Saturday, August 13, 2016

India's 70th Independence Day: Is "Make in India" All Hype?

Some of Prime Minister Narendra Modi's supporters claim that his "Make in India" campaign has brought India to the verge of becoming a manufacturing behemoth 69 years after the nation's independence. Others claim India is already a manufacturing powerhouse. Let's examine these claims based on data.

Manufacturing Ranking:

While India now ranks 6th in the world in terms of total manufacturing output, it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016.  Pakistan's manufacturing value added is ranked 146th by the same report.


Manufacturing Output:

India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%,  Japan's 16%, Germany's 7% and South Korea's 4%.

The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014.   However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014

UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its  MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.

India's manufacturing output declined 0.7% in April-June 2016-17

Make in India:

Prime Minister Narendra Modi has recognized how far behind India is in the manufacturing sector. His government's highly publicized "Make in India" is designed to Change that.

What does India, or for that matter any other developing country, need to boost its manufacturing output? Most experts agree on two essential pre-requisites for industrial development:

1. Energy and Infrastructure

2. Skilled Manpower

China's rapid industrialization over the last few decades has shown that the focus must be on the above two to achieve desired results. Has India learned from the Chinese experience? Let's examine this question.

Energy and Infrastructure Development:

"Infrastructure is the biggest hurdle to the ambitious Make in India program of the government," Standard and Poor Global Ratings Credit Analyst Abhishek Dangra told reporters on a conference call,  according to India's Economic Times publication.

"The government is scaling up spending, but its heavy debt burden could derail its ambitions to improve public infrastructure," the Standard and Poor report said.

India suffers from huge energy deficit. Over 300 million of India’s 1.25 billion people live without electricity.  Another 250 million get only spotty power from India’s aging grid, with availability limited to three or four hours a day, according to an MIT Energy Report. The lack of electricity affects rural and urban areas alike, limiting efforts to advance both living standards and the country’s manufacturing sector.

Skilled Manpower:

“India doesn’t have a labor shortage—it has a skilled labor shortage,” said Tom Captain, global aerospace and defense industry leader at Deloitte Touche Tohmatsu, according to a Wall Street Journal report.

The WSJ report said that over 80% of engineers in India are “unemployable,” according to Aspiring Minds, an Indian employability assessment firm that did a a study of 150,000 engineering students at 650 engineering colleges in the country.

NPR's Julie McCarthy reported recently that ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years.

Impact on Agriculture: 

Prime Minister Modi's focus on manufacturing is talking away resources and attention from India's farmers who are killing themselves at a rate of one every 30 minutes.

Majority of Indian farmers depend on rain to grow crops, making them highly vulnerable to changes in weather patterns. As a comparison, the percentage of irrigated agricultural land in Pakistan is twice that India.

More than half of India's labor force is engaged in agriculture. Value added per capita is among the lowest in the world. Pakistan's agriculture value added per capita is about twice India's. This is the main cause of high levels of poverty across India.

Chinese Experience:

China has shown that it is possible to make huge strides in manufacturing while at the same time achieve high productivity levels in agriculture.

On the manufacturing front, China has taken care of the basics like energy, infrastructure and skilled manpower development to achieve phenomenal growth.

As part of the China-Pakistan Economic Corridor (CPEC) development, Pakistanis are learning from the Chinese to replicate success in manufacturing.

The first phases of CPEC are focused on building power plants, gas pipelines, rail lines, roads and ports at a cost of $46 billion. At the same time, China and Pakistan are also focussing on skills training via vocational schools and Pakistan-China Education Corridor. These projects will lay the foundation necessary to ramp up manufacturing in Pakistan.

Summary:

Both India and Pakistan want to emulate the success of China in the manufacturing sector. The Chinese experience has shown that development of energy, infrastructure and skilled labor are essential to achieve their manufacturing ambitions. The South Asians must move beyond hype to do the hard work necessary for it. Pakistan is working with China via CPEC to make progress toward becoming a manufacturing powerhouse.

Related Links:

Haq's Musings

Auto Industry in India and Pakistan

UN Industrial Development Report 2016

Indian Farmer Suicides

China-Pakistan Economic Corridor

Robust Energy Demand Growth in Pakistan

Human Capital Development in Pakistan


87 comments:

Mohsin H. said...

Good analysis, Sir!

Another issue is their red tape which Modi has not been able to cut through. Or the issue with the SMEs which, despite all the great press, have been a bit of a drag what with all the resistance to global standards!

