Adani Group planning payments and e-commerce ventures: FT report
India’s Adani Group is considering an application for a licence to operate on the country’s public digital payments network and is in talks with banks to finalise plans for a co-branded credit card, the Financial Times reported on Tuesday. The plans to expand its consumer businesses come as billionaire Gautam Adani’s ports-to-power conglomerate mulls spending $84 billion in infrastructure over the next decade. If approved, the group will enter India’s burgeoning digital payments market, competing with incumbents like Google Pay and Walmart-backed PhonePe. India’s payments market is projected to reach $814.43 billion by 2029, up from $357.51 billion in 2024, according to a report by Mordor Intelligence. Currently, PhonePe leads the market with a 48.9% share, followed by Google Pay with a 37.7% share. Additionally, Adani Group is in discussions to offer online shopping through India’s government-backed public e-commerce platform, Open Network for Digital Commerce (ONDC), with services potentially available through its consumer app Adani One, launched in December 2022.
The conglomerate has been making efforts to recover from a January 2023 report by U.S. short-seller Hindenburg that triggered a sell-off in the group’s listed shares. The report accused the group of stock manipulation and improper use of tax havens, allegations that the group has refuted. A court-appointed panel stated in May 2023 that India’s markets watchdog “drew a blank” on the case, while the country’s top court said in January this year that no further scrutiny was needed. So far, four of the seven group companies have surpassed pre-Hindenburg report levels, including Adani Enterprises’ intraday recovery on Friday. The flagship firm’s shares are currently about 4% lower than pre-report levels.
Editor’s Note: Adani Group is eyeing entry into India’s digital payments sector by applying for a license and negotiating plans for a co-branded credit card with banks, as reported by the Financial Times. Additionally, discussions are underway for the conglomerate to offer online shopping services through India’s ONDC platform via its consumer app Adani One. These moves mark a strategic expansion into consumer businesses following Adani’s plans for significant infrastructure investment in the coming decade.
Google to manufacture Pixel in Tamil Nadu, MK Stalin confirms
Google is set to begin production of its Pixel smartphones in Tamil Nadu, India. The tech giant, in partnership with Foxconn Technology Group, will establish new production facilities in the state. Tamil Nadu Chief Minister M.K. Stalin confirmed the establishment of the first Google Pixel manufacturing unit in the region. Additionally, Google’s subsidiary, Wing, may start assembling drones in Tamil Nadu. This decision followed a visit by a state delegation, including Industries Minister Rajaa and Foxconn executives, to the US, where they met with senior Google officials in Mountain View, California. Google’s plans to start manufacturing Pixel 8 smartphones in India were announced in 2023, but the specific location was not disclosed at the time. This move aligns Google with other tech giants like Apple and Samsung, which have already set up local production facilities in India.
In addition to expanding its manufacturing footprint, Google is rolling out AI-powered editing features to older Pixel smartphones. Previously exclusive to the Pixel 8 lineup, these features include the Magic Editor, which enhances photo editing capabilities. Google had promised to make these AI features accessible to all users starting May 15, and they are now being rolled out to devices such as the Pixel 6 and Pixel 7. Users have reported the arrival of these features on their devices via Reddit, marking a significant update for older Pixel smartphones. This development is part of Google’s broader strategy to enhance the functionality and user experience of its existing devices.
Editor’s Note: Google has confirmed plans to manufacture Pixel smartphones in Tamil Nadu, India, in partnership with Foxconn Technology Group, according to Tamil Nadu Chief Minister M.K. Stalin. Additionally, there are discussions about Google’s subsidiary, Wing, potentially assembling drones in the region. The move underscores Google’s commitment to local production in India and mirrors efforts by other tech giants like Apple and Samsung.
Electronics companies want Rs 35,000 crore in PLI funding to increase production
The electronics manufacturing industry in India is urging the government to implement a production-linked incentive (PLI) scheme worth Rs 30,000-35,000 crore for components and sub-assemblies, alongside capital expenditure support to bolster the rising exports of mobile phones and other electronics, according to the Economic Times. The India Cellular & Electronics Association (ICEA), which represents top smartphone brands and manufacturing companies, stated that this scheme is crucial to meet the projected demand for electronics components, expected to reach $75-$80 billion by 2026 and $300 billion by 2032. The aim is to support the manufacturing of $300 billion worth of electronics products by 2026 and $1.2 trillion by 2032. The ICEA emphasized that the incentive scheme should increase domestic value addition in mobile phone manufacturing from the current 18% to 35-40%, in parallel with the development of India’s semiconductor ecosystem. The industry requested a 4-6% incentive for manufacturing sub-assemblies and high-end printed circuit boards, recommending an eight-year PLI plan with flexibility to claim incentives over six years.
