Prime Minister Narendra Modi on Friday said the upcoming semiconductor units will further strengthen India’s “transformative journey” towards technological self-reliance. The Union Cabinet on Thursday approved proposals to set up three semiconductor plants, including a mega fab by Tata Group, at a cumulative investment of Rs 1.26 lakh crore, as India moves to position itself as a global powerhouse in chip manufacturing.
Modi said on X, “With the Cabinet approval of three semiconductor units under the India Semiconductor Mission, we are further strengthening our transformative journey towards technological self-reliance. This will also ensure India emerges as a global hub in semiconductor manufacturing.”
The government is offering incentives of up to Rs 76,000 crore to boost domestic manufacturing of semiconductors, which are essential components of electronic devices and find usage in mobile phones, laptops, refrigerators, washing machines and automobiles, among others.
The three units approved for support under the scheme will make chips for various sectors, including defence, automobiles and telecommunications, and will begin construction within the next 100 days, Minister for Electronics and IT Ashwini Vaishnaw had told reporters after the cabinet meeting.
India remains a top conviction theme for the Blackstone Group globally, which plans to deploy capital from its $65 billion dry powder to further expand its assets portfolio beyond the current $50 billion, Kathleen McCarthy, global co-head of real estate at Blackstone Group, told ET.
“We are just getting started in India… Size of the opportunities in other markets is not even close to what India has to offer,” said McCarthy, who manages real estate assets worth $586 billion globally for the group.
Blackstone is the largest owner and operator of office properties in India with an office portfolio of 135 million sq ft across 48 assets in seven key cities. The global investment major will continue to invest in office properties here besides increasing investments in new segments such as hospitality, data centres and warehousing.
“When I review our (India) portfolio today, it’s clear that real estate and private equity stand out, boasting $50 billion in assets, with $20 billion assets in real estate alone. We believe we are just scratching the surface,” McCarthy said.
According to her, Blackstone has succeeded in building exceptional companies in India, particularly in sectors like office and retail, where the firm identified specific opportunities unique to the Indian market.
“Our global focus on logistics represents approximately 42% of our portfolio, with a current (India logistics) footprint of 40 million sq ft, achieved in just 2.5 to 3 years – a stark comparison to the 10 years it took to reach 100 million sq ft in the office sector. This rapid growth underscores the strength of our platform and our ability to capitalise on conviction themes,” she said, adding that data centres are another area of global conviction for the firm.
Blackstone is one of the early global investors to enter India. After establishing its presence in 2006, it has emerged as one of the top 10 business groups in the country.
“Looking beyond our current endeavours, hospitality investing remains largely untapped. While we do own some hotels, we anticipate substantial growth in both domestic and international tourism, drawing upon our 30 years of experience operating hotels and partnering with renowned brands,” McCarthy said. “We are eager to expand our portfolio of hospitality assets.”
Blackstone owns seven or eight hotels that are strategically linked to other investments but is keen to invest in larger-scale hospitality ventures. Globally, it has a track record in various formats, ranging from luxury and leisure-oriented properties to business travel accommodations and branded limited-service hotels, which are highly popular among both leisure and business travellers.
In India, she sees immense potential for growth in the hospitality sector, which is still in its nascent stages as various brands hold around 178,000 hotel keys and this underscores the vast opportunities that exist in this market.
According to her, Blackstone’s India portfolio performance has been “exceptionally successful” owing to its value creation strategy and approach in the market. She highlighted the performance of Embassy Office Parks REIT in the public markets that saw returns of 3 to 3.5 times higher than the market average since it took the maiden India REIT public until the recent exit.
“This aspect of our strategy has been particularly reassuring for investors, especially those who may have had challenges with investments in India’s real estate sector prior to the financial crisis. Demonstrating our capacity to deliver returns has addressed a key concern among investors and solidifies their interest in both our investments and the Indian market as a whole,” she added.
McCarthy is of the view that India’s economy, compared to other markets, has displayed a more stable picture, characterised by lower inflation rates, steady interest rates and sustained economic growth. This stability has been further bolstered by favourable demographic trends.
“The unique combination of strength and stability in India’s economic landscape, coupled with favourable real estate operating and supply fundamentals, sets it apart globally. This confluence of factors creates a highly attractive ecosystem for real estate investment, offering a robust foundation for sustained growth and stability in the sector,” she said.
McCarthy believes India is still in the early stages of capital investment from global institutional investors and there is significant potential evident in various asset classes such as hotels, warehouses and data centres. The influx of capital into the market is a positive development as it enhances liquidity and fosters growth opportunities.
