Weekly News Updates- June 19 – June 25

Indian automobile industry expands by 19% in FY24; India's demand for electronics components expected to exceed $240 billion by 2030; Quanta Computer Inc. considers establishing manufacturing base in India; Taiwan ‘actively considering’ Visa on Arrival for Indians; Indian startups regain lost funding ground in H1 2024: Tracxn Report; Cost of FAME 3: Automakers must meet local sourcing norms or face penalties

Indian automobile industry expands by 19% in FY24 to reach INR 10.22 lakh cr: Report

The Indian automobile industry grew by 19 per cent to Rs 10.22 lakh crore in FY24, driven primarily by the robust expansion of the utility and sports utility vehicle (SUV) segments, according to a report by Primus Partners. The industry saw a 10 per cent increase in volume, with the UV and SUV segment experiencing a notable 23 per cent rise in volume and a 16 per cent increase in price, leading to an overall value increase of 39 per cent. This growth was attributed to factors such as a general rise in prices, a shift towards higher segments, hybrid and automatic vehicles, the popularity of sunroofs, and the increasing adoption of electric vehicles (EVs). The report highlights that Indian consumers are favoring higher-priced, feature-rich models, contributing to the industry’s transformation and positioning India as a leader in the global automobile market.

While the UV and SUV segments surged, the passenger vehicle (PV) segment saw a 9 per cent decline in volume, resulting in a 4 per cent drop in value due to slight price increases. In contrast, the two-wheeler segment grew by 10 per cent in volume and 13 per cent in value, making India the top producer of two-wheelers globally with over 20 million units produced last year. The three-wheeler segment and the commercial vehicle segment also saw growth, with volume increases of 16 per cent and 3 per cent and value increases of 24 per cent and 7 per cent, respectively. Despite being third in terms of vehicles registered, behind China and the US, India’s average vehicle price remains lower than that of many advanced countries. However, the value of the Indian automobile industry is growing faster than its volume, underscoring the country’s significant strides in the global market.


Editor’s Note: The Indian automobile industry showed robust growth in FY24, expanding by 19% to reach INR 10.22 lakh crore. This growth was largely driven by strong performances in the utility and sports utility vehicle (SUV) segments, which saw significant increases in both volume and value. The industry’s transformation, marked by a shift towards higher-priced and feature-rich models, underscores India’s growing influence in the global automotive market.

India’s demand for electronics components expected to exceed $240 billion by 2030

India needs to transform its electronics sector from an import-dependent, assembly-led model to value-added component manufacturing, as emphasized in a report by the Confederation of Indian Industry (CII). In 2023, the demand for components and sub-assemblies surged to US$45.5 billion to support electronics production worth US$102 billion. This demand is projected to skyrocket to US$240 billion by 2030, supporting an electronics production value of US$500 billion. Key components and sub-assemblies, such as Printed Circuit Board Assemblies (PCBAs), are expected to grow at a robust CAGR of 30%, reaching US$139 billion by 2030. To facilitate this transformation, the report urges the government to implement crucial measures, including a fiscal support scheme, the introduction of SPECS 2.0 (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors), rationalising import tariffs on components like camera modules, and signing Free Trade Agreements (FTAs) with European and African countries. These steps are essential for transitioning India from a mere assembler to a producer of high-value electronic components.

The report identifies five priority components—batteries (lithium-ion), camera modules, mechanicals, displays, and PCBs—as critical areas for India to focus on. These components, which accounted for 43% of the demand in 2022, are expected to grow to US$51.6 billion by 2030. Currently, the production of these components within India is minimal, making the country heavily reliant on imports—a trend that is unsustainable. The PCBA segment, with most of its demand currently met through imports, is another high-potential area for India. This segment is expected to grow by 30%, creating a demand of around US$87.46 billion by 2030. However, India faces significant challenges, including manufacturing costs that are 10-20% higher than those in China, Vietnam, and Mexico, a lack of large domestic manufacturing corporations, a weak domestic design ecosystem, and insufficient raw materials. Policy support is crucial in overcoming these hurdles, which will yield substantial economic benefits, such as creating approximately 280,000 jobs by 2026, increasing domestic value addition, reducing import dependency, and boosting GDP. These strategic changes are vital for positioning India as a global hub for electronics manufacturing.

Editor’s Note: India’s electronics sector is poised for transformative growth, with demand for components and sub-assemblies projected to exceed $240 billion by 2030, supporting a production value of $500 billion. To achieve this, the Confederation of Indian Industry (CII) emphasizes the need for India to shift from an import-dependent model to a manufacturer of high-value electronic components like PCBAs and lithium-ion batteries. Key policy measures, including fiscal support schemes and rationalized import tariffs, are crucial to bolster domestic manufacturing capabilities and reduce reliance on imports, fostering job creation and economic growth in the sector.

Quanta Computer Inc. considers establishing manufacturing base in India

Taiwan’s Quanta Computer Inc., the world’s leading contract PC manufacturer known for making laptops and assembling Apple Inc’s watches, announced on Thursday that it is considering establishing a manufacturing base in India. Following the company’s annual investor conference, Quanta vice-chairman C.C. Leung stated that they were gathering materials for evaluation and looking into the possibility of establishing a manufacturing base in India. This consideration comes in the wake of a similar move by Quanta’s rival, Hon Hai Precision Industry Co Ltd, commonly known as Foxconn. Foxconn has announced plans to invest billions of dollars in establishing 10 to 12 facilities in India by 2020. Indian government officials have confirmed that Foxconn is in talks with its main client, Apple, regarding these potential investments.