Additionally, the ICEA proposed that companies investing Rs 1,000 crore or more in specific component manufacturing should receive 40% capital expenditure support, with an average incentive of 5% over six years for producing raw materials and other inputs. The industry stressed the importance of reducing reliance on imports by fostering an indigenous semiconductor ecosystem, supported by localized PCBA operations, focused circuit design, and increased value addition in product manufacturing. The ICEA projected that the domestic manufacturing of components would meet 5-10% of global demand within 6-7 years once established. They also recommended a 5% interest subsidy for component production on term loans and working capital requirements. Last month, ICEA suggested measures to enhance India’s position in semiconductor product design and IP creation, including encouraging large Indian corporates to invest in semiconductor design and treating chip design and manufacturing as a strategic sector. They also proposed establishing an exclusive market exchange for the electronics and hi-tech industry.
Editor’s Note: The Indian electronics manufacturing industry is advocating for a production-linked incentive (PLI) scheme totaling Rs 30,000-35,000 crore for components and sub-assemblies, as reported by the Economic Times. The India Cellular & Electronics Association (ICEA) asserts that such a scheme is vital to meeting the growing demand for electronics components, projected to reach significant milestones by 2026 and 2032. Emphasizing the need to boost domestic value addition and foster a robust semiconductor ecosystem, the industry proposes a comprehensive plan encompassing incentives, capital expenditure support, and measures to reduce reliance on imports.
Firms struggle with e-commerce in Q4, with revenues declining across all segments
The March quarter saw a slowdown in online consumption across segments such as electronics, wearables, and beauty products, as indicated by multiple listed companies and industry trackers. Logistics firm Delhivery reported a 13% sequential decline in express parcel shipments to 176 million, reflecting a dip in ecommerce delivery volumes. Cofounder and CEO Sahil Barua noted that this slump followed a strong October-December period marked by festive season sales, with year-on-year delivery volumes also down 2%. Despite this muted online consumption, brokerage firm Citi maintained long-term growth expectations of 15%-20% for ecommerce.
Overall, ecommerce sales remain sluggish, likely growing at less than 15% compared to the usual 20% growth rate, according to a major third-party logistics firm executive. Apparel and smartphone shipments, typically strong drivers of ecommerce growth, did not see significant increases due to the lack of major events and substantial purchases made during the last festive season. However, appliance sales saw a boost due to early summer demand, with Amazon India reporting significant growth in ACs, fans, and coolers during March and April, and Flipkart noting a 50-60% rise in AC demand in March. Smartphone sales remained muted due to a shift towards offline purchases and a lack of major releases, with Counterpoint Research reporting an 8% year-on-year increase in shipments from January to March, driven primarily by a low base from the previous year. The offline share of smartphone sales reached 64%, the highest post-Covid figure, while the premium segment (items costing over Rs 30,000) saw an 18% growth in market value, accounting for 20% of sale volume and 51% of sale value, the highest ever recorded.
Editor’s Note: In Q4, firms encountered challenges in e-commerce as revenues declined across various sectors, including electronics, wearables, and beauty products. Despite a strong festive season, logistics company Delhivery reported a sequential decline in express parcel shipments, reflecting a slowdown in online consumption.
Google invests $350 million in Flipkart
Google contributes $350 million to Flipkart, as part of a roughly $1 billion fundraising round
On May 24, Walmart-owned e-commerce platform Flipkart received a significant investment from Google in its latest funding round. Flipkart announced that Google would join as a minority investor, pending regulatory approvals. Reuters reported that Google’s investment amounted to nearly $350 million, raising Flipkart’s valuation to $37 billion. This partnership also includes a deeper collaboration with Google Cloud to enhance Flipkart’s cloud infrastructure. Rajneesh Kumar, Flipkart’s Chief Corporate Officer, stated that the collaboration would help the company expand its business and modernize its digital infrastructure. Earlier reports indicated that Flipkart was raising $1 billion, including a $600 million investment from Walmart, with Flipkart Internet receiving a cash infusion of about ₹924 crore ($111 million) from Singapore-based entities earlier in the year. This marks Flipkart’s first fundraiser since 2021.
In March, reports surfaced that Flipkart planned to enter the quick commerce sector, offering 10-15 minute deliveries in major cities such as Bengaluru, Delhi (NCR), and Hyderabad, potentially competing with Blinkit, Swiggy Instamart, and Zepto. While Flipkart did not confirm these plans, a spokesperson highlighted the company’s investments in enhancing delivery capabilities, including same-day delivery in 20 cities for items such as mobiles, essentials, electronics, home appliances, fashion, books, and other lifestyle products. Additionally, Flipkart introduced a new Unified Payments Interface (UPI) service in partnership with Axis Bank, putting it in direct competition with Google Pay, operated by its new investor Google, and the formerly acquired PhonePe.
