiscal 2022, it said.

The ratings agency said credit profiles of small and and mid-sized media companies have weakened and liquidity pressure may intensify for them if recovery in ad revenue is delayed.

However, Crisil said M&E companies have adopted aggressive cost rationalisation initiatives.

Besides, the pandemic-led change in consumer behaviour has accelerated monetisation opportunities forthese players through integration of digital media into their traditional businesses. “Some of these aspects can lead to structural changes in business models of the M&E sector over the longer term,” it said.

ASCI releases draft rules for influencers

Source: LiveMint.com, Feb 22, 2021

NEW DELHI: The Advertising Standards Council of India (ASCI) has issued draft rules for advertising and promotions by influencers on digital media platforms to protect consumer interest as the watchdog seeks to oversee the burgeoning digital influencer market.

The mainstay of the new draft code is to clearly identify and label upfront that a said communication is an advertisement. “The biggest part of the new rules is to tell consumers that you are watching an ad and not content. That disclosure has to be in a prominent position,” said Manisha Kapoor, secretary general, ASCI.

Prominent labelling means people should not miss the disclosure and it should be suitable for all digital devices across phones, tablets and laptops. It needs to be visible regardless of the device used, or the platform such as website or app.

The nature of labelling has been specified for various digital media channels too such as Twitter, Instagram and YouTube. The code has given guidance on the type of disclosure on the varied promotions such as a video, picture promotion or an audio. In case of audio, the disclosure label must be stated at the beginning and the end.

According to the code, filters should not be applied to social media advertisements if they exaggerate the claim that the brand is making. “In case of a shampoo ad, the influencer should not use a filter to make the hair look shinier,” said Subhash Kamath, chairman, ASCI, adding that the claims would also have to be truthful and honest.

The draft rules have been prepared in collaboration with digital and social media stakeholders and influencers. It is open for public discussion and suggestions can be given until 8 March. The final guidelines will be introduced by 31 March and it will be applicable to all promotional posts published on or after 15 April 2021.

The draft code requires an influencer to do due diligence of any technical or performance claims of the brands they promote. These could include claims such as “ 2X better, effect lasts for 1 month, fastest speed, best in class etc,” the guidelines said. Evidence of due diligence would include correspondence with the advertiser or brand owner confirming that the specific claim made in the advertisement is capable of scientific substantiation. Influencer marketing is currently estimated at $75 million-$150 million, according to digital marketing agency AdLift.

Incentives for furniture manufacturing in the works

Source: ETRetail.com, Feb 18, 2021

New Delhi: A new scheme to promote domestic furniture manufacturing is in the works as the government seeks to reduce India’s dependence on imported furniture. The Department for Promotion of Industry and Internal Trade (DPIIT) is in talks with other ministries and states to rollout a scheme to make India self-reliant in furniture manufacturing through incentives such as tax breaks. India imported $592 million of furniture in the April-November period of FY21, more than half of which came from China.

“We have begun an exercise and consultations are on with various stakeholders for the furniture sector,” said an official. However, a production linked incentive scheme or PLI is ruled out for the sector.

“We are looking at schemes which states can consider and what benefits they can offer such as tax concessions,” the official added.

The furniture sector is one of the champion sectors for the government.

The government is also exploring the idea of furniture clusters, on the line of leather clusters, wherein large scale manufacturing can take place.

The move is crucial as besides China, India also imports furniture from Korea and some ASEAN countries with which it has free trade agreements that limits the scope for duty hikes.

“Given that furniture imports have been substantial in the past, any incentive scheme for manufacturing in India will make supplies from these domestic manufacturers, predominantly MSMEs, more competitive not only for local consumption but also in global markets,” said Bipin Sapra, partner at advisory firm EY.

20 projects worth Rs 363.4 crore sanctioned for infrastructure and expansion of food processing

Source: The Economic Times, Feb 17, 2021

New Delhi: Twenty projects leveraging an investment of Rs 363.40 crore supported with a grant of Rs 102.81 crore under the scheme for creation for infrastructure for agro-processing cluster (APC) and the scheme for creation and expansion of food processing and preservation capacities (CEFPPC) under pradhan mantri kisan sampada yojana (PMKSY) were sanctioned by the Inter Ministerial Approval Committee (IMAC) chaired by Food Processing minister Narendra Singh Tomar.