Riaz Haq said...

Mohsin H.: "Good analysis, Sir!"

Meanwhile, India's manufacturing output is down 0.7% in April-June quarter and its exports are down 6.8%. Exports fell in July by 6.84% to $21.7 billion. Exports have declined for 20 of the past 21 months. India's power generation growth down to 1.6% in July lowest in yrs.

https://pbs.twimg.com/media/CptgeFVUAAEkVEz.jpg:large

https://pbs.twimg.com/media/Cpqaq3HXYAAfMBJ.jpg:large

https://pbs.twimg.com/media/CpjY8WfVYAEDM7K.jpg:large

Joseph Panchal said...

The "Make in India" is a seed that was recently planted. Proper conditions like the GST, Labor Laws and Training need to go through the legislative process. The germination and fruit bearing will come.

Asma said...

The MIT 10/2015 report you cite is a lengthy one and what you have mentioned from it is duly noted. The research was done from pre Modi to 1 year post Modi. Here is the conclusion:-

Paradoxically, the sheer size of the task ahead—the fact that India is in the early stages of upgrading and modernizing its energy system—is in some ways an advantage. It happens to be embarking on its modernization phase at a time when prices for renewable-energy generation, and for the technology to make it work at the local level, are starting to rival prices for traditional fossil-fuel-generated power.

BMW, for example, said earlier this year that it will build a solar plant to meet 20 percent of the power demand at its factory near Chennai. Indian Railways, which operates the most extensive railroad system in the world and is the nation’s largest employer, plans to build a gigawatt of solar capacity in the next five years. By avoiding the cost of providing universal, grid-based electricity, India can concentrate on what works best for specific locations and specific needs. Every microgrid and local solar system deployed reduces by a fraction the need to extend the grid; every new renewable-energy system installed by a business or factory reduces the pressure to build ultra-mega power plants.

Ananda Tushar said...

American military manufacturer Lockheed Martin could soon be producing F-16 fighters in an assembly line based in India, taking advantage of the new liberalised FDI conditions announced recently. India will also become a platform for export of F16s worldwide after technology transfer terms are negotiated all part of the Make in India thrust.
TATA collaborating with GE and Lockheed Martin will train engineers for this purpose. The government has earmarked $3.5 billion through private public partnership to overcome the skill deficit.

Anonymous said...

F 16 is a plane being phased out in the US and over 40 years old.the tot on offer is less than what we get from Russia for Su 30 mki.

US government are unreliable we should stick with Russia Israel and France and only buy things these countries can't offer like p8 Poseidon and transport planes line c 17...

Riaz Haq said...

#India redfaced as its independence day video shows #Pakistan’s #JF17 jets photoshopped with tricolor via @htTweets

http://www.hindustantimes.com/india-news/culture-ministry-video-features-pakistan-s-jf-17-jets/story-LnWQfOze4EbL2Ne5swuS0N.html

The culture ministry was embarrassed on Friday when social media users pointed out that one of its videos celebrating Independence Day featured Pakistan’s JF-17 Thunder combat jets in the opening segment.
The animated segment at the start of the 1.40-minute video showed two JF-17s, one on either side of a stylised symbol commemorating 70 years of the country’s independence and adorned with the Indian tricolour.
The video, which promoted an online application system for getting no-objection certificates for constructions from the National Monuments Authority, was posted on Twitter on Thursday. Eagle eyed social media users pointed out the jets in the video were Pakistani aircraft and it was removed from Twitter.
An official reaction from the culture ministry was awaited.
The JF-17 looks similar to India’s Tejas light combat aircraft. Both are single-engine jets but the Tejas does not have tailplanes while the JF-17’s air intakes are located further forward on the fuselage.

Riaz Haq said...

#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT


"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.

BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.

In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector.

On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.

While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."

Anonymous said...

So BMI's prediction about Pakistan is right, and others prediction about India is wrong. At least in India's case there is already a baseline to compare with their industries producing various things from bikes to cars, trucks and locomotives, many of which is exported too.

what does Pak produce ?

It is amazing that Pakis think what they failed for 69 yrs would suddenly be solved.

You wanna bet. 10 yrs from now you still would be talking about Pak's potential.

Anonymous said...

https://lineshapespace.com/manufacturing-in-india/?utm_source=twitter&utm_medium=paid&utm_campaign=SimpleReach&sr_source=lift_twitter

Riaz Haq said...