Editor’s Note: Google has invested $350 million in Flipkart as part of a larger fundraising round, boosting Flipkart’s valuation to $37 billion. This investment aligns with Flipkart’s plans to expand its business and modernize its digital infrastructure, including a deeper collaboration with Google Cloud.
Hero Electric, Okinawa, and Benling may be removed from all government schemes: Officials
Three electric two-wheeler companies—Hero Electric, Okinawa, and Benling India—face potential de-registration or blacklisting from future government schemes if they do not repay the money owed under the FAME-II scheme. These companies were found to have earned ₹300 crore in violation of the FAME-II guidelines and are now required to return this amount. In April last year, the Ministry of Heavy Industries (MHI) fined Hero Electric ₹133.8 crore, Okinawa Autotech ₹116.85 crore, and Benling India ₹48.42 crore for non-compliance with the scheme’s norms. Consequently, Hero Electric and Benling India have been debarred from all MHI schemes, and Okinawa’s case remains pending in court. All three companies declined to comment, citing ongoing legal proceedings. The violations primarily involved allegations of importing vehicle parts, particularly from China, against the scheme’s localisation requirements.
In 2022, complaints prompted the MHI to investigate 13 companies, revealing that six companies, including Hero Electric, Okinawa Autotech, and Benling India, violated FAME-II norms, leading to a total fine of ₹469 crore. While Amo Mobility, Greaves Electric Mobility, and Revolt returned the subsidies with interest, Hero Electric, Okinawa, and Benling did not, resulting in their de-registration in late 2023. These companies have appealed to the Delhi High Court, asserting their compliance with the scheme. Okinawa has filed a writ petition to recover over ₹425 crore in outstanding FAME II dues, maintaining that it has adhered to the guidelines and emphasizing that the electric two-wheeler industry is now self-sufficient.
Editor’s Note: Hero Electric, Okinawa, and Benling India face potential removal from future government schemes due to non-repayment of funds under the FAME-II scheme, totaling ₹300 crore. While Hero Electric and Benling India have already been debarred from Ministry of Heavy Industries schemes, Okinawa’s case is pending in court. Allegations primarily revolve around violations of the scheme’s localisation requirements, particularly related to importing vehicle parts from China.
Mobile PLI may extend beyond 2026
The highly successful smartphone PLI (production-linked incentive) scheme, initially set to conclude in 2025-26, might be extended by a couple of years. This five-year scheme, which began in 2020, allows companies to choose any five consecutive years within its duration, with Apple selecting 2021-2026 and Samsung 2020-2025. While perpetual subsidies are not seen as sustainable, an abrupt end could be counterproductive. Therefore, the government is considering replacing the smartphone PLI with a component-incentive scheme focused on inputs that are currently imported, contributing to the current account deficit. This transition aims to provide manufacturers time to scale up component production while still supporting finished products temporarily. The PLI scheme has significantly boosted domestic smartphone production, increasing from ₹2.14 trillion in FY20 to ₹4.1 trillion in FY24, and exports have risen from ₹27,225 crore in FY20 to ₹1.2 trillion in FY24. Apple and Samsung have been the primary beneficiaries, with local manufacturer Dixon also gaining from the scheme.
The new component scheme will be finalized once the new government takes office next month and will be aimed at increasing domestic value addition from the current 15-18% to around 35-40%, eventually reaching 50%. The scheme will adopt a plug-and-play model, with the government acquiring land and building factories that global companies can use to produce printed circuit boards, electronic components, camera modules, and more. Investments in land and factories are expected to be recouped through goods and services taxes, while reducing the import bill and current account deficit. Competing countries like China, Thailand, and Vietnam, which currently hold a trade surplus in electronics, have established similar models. India’s domestic electronics manufacturing grew from $102 billion in FY23 to $115 billion in FY24, with a target of $300 billion by 2025-26. Additionally, electronics goods exports increased by 23.6% to $29.12 billion in FY24, despite a contraction in the country’s total exports.
https://www.financialexpress.com/business/industry-mobile-pli-may-be-extended-beyond-2026-3497936
Editor’s Note: The successful smartphone Production-Linked Incentive (PLI) scheme, initially slated to end in 2025-26, might be extended for a few more years. The proposed extension aims to facilitate a smoother transition to a new component-focused incentive scheme, aiming to bolster domestic component production and reduce reliance on imports, particularly for inputs contributing to the current account deficit.