The projects are likely to generate employment for nearly 11,960 people and benefit 42,800 farmers.

“The proposals for projects approved in the IMAC meetings are expected to increase the level of processing and value addition of horticultural and agricultural produce, which will result in increase in the income of the farmers and create employment at the local level,” Tomar said.

Under the CEFPPC, 11 proposals with total project cost of Rs 113.08 crore including grants-in-aid of Rs 36.30 crore will come in the states of Himachal Pradesh, Manipur, Arunachal Pradesh, Maharashtra, West Bengal, Karnataka, Mizoram, and Gujarat. The scheme approved since 2017 promotes processing and preservation of agro food products and modernization and capacity enhancement of food processing.

This will help in increasing the level of processing and value addition thereby reducing the wastage of agro-produce.

Further, under the scheme for Creation of Infrastructure for APC will encourage entrepreneurs to set up food processing units based on cluster approach. Under these nine proposals with a total project cost of Rs 250.32 crore including grants-in-aid of Rs 66.61 crore in the states of Madhya Pradesh, Andhra Pradesh, Karnataka, Maharashtra, Arunachal Pradesh, Assam, and Rajasthan have been approved.

Amazon, Foxconn partner to make Fire TV sticks in India

Source: Hindustan Times, Feb 17, 2021

Amazon.com Inc. will manufacture its Fire TV stick streaming devices in India later this year in a boost to the government’s efforts to lure foreign companies to start manufacturing in India.

The devices will be produced by contract manufacturer Cloud Network Technology, a unit of Taiwan’s Foxconn, in Chennai, Amazon India said in a statement on Tuesday. The manufacturing programme will be able to produce “hundreds of thousands of Fire TV Stick devices every year”, catering to the demands of customers in India, Amazon said in a blog post.

The company will “continuously evaluate scaling capacity to additional marketplaces/cities depending on domestic demand,” it said.

“Amazon will also look at sourcing electronic components from India apart from their assembly, as part of its manufacturing efforts in the country. It might take a call on manufacturing its other flagship devices later, based on how current production efforts proceed,” said a person aware of the matter, seeking anonymity.

Amazon is part of a growing list of multinationals looking to open manufacturing centres in India. US electric vehicle maker Tesla Inc. is close to signing a pact to start assembling its electric cars in Karnataka, the state said over the weekend. Foxconn has also been planning to expand its manufacturing capabilities in the southern states.

The production of Fire TV sticks is part of the $1 billion investment commitment in India made by Amazon founder Jeff Bezos last year. It aims to create a million jobs by 2025 in the country, including those at its manufacturing centres, said the person cited above.

Amazon did not disclose investments for making the Fire TV sticks. “India is poised to become a major player in the global supply chain in the electronics and IT products industry. We welcome Amazon’s decision to set up a manufacturing line in Chennai, as it will enhance domestic production capacities, and create jobs.

This will further our mission of creating an ‘Atmanirbhar Bharat’,” IT minister Ravi Shankar Prasad said. Prasad said, after a virtual meeting with Amit Agarwal, Amazon’s global senior vice-president and India head, that the government’s decision to launch the production-linked incentive (PLI) scheme has received a tremendous response worldwide.

Govt set to clear new Chinese investment proposals in coming weeks: Report

Source: Business Standard, Feb 16, 2021

New Delhi: India is poised to clear some new investment proposals from China in the coming weeks as frosty relations between the two neighbouring countries thawed amid an easing in border tensions, said three government officials with knowledge of the matter.

Last week, India and China began disengagement from the Pangong Tso area, in the Ladakh region of the western Himalayas, following a nearly nine-month-long standoff after the worst clash between the neighbouring countries since 1962.

At the height of the tensions, India framed various policies targeting China, including blocking the nation from participating in government tenders, compelling any Chinese company investing in India to seek approvals and banning dozens of Chinese apps.

The foreign investment rule change by the Indian government said investments from an entity in a country that shares a land border with India would require government approval, markedly slowing investments flows from China.

The rule change had put in limbo over 150 proposals from China worth more than $2 billion, hurting the plans of Chinese companies in India.