Czech car maker Skoda Auto has kept a low profit ambition for India despite being in the market for more than 20 years even as the top five carmakers in the very same market, have had a profitable run – most recently, led by a sustained gain in volumes of pricier models.
The Volkswagen Group company that is responsible for driving the group strategy in India is reinforcing its commitment to the market by getting into the next phase of investment through entry in the competitive sub-four metre compact SUV segment and launching electric vehicles. But its expectations from a market where the Asian rivals had a head start, remains moderate, the company’s top official said.
“Profit is not the main target for India. We have to have some profits but the level of profit is not important. We believe in this market and its long term potential. We are still in a phase in which we are trying to enhance our footprint and increase the car park,” Martin Jahn, Member of the Board of Management for Sales & Marketing Skoda Auto a.s told ET.
Jahn added that Skoda “cannot continue to lose money” in India and the CSUV planned for the first half of 2025 could give the much needed volume thrust to Skoda’s India operation –its third largest outside Europe. This would also help the company utilise its network of 260 dealers, optimally, he said.
“We have an intention to sell as many cars as possible but the market has to also accept it and it should be at some profit. We are learning as we go,” said Jahn, adding that increasing India volumes substantially is also his key responsibility. He was in Mumbai to meet the company’s dealer partners
Avik Chattopadhyay, co-founder at brand consulting firm Expereal points out, it’s one thing to know the brand and quite another to know about the brand. The onus lies on the brand to communicate with the market on the same and connect with people who appreciate the brand DNA and wish to associate with it. Skoda needs to work on creating awareness about the brand, he added. It’s seen as just another European car brand. “Skoda has to create its space in the mind.”
Meanwhile, updating on the company’s EV plans for India, Jahn said, Skoda “continues to explore all possibilities” including a partnership for developing an affordable EV model– priced up to Rs20 lakh. In the interim period, it would bring the Enyaq– a premium electric SUV to “test the waters.” Skoda Auto has outlined an investment of 6 billion euros 2027 to launch at least six EV models globally in the coming years.
Last month, Volkswagen Group and Mahindra & Mahindra said they have signed a supply agreement, focusing on the future of electric mobility in India. This collaboration will see Mahindra’s INGLO electric platform being equipped with Volkswagen’s MEB electric components and unified cells.
On whether the scope of partnership going ahead will go beyond and also include the two companies co-developing a low cost platform, Jahn said, “The deal with Mahindra has been done at the VW Group level and has nothing to do with Skoda specifically.” In response to if the company is in talks with JSW for a potential partnership. “We are exploring all the options,” he said declining to comment further.
Skoda’s EV strategy for India will be phased one as “everything is so dynamic in India and elsewhere when it comes to EVs – we will do whatever makes business sense,” he said.
Czech carmaker Skoda Auto plans to enter the mass market of electric vehicles segment in India, for which it is exploring all options, including partnerships with local companies for economies of scale, company’s management board member Martin Jahn said on Wednesday. The company is gearing up to enter the electric vehicles segment in India this year and is currently testing its premium electric SUV Enyaq.
“We are exploring all the options. I am not at liberty to give you any details on this because no decision has been made. We are looking at everything we want to bring volume electric car to India,” Jahn, who is the member of the Board of Management for Sales and Marketing Skoda Auto, said here in an interaction.
He further said, “How and when we are going to do it, we do not know yet. We are looking at the options that would be the best for India. But we of course want to participate in the growth of the electric (vehicle) market in India.”
When asked if Skoda Auto is looking for partnerships with Indian companies for the mass market EV foray, he said, “We are exploring all the options for the entry of the volume electric market.”
On how important is it to have a local partner, Jahn said, “From a strategy point of view, it’s important to determine what is the best way which we’re exploring at the moment. The options are (whether) doing it alone (or) doing it with a partner in various kinds of partnerships…”
Earlier this month, Volkswagen Group, of which Skoda Auto is a part, and Mahindra & Mahindra announced their first supply agreement for electric vehicle components under their joint vision for electric mobility collaboration.
Under the agreement, Mahindra will become the first external partner to use Volkswagen’s “groundbreaking unified cell concept”, the core element of its battery strategy.
Jahn said a clarity in government policies will make it better for the company to plan a roadmap for its electric mobility journey.
“I have observed globally that these policies are changing very quickly.
“The governments are changing them for many reasons. We want to have from every government as much clarity as possible, but we are also realistic and we know that these policies will be developing. So the the more clarity we have, the better for us,” Jahn noted.