Anon: "You wanna bet. 10 yrs from now you still would be talking about Pak's potential."

Yes, I agree.

It's because Pakistan is a young country with even younger demographics. Its potential is virtually unlimited.

It'll continue to grow with time as Pakistan achieves greater successes in the coming decade.

Here's Jacqueline Novogratz of Acumen Foundation:

"I look at the hundreds of young people, each of them filled with unlimited potential, undaunted by the lack of a traditional classroom or teacher or even time for school. Yet they couldn’t be more serious, more focused on learning, their only real hope for changing their own lives in ways that would give them more control."

https://medium.com/acumen-ideas/as-i-leave-the-karachi-airport-waiting-for-my-delayed-pia-flight-to-mumbai-my-twitter-feed-sends-79acf47d1d6c#.dwu82fu1w

Sushma Pandit, MSc said...

You have quoted future predictions such as, "Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."

That is good for Pakistan but relative to other South Asian countries, Pakistan is expected to grow lot slower. Here are the estimates per capita PPP $ figures for 2016 & 2021 and the cumulative 5 year growth by the IMF economists.

Bangladesh 3841 & 5194 (35.22%)
India 6599 & 9837 (49.07%)
Pakistan 5174 & 6648 (28.49%)

Riaz Haq said...

SP: "the cumulative 5 year growth by the IMF economists."

IMF has been so wrong for so long that these long term forecasts are meaningless.

Here's an assessment of IMF's forecasts record:

In the 2001 issue of the International Journal of Forecasting, an economist from the International Monetary Fund, Prakash Loungani, published a survey of the accuracy of economic forecasts throughout the 1990s. He reached two conclusions. The first was that forecasts are all much the same. There was little to choose between those produced by the IMF and the World Bank, and those from private sector forecasters. The second conclusion was that the predictive record of economists was terrible. Loungani wrote: “The record of failure to predict recessions is virtually unblemished.”

Now Loungani, with a colleague, Hites Ahir, has returned to the topic in the wake of the economic crisis. The record of failure remains impressive. There were 77 countries under consideration, and 49 of them were in recession in 2009. Economists – as reflected in the averages published in a report called Consensus Forecasts – had not called a single one of these recessions by April 2008.

This is extraordinary. Bear in mind that this is not the famous complaint from the Queen that nobody saw the financial crisis coming. The crisis was firmly established when these forecasts were made. The Financial Times had been writing exhaustively about the “credit crunch” since the previous summer. Northern Rock had been nationalised in the UK and Bear Stearns had collapsed in the US. It did not take a genius to see that trouble was on the way for the wider economy.

More astonishing still, when Loungani extends the deadline for forecasting a recession to September 2008, the consensus remained that not a single economy would fall into recession in 2009. Making up for lost time and satisfying the premise of an old joke, by September of 2009, the year in which the recessions actually occurred, the consensus predicted 54 out of 49 of them – that is, five more than there were. And, as an encore, there were 15 recessions in 2012. None were foreseen in the spring of 2011 and only two were predicted by September 2011.


https://www.ft.com/content/14e323ee-e602-11e3-aeef-00144feabdc0

Sushma Pandit, MSc said...

Predicting a recession versus cross country comparisons in a region using existing fundamentals such as savings rate, and others you have mentioned, are two separate issues.

You have articulated Pakistan economic future yourself using BMI. Now, how does Pakistan compare with others in South Asia? That's where IMF comes in.

Riaz Haq said...

#Pakistan: Planting economic seeds for a brighter tomorrow- #CPEC #FDI

http://www.khaleejtimes.com/international/pakistan/pakistan-planting-economic-seeds-for-a-brighter-tomorrow

A few years ago a lot of international firms almost cringed at the idea of investing in Pakistan. Insecurity, instability and unfavourable business environment were the usual key words used to bail out of potential conversations. However, none of that holds true today. Pakistan has made commendable progress in restoring macroeconomic stability and is a rising star in south Asia, exuding confidence and optimism like never before.

Karachi, Pakistan's financial hub of 20 million, is flourishing with a spur in real estate boom and new, upmarket seaside restaurants and cafes. In major cities car sales are on the rise and shopping malls are sprouting to cater for an expanding middle class.

The revived health of the economy is evident from the vital statistics: the annual GDP growth rate for the fiscal 2015-16 that ended on June 30 stood at 4.7 per cent - its fastest pace in eight years. In 2014-15, Pakistan grew at 4.2 per cent, as per Pakistan Economic Survey report.

