In June, activity in India's manufacturing sector bounced back from a slight dip the previous month, with the manufacturing PMI increasing to 58.3 from May’s 57.5. The upbeat demand led to expansions in new orders, output, and purchasing levels. The increased workloads created more jobs, leading to a fourth consecutive month of increased hiring. The outlook for the manufacturing sector is positive, as companies anticipate further improvements in demand and order book volumes in the coming year.
According to the latest survey by OAG, a U.K.-based aviation analytics firm, India has become the third-largest domestic aviation market globally, after the United States and China. The data shows that the capacity growth rate of seats over the last 10 years has averaged around 6.9%, which is the highest among the top five aviation markets. In order to meet the increasing demand, various Indian airline companies have placed orders for over 1,000 new aircraft that will be delivered over the next 10 years. This has also created an opportunity for the MRO sector to experience exponential growth in the coming years. To support this growth, the government has recently announced a uniform levy of a 5% tax on the import of aircraft parts, components, testing equipment, tools, and toolkits, regardless of their HSN code.
According to its latest report, the Confederation of Indian Industry has projected that the electronics manufacturing sector will grow to $500 billion by 2030, up from $125 billion at present. There will be significant opportunities in the printed circuit board assembly segment, which is expected to grow by over 30%.
The Indian automobile industry saw a 19% surge to $122.53 billion in fiscal year 2023-24, driven significantly by growth in the utility and sports utility vehicle segments. The overall volume of vehicles increased by 10% annually, highlighting strong consumer demand. The UV and SUV segments experienced a remarkable 23% increase in volume and a 16% rise in average prices, resulting in a substantial 39% growth in the overall segment value.
The Ministry of Heavy Industries has announced it will allocate $1.2 billion to provide incentives to manufacturers as part of the third iteration of the Faster Adoption and Manufacturing of Electric Vehicles scheme. The strategy aims to reduce environmental pollution by decreasing carbon emission intensity by 33%-35% below 2005 levels by 2030, ultimately achieving net-zero emissions by 2070, and reducing dependency on oil imports. According to Morder Intelligence, the electric vehicle market is projected to expand significantly from its estimated value of $35 billion in 2024 to $110 billion by 2029 at a CAGR of 26%.
According to data from the Ministry of Corporate Affairs, 59 foreign companies registered and started their operations in fiscal year 2024. These companies are from the aviation, engineering, and construction sectors. Some of the companies in the aviation segment are Italia Transporto Aereo SPA, Oman-based Salam Air, Swiss engineering firm Pini Group SA, Japanese builder Dainichi Consultant, and Airbus Defence and Space SA. The engineering and construction sectors include U.S.-based Modjeski and Masters and Japan High-Speed Rail Electric Engineering.
A few recently announced projects and investment news items are listed below for your reference.
The Tata Group and Airbus Helicopters are collaborating to establish a final assembly line (FAL) in India for the H145 helicopters. The FAL will be responsible for assembling major components, avionics, mission systems, electrical harnesses, hydraulic circuits, dynamic components, fuel systems, and installing engines.
The Essar Group plans to invest approximately $2.8 billion over the next four years to establish a green hydrogen plant in Jamnagar, Gujarat. The plant aims to have a hydrogen capacity of 1 GW and a green molecule capacity of 1 million tons per year.
Mercedes-Benz plans to invest $400 million to expand production capacity at their Chakan Pune plant.
Volvo Cars is planning a major expansion in India. The company intends to introduce a new electric vehicle (EV) model every year. This will begin with the single-motor Volvo XC40 Recharge in 2024, followed by the EX30 small SUV in 2025, and then the EX90 full-size SUV.
Ather Energy is investing $250 million to build their third production facility in Aurangabad, Maharashtra. The facility will produce 1 million automobile and battery packs annually and would create around 4,000 jobs.
Japanese company Horiba plans to establish a manufacturing unit for mass flow controllers, which are essential for various chipmaking processes like wafer cleaning, thin film deposition, chemical vapor deposition, and gas spray coating.
State-owned Damodar Valley Corp. plans to increase its solar power capacity to around 4,000 MW by 2030 with a capital expenditure of approximately $2.5 billion.
Samvardhana Motherson International (SAMIL) is investing around $650 million in capital expenditure for the current fiscal year to strengthen its automotive and non-automotive businesses. This includes setting up six greenfield facilities in India, China, and Poland.
For more information, please contact Arun Mahajan at AMahajan@AMTonline.org.