When asked how much of sales EVs are expected to contribute for Skoda in India in future, he said, “We will have to see that. The electrification just started and also there can be some presumptions. We will see.”
In Europe, he said, “We are now around 10 per cent of electric car in our portfolio and according to the current plan in Europe, it should increase and we should be by between 50 per cent to 70 per cent electric in 2030 given the presumption that Europe goes full electric in 2035.”
MUMBAI: The deal to merge Reliance Industries Ltd (RIL) subsidiary Viacom18 and The Walt Disney Company’s local unit Star India will significantly alter the media and entertainment sector by creating the biggest media entity in the country, said industry executives and experts.
The Rs 70,352 crore ($8.5 billion) merged entity, in which RIL will infuse Rs 11,500 crore, will have a viewership share of more than 40%, enabling it to secure premium advertising rates and consumer average revenue per user (ARPU), they said.
The failure of Zee Entertainment Enterprises and Sony Pictures Networks India to merge is expected to benefit Star-Viacom18, which would have had to contend with a duopoly if the Sony-Zee merger had also gone through.
‘Big Daddy of Media’ The repercussions of the deal might also be felt in the telecom sector, where Reliance Jio’s rival Bharti Airtel would face pressure to step up its content offerings, said experts.
According to industry estimates, telecom operators spend Rs 2,000-3,000 crore on procuring content.
Nuvama Institutional Equities executive director Abneesh Roy said the merger deal is negative for other broadcasters and telecom players, as Reliance Jio will gain superior access to content.
“The merger is potentially also slightly negative for advertisers as the bargaining power of the merged entity will be higher. In media, the leader takes it all. The JV (joint venture) will become the big daddy of media and will be 3-6x of other key peers,” he said.
Star-Viacom18 will have exclusive rights to all the key cricket properties, including the Indian Premier League, International Cricket Council and Board of Control for Cricket in India, in addition to about 200,000 hours of content comprising movies and TV shows.
The consolidation of TV and digital rights of key cricket properties under a single umbrella is expected to enhance monetisation over time.
Roy also said that Star-Viacom18 can gradually achieve profitability in sports by increasing subscriber ARPU and ad rates. The two companies have pledged roughly Rs 82,000 crore ($10 billion) in sports rights for the 2023-27 period.
The combined entity will house premium English content — from Disney, NBC Universal, Paramount Global and HBO — which will allow it to effectively compete against Netflix and Prime Video in the premium over-the-top (OTT) segment.
RIL and Viacom18 will own 63% stake in the JV while Disney will hold the remaining 37%. The fund infusion by RIL will help it invest in sports and digital content. Last year, Viacom18 received a fund injection of $1.8 billion from RIL and Bodhi Tree Systems.
The JV will have Nita Ambani as chairperson and Star’s former CEO Uday Shankar as vice chairperson.
The two companies together own 117 TV channels and two streaming platforms, Disney+ Hotstar and JioCinema.
Star and Viacom18’s consolidated revenue in 2022-23 was about Rs 25,000 crore, higher than the combined revenue of Zee Entertainment Enterprises, Sony Pictures Networks India and Sun TV Network, which was around Rs 18,000 crore.
Experts said the deal will also help RIL, which will control the JV, to overcome the growing threat of Google and Meta, which together gobbled up Rs 46,000 crore in digital ad spends in 2022-23.
US electric automaker Tesla could soon set up shop in India, with the government close to finalising a policy to extend concessional import duties on electric cars exceeding Rs 30 lakh (about $36,000) for 2-3 years.
The reduced import duties are likely to be offered in lieu of bank guarantees by Tesla for a proposed investment to build an electric vehicle factory in India, people aware of the developments told ET.
India imposes 100% import duty on cars with cost, insurance and freight value of more than $40,000 (about Rs 33 lakh), and 60% for those below that threshold. Tesla is willing to invest up to $2 billion if the Indian government offers reduced import duty of 15% on imported electric cars in the first two years of operations, ET had reported.
The Centre is keen that foreign automakers entering the large and growing Indian market accelerate plans for local manufacturing to boost employment generation while bringing down prices of electric vehicles through localisation. “The government is looking at reducing import duties temporarily, based on bank guarantees. The quantum of the bank guarantee has not been determined (yet), but the thought is that this will help ensure that companies make timely investments and set up local factories,” said one of the persons cited above. Bank guarantees can be encashed in the event of non-compliance with timelines specified for making investments.