Among the proposals delayed was China’s Great Wall Motors’ acquisition of a General Motors’ plant in India.

“We’ll start giving approvals to some greenfield investment proposals, but we will only clear those sectors which are not sensitive to national security,” one of the officials said.

The officials, who asked not to be named as the discussions are private, did not give details of the proposals they plan to clear in the coming weeks.

The prime minister’s office did not immediately respond to an email seeking comments, while the home ministry did not respond to an email, call or message.

The government will also look to clear some other brownfield projects – new investments in existing projects – that are not a risk to national security after the first round of clearance to new investments, the above officials said.

The government is also considering allowing some investment from Chinese firms in certain sectors via the “automatic” route, or without government scrutiny, said the officials.

The officials said investments for stakes of up to 20%, in “non-sensitive” sectors, may revert to the automatic route for nations with which India shares land borders.

Centre hints at regulatory guidelines for social media

Source: The Hindu Business Line, Feb 11, 2021

New Delhi: A day after the Centre’s warning to Twitter, Union Cabinet Minister for Information Technology and Law Ravi Shankar Prasad indicated that stronger regulatory measures are on the anvil for social media. Prasad told Rajya Sabha on Thursday that his department and the Information and Broadcasting Ministry are working on specific guidelines for social-media platforms. “The work is in progress,” he said, and asked social-media platforms to strictly follow Indian laws and the Constitution, especially on reasonable restrictions to freedom of speech.

Prasad reiterated the government’s stated firmness on the direction to Twitter to suspend about 500 accounts and the counter-assertion by the microblogging site on grounds of freedom of speech. The Minister asserted that no platform is above the Constitution of the country. “We respect social media. It has empowered common people,” he said. But he said the Centre will not allow misuse of social media for spreading violence. “We have formed a platform to bust fake news. We appreciate the work that social-media platforms have done here, but they must respect the Constitution of India,” he said.

The Minister said the Centre is ceased of the standing committee recommendations for creating a set of guidelines. “The Ministries of IT and Information Broadcasting will review the guidelines soon. These platforms cannot make a law of their own where the Constitution has no place,” he said.

The US administration, on its part, maintained that it is committed to “supporting democratic values” in general and so far as the recent controversy over suspension of Twitter accounts is concerned, the matter would be dealt by the company individually.

“What I would say generally is that around the world, we are committed to supporting democratic values, including freedom of expression. I think when it comes to Twitter’s policies we would have to refer you to Twitter itself,” said US Department of State spokesperson Ned Price.

Prasad said the Centre is in touch with Twitter. “We have had a meeting with Twitter. If the Capitol Hill is attacked and the US police takes action, these micro blogging companies stand with them. But if the Red Fort is attacked, they stand with protesters. This double standard will not be allowed. Freedom of speech is subject to reasonable restrictions because of sovereignty and integrity of India. What is the reason for the hashtags such as ‘Narendra Modi massacre’ of farmers,” he said.

He maintained that the Centre is committed to freedom of speech. “This government is led by leaders who have fought for freedom of individuals, media and independence of judiciary particularly during Emergency. Our commitment to freedom of media is total. We are equally concerned about the safety, security and sovereignty of India,” he said.

Issues of privacy He said the Centre will also address the issues of privacy when we come up with a guidelines. “The work is in progress. I would urge the social media to measure the unbridled exposure on the standards of your own guidelines and take action,” he said.

Govt’s logistics division to formulate national packaging initiative

Source: Business Standard, Feb 10, 2021

New Delhi: The logistics division, under the Commerce Ministry, has started an exercise to formulate a national packaging initiative, which will be part of the proposed logistics policy.

The ministry on Wednesday said that a stakeholder consultation was organised to define the scope and the national packaging initiative as part of the national logistics policy that is currently being finalised.

According to Pawan Agarwal, Special Secretary (Logistics), packaging deserves greater attention from improving the overall logistical efficiency perspective.

“Valuable inputs on packaging came from… participants and more such key players would be involved in the formulation of the National Packaging Initiative,” it said in a statement.

It added that e-commerce companies such as Amazon and Flipkart were urged to invest in sustainable packaging as they are one of the biggest users of packaging material. It was also pointed out that dangerous and chemical verticals would also need special attention from the packaging perspective.