Under Prime Minister Narendra Modi, India has been striving to rejuvenate its manufacturing sector to boost economic growth and employment. However, it has yet to match China’s prowess, particularly in technology, where most factories are initially expected to be assembly units. Currently, all of Quanta’s manufacturing facilities are located in China.Leung emphasized that Quanta does not have specific investment plans at present and mentioned several considerations for evaluating India’s suitability for manufacturing. In addition to its work with Apple, Quanta manufactures laptops for Hewlett-Packard Co and is the main assembler for the recently released Apple Watch. Despite a predicted 6.2 percent drop in industry-wide shipments by market analysts International Data Corp, Quanta expects its PC shipment volume and revenue contribution from PCs to remain consistent with last year.


Editor’s Note: Quanta Computer Inc., renowned for manufacturing PCs and assembling Apple devices, is exploring the possibility of establishing a manufacturing base in India, following in the footsteps of its rival Foxconn. This move aligns with India’s efforts to bolster its manufacturing sector under Prime Minister Narendra Modi’s leadership, though the country still trails China in technological manufacturing capabilities. Quanta’s consideration reflects a strategic evaluation of India’s potential as a manufacturing hub amidst global shifts in supply chain dynamics.

Taiwan ‘actively considering’ Visa on Arrival for Indians

Taiwan is “actively considering” extending visa-on-arrival facilities for Indian travelers, announced deputy foreign minister Tien Chung-kwang. He highlighted the growing outbound travel power of Indians as a key factor in this consideration, though discussions with the immigration department are still necessary. Currently, Indian travelers must apply for a visa through the Taipei Economic and Cultural Center in India, a process that takes 2-10 working days. Taiwan sees India as a crucial market to achieve its target of 10 million annual tourists, particularly in the corporate incentive sector.

Despite this, the lack of direct flights between Taiwan and India, suspended during the COVID-19 pandemic, remains a significant challenge. Trust Lin, deputy director-general of Taiwan Tourism Administration, emphasized the need for direct flights to facilitate travel.In 2019, Taiwan welcomed 40,000 Indian tourists, but this number dropped to 32,000 last year. Taiwan aims to attract over 100,000 Indian tourists annually and reach pre-pandemic levels this year. To boost tourism, Taiwan opened the Taiwan Tourism Information Centre in Mumbai and launched the Taiwan Specialist Program to educate Indian travel professionals about Taiwan’s offerings.

India’s business travel market is significant, with business travel spending expected to reach $38 billion this year. Taiwan’s tourism authorities are focusing on the Meetings, Incentives, Conferences, and Exhibitions (MICE) market to attract Indian travelers, underscored by a multi-city roadshow in India earlier this year.


Editor’s Note: Taiwan is actively considering offering visa-on-arrival facilities to Indian travelers, aiming to enhance tourism between the two countries. Deputy Foreign Minister Tien Chung-kwang highlighted India’s growing outbound travel potential as a key factor in this decision, though logistical challenges such as the absence of direct flights remain to be addressed. Taiwan is keen to tap into India’s lucrative business travel market and boost overall tourist numbers through strategic initiatives like the Taiwan Specialist Program and targeted marketing efforts in major Indian cities.

Indian startups regain lost funding ground in H1 2024: Tracxn Report

After experiencing declining funding for four consecutive half-year periods since 2022, Indian tech startups have seen an upward trend in the first half (H1) of 2024, according to the India Tech Semi-Annual Funding Report by Tracxn. Indian startups raised $4.1 billion in H1 2024, a 4% increase from $3.96 billion in the second half (H2) of 2023, though this is still 13% lower than the $4.8 billion raised in H1 2023.

India ranked as the fourth-highest-funded country globally in the tech startup landscape, slipping one position as China advanced by raising $6.2 billion. Despite this, India had more funding rounds (540) and first-time-funded companies (168) than China, which had 327 rounds and 159 new companies.

Neha Singh, co-founder of Tracxn, noted the signs of stabilization and an upward trend in funding. She highlighted India’s strong performance in the retail, enterprise applications, and fintech sectors, which are driving economic growth. Bengaluru led in total funds raised, followed by Delhi and Mumbai. The top investors were Accel, Blume Ventures, and Peak XV Partners. Notably, three unicorns emerged in H1 2024, with 33 new additions to the soonicorn club, and the number of IPOs increased to 17 from six in H1 2023. This positive shift underscores the resilience and potential of the Indian tech startup ecosystem, indicating a promising future ahead.


Editor’s Note: Indian tech startups have rebounded in the first half of 2024, raising $4.1 billion in funding, marking a 4% increase from the previous half-year. Despite a slight decline compared to the same period in 2023, India remains a prominent player globally with a robust number of funding rounds and new companies entering the market. The emergence of new unicorns and an uptick in IPOs signal a promising trajectory for India’s tech startup ecosystem moving forward

Cost of FAME 3: Automakers must meet local sourcing norms or face penalties

Automakers applying for subsidies under the third edition of the Centre’s flagship incentive scheme for electric vehicles, Faster Adoption and Manufacturing of Electric Vehicles (FAME 3), will face penalties if they fail to adhere to localization norms.

A senior official told ET that companies certifying vehicles for subsidies will undergo a techno-commercial audit twice a year to ensure compliance with these norms. FAME 3 is scheduled to be announced in the upcoming budget, reinforcing the government’s commitment to promoting local manufacturing in the electric vehicle sector.


Editor’s Note: Under the upcoming FAME 3 initiative, automakers seeking subsidies for electric vehicles must comply with stringent local sourcing requirements or risk penalties, according to a senior government official. The scheme, set to be announced in the upcoming budget, aims to bolster local manufacturing and advance India’s electric vehicle adoption agenda.