Faced with the prospect of relaxed import duties for Tesla, Indian automakers are taking a cautious wait-and-watch approach before making any move.
A senior industry executive who did not wish to be named said while the industry has not yet formally communicated any objection to the government, several carmakers have been concerned that any reduction in import duty will result in an unfair advantage to the American carmaker, which has yet to make a firm investment plan.
Last month, Mahindra & Mahindra (M&M) managing director Anish Shah said his company had made representations to government officials, saying global EV makers must be nudged to invest in India.
“It should be a level playing field… investing in India is important. Our approach is essentially to create a stronger industry in India, and not to be in a situation where manufacturing is done outside India, and India just becomes an importer of products,” Shah said at the World Economic Forum in Davos, without referring to Tesla by name, as per media reports.
Homegrown auto majors like Tata Motors and M&M already produce EVs locally.
Automakers dispatched 393,074 units of cars, utility vehicles and vans last month, a 14% increase from a year earlier and the highest on record, as dealers restocked inventories depleted during year-end sales promotions.
As per data available with industry body Society of Indian Automobile Manufacturers (SIAM), the previous record for passenger vehicle sales was 391,811 units in October 2023.
In January last year, manufacturers had dispatched 346,080 units to dealerships.
Automakers in India mostly report wholesale dispatches from factories to dealerships, and not retail sales to customers.
Volumes were propelled by strong performance at Maruti Suzuki, Hyundai Motor India and Tata Motors.
Sales of two-wheelers rose 26% from a year earlier to 1,495,183 units last month. Three-wheeler dispatches went up by 9.5% to 53,537 units.
“Passenger vehicles sales have remained resilient led by positive consumer sentiments, while the two-wheeler segment witnessed good growth in January as well, as the rural market continues to recover,” SIAM president Vinod Aggarwal said.
While the three-wheeler segment also performed better last month, the commercial vehicle segment did not grow in January 2024, Aggarwal said.
“It (CV) is likely to see good offtake in the next two months of this financial year,” he added.
The government’s strategic focus on mobility in budget 2024, including strengthening the electric vehicle ecosystem, especially the charging infrastructure and public transport, should help in continuing with the overall growth momentum for the auto sector, he said.
“Industry stocks were low at the start of the month which prompted dealers to restock. While demand parameters are stable, February onwards we will see the direction the market is moving,” Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki told ET.
Tarun Garg, COO, Hyundai Motor India said, he is “cautiously optimistic” about the momentum in the auto industry continuing in 2024.
India’s automotive sector employers are likely to offer double-digit pay increases in 2024, according to a new study, continuing the uptrend of the previous years as they seek to retain good talent.
The pay rise is likely to be 10.5% on average for staff of automotive producers and 10% for those working for suppliers, according to Deloitte’s Increment and Attrition Trends Study, which the company shared exclusively with ET.
This is in line with the trend of the previous few years and higher than the India Inc average of more than 9% expected this year, which ET had reported earlier.
“The past three years have witnessed double-digit hikes for the automotive industry, especially the producers,” said Neelesh Gupta, director, Deloitte India. Barring 2020, Covid-19 impact, 2021, ’22 and ’23 have seen over 10% hikes, Gupta said.
Reasons: High attrition faced by the sector and increasing focus on electric vehicles.
The auto sector executives ET spoke with confirmed the trend.
“Average salary hike for our workforce (over 5,000 employees) is expected to hover around 10%,” said Amit Sharma, business HR head at International Tractors Limited.
Sharma indicated that the robust performance of the auto industry has led to significant talent movement across the passenger vehicle, commercial vehicle and tractor segments.
“This is why organisations are offering substantial salary hikes while they foresee continued momentum in the market,” said Sharma.
Sarma Chillara, HR head of Škoda Auto Volkswagen India, said, “For 2024, we plan for an overall salary hike of approximately 10%, which is similar to what we have paid last year.”
Skoda has a policy of differentiating the salary and rewards of top talent or top performers. “We do pay them on the higher side as compared to the rest of the employees to acknowledge and appreciate their good performance and contributions,” said Chillara.
This year, Hyundai Motor India Limited (HMIL), too, will recognise its top performers, who make up 20% of the workforce, distinguishably this year, according to Charles JS Walter, AVP and vertical head – human resources.
“On the back of a strong 2023, pay hikes would reflect holistic performance and growth visualisation, keeping business imperatives pivotal,” said Walter.
A spokesperson for Mercedes Benz India said, “We separate company performance and individual performances. We think merit increase is just one avenue of rewarding individual performance. Job rotation, professional enrichment, training at pedigree institutes, international exposure and mentoring/coaching are essential to an employee’s development.”
According to Deloitte, the salary increase for top performers or top talent may even be double (21%) of the average increase.
Indian automaker Mahindra & Mahindra has signed a supply agreement with Germany-based Volkswagen Group on components for M&M’s INGLO platform, the company said in a stock exchange filing on Friday.
As a part of this agreement, M&M will equip certain range of its electric platform INGLO with electric components of Volkswagen’s MEB and unified cells, the company said. The supply deal will span a number of years and have a lifetime total volume of roughly 50 GWh.
Shares of M&M saw a mild uptick following the announcement and were trading with gains of 3 per cent as on 11:20 am. Meanwhile, benchmark indices were up 0.5 per cent.
M&M will become the first external partner to use Volkswagen’s unified cell concept which is a core element of Volkswagen’s battery strategy. Volkswagen’s MEB platform is currently used by Audi, Skoda, SEAT/CUPRA, and Ford.
“With the agreement, Volkswagen and Mahindra are further deepening their collaboration which started with a partnering agreement and a term sheet in 2022. Both companies will continue to evaluate a potential expansion of the collaboration,” it said in a statement.
Mahindra is looking to launch five all-electric SUVs in India through INGLO December 2024 onwards. While announcing the INGLO platform back in 2022, Chairman Anand Mahindra said it was a ‘disruptive new electric platform’.
M&M’s Q3 profit after tax saw an increase of 34 per cent on a year-on-year basis at Rs 2,658 crore while revenue rose 15 per cent to Rs 35,299 crore.
“Our businesses have delivered a solid operating performance this quarter. Auto continues to gain market share and grew rapidly to double its profit. Farm has gained market share despite tough market conditions,” M&M Managing Director & CEO Anish Shah said.
The fast moving consumer goods (FMCG) market growth rate will improve next fiscal led by a bounce back of value growth which has been impacted this fiscal due to a steep fall in commodity prices, said Godrej Consumer Products managing director and chief executive officer Sudhir Sitapati.
This year, volume growth has exceeded value growth since most FMCG product prices have turned negative, the makers of Good Knight mosquito repellant and Cinthol soaps said.
Talking to ET, Sitapati said commodity prices are now flat to slightly positive, while wage inflation is positive whereby product prices will be little higher than before in next few quarters leading to a high single digit value growth for the industry this calendar year.
“The water has found its own level as far as commodity prices. Unless there is a big geo-political factor, prices of palm oil and crude which are the biggest inputs for FMCG are expected to remain stable in 2024. This will improve overall industry growth rates next fiscal,” he said.
Godrej, which is the market leader in hair colour in India and globally has a complete portfolio in the hair care range, is evaluating options to expand its presence in the domestic market in this segment with newer categories like hair conditioners, treatment and straighteners, said Sitapati.
He said the company is testing the waters since it has these products right now in the salon channel sold under Godrej Professional brand name and depending on the success a separate line up may be sold in retail stores. It is not keen in crowded categories like shampoos and hair oils.
“Globally, we have a big hair care portfolio accounting for almost a third of our consolidated business. There are no definitive plans yet to launch those in India, but the potential remains,” said Sitapati. The market for hair care in India is around Rs 35,000 crore which includes shampoos, conditioners, hair colours, hair oils and straighteners.
Godrej in its December quarter earnings said India volumes grew by 12% while revenue by 9%. The revenue growth continued to lag the volume growth driven by price declines in personal wash. The company, which is the second largest in soaps, had increased prices of most soap packs by up to 25% in the peak of inflation in 2022 but has now dropped their prices by upto 20%.
FMCG market researcher NielsenIQ recently said the Indian FMCG industry reported 6% growth in value in the December quarter attributed to a 6.4% increase in volume. The researcher said the market is poised to grow by 4.5%-6.5% in 2024.
Sitapati said demand from higher income consumers is “extraordinarily high” whereby the premium products are doing exceedingly well. “The number of such consumers has gone up, with 20% of India now doing very well. The stress is amongst urban poor and rural. As a result, most mass products demand is sluggish,” he said.
The company has recently launched an anti-mosquito agarbatti targeting the mass market with a pack of ten selling for Rs 10, priced at par with the unorganized products and illegal imports from China. Sitapati said this product should help to increase growth rate since it’s a unique one based on a new molecule and the market size for such agarbatti is almost Rs 1200 crore.
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