Inflation, the cornerstone of a healthy economy, has been tamed at around 3 per cent from the highs 20 per cent in 2008, as per the latest Economic Survey published by the Government of Pakistan.

The government's budget deficit too eased from 8 per cent to 5 per cent of the GDP, and the current account deficit is now at 1 per cent of the GDP. Tax revenues have doubled in the last three years, and remittances have reached a whopping $19.9 billion for the fiscal ending on June 2016. The foreign exchange reserves too are at an all-time high at over $21.4 billion, enough to finance over five months of country's import bills. Rightly so, the Pakistani rupee has maintained exchange rate stability during
the year.

The interest rates are at a 43-year low allowing strong credit expansion and helping companies in various industries, such as industrial, food, beverage, textile, electricity and construction.
Investment in infrastructure has seen a significant jump, primarily fuelled by initiatives undertaken as part of the massive China-Pakistan Economic Corridor (CPEC). The $46-billion commitment by China is expected to bolster Pakistan and turn it into a flourishing trade economy in a few years after completion.

Government initiatives

The first signs of improvement appeared in 2013 when Pakistan witnessed a peaceful transition of its civilian government for the first time in history. Since then the government has launched concerted programmes with the military to weed out extremism and terrorism from the soil of Pakistan and create an enabling environment. Zarb-e-Azb has immensely helped in this regard and a smooth implementation of the National Action Plan (NAP) too played an important role.

Concurrently, the government has also been working on the economic front by drafting prudent policies and implementing the same in time. In the last three years, financial coffers have been revived as the tax revenue doubled.
The government is now contouring plans to develop Pakistan into a manufacturing hub. It aims to diversify, grow at a consistently fast pace for the next 10 years, and emerge as the top 10 emerging markets from Asia and Africa. As of now, textile and automotive sectors are showing great potential and the fastest rate of growth.
The government has also managed to complete 11th successful reviews with the International Monetary Fund (IMF), which has further strengthened the confidence of international investors and has placed Pakistan on their radar screen as future investment destination.

Asif said...

Apne Templeton ka zikar kiya lekin out of $100 sirf $6 Pakistan will go to Pakistan. Koi guide 100% ke liye??. Emerging Market 2017 me Pakistan ayega. Please thanks

Riaz Haq said...

Asif: "Koi guide 100% ke liye??"

PAK ETF is 100% invested in Pakistan

Riaz Haq said...

SP: "Predicting a recession versus cross country comparisons in a region using existing fundamentals such as savings rate, and others you have mentioned, are two separate issues."

Unanticipated recessions are the biggest killers of long term growth forecasts.

Riaz Haq said...

What explains #Modi government kicking up a row over #China #Pakistan Economic Corridor (#CPEC) now?

http://scroll.in/article/814059/what-explains-modi-government-kicking-up-a-row-over-china-pakistan-economic-corridor-now … via @scroll_in

By MK Bhadrakumar

The big question is: How do the Chinese assess the Modi government’s proclivity to count the trees instead of seeing the woods? Do they sense this might be a matter of conscious choice?

What rankles most in the Indian mind is China’s relations with Pakistan. The Modi government demands that China should suspend the China-Pakistan Economic Corridor on the plea that Gilgit, Baltistan and Pakistan-Occupied Kashmir are Indian territories.

In reality, though, we have a classic situation where it is entirely up to India to raise dust (or not to raise dust). It is even baffling how economic development of those neglected regions would hurt Indian interests. After all, the people inhabiting those regions are also Indians, isn’t it?

The sensible thing would have been to let the Chinese loosen their purse strings to develop our territories that happen to be inside Pakistan temporarily so that when we finally make them part of Akhand Bharat, they won’t be the impoverished terrorist-infested swathes of land that they are today.

Frankly, India is taking an illogical stance. The Modi government estimates that Economic Corridor is “India-centric”, whereas, it is a strategic initiative by China in self-interest.

China has a good reputation for putting money only where the mouth is – and $46 billion is a lot of money. The Chinese motivations are not difficult to comprehend.

The Economic Corridor boils down to project exports by Chinese industry, which is saddled with excess capacity.
Two it opens up efficient communication links with markets in the Gulf and Africa.
It fuels the economy of Xinjiang.
It mitigates to some extent China’s “Malacca Dilemma” – the fact that 80% of China’s oil imports have to pass through the strait en-route from West Asia and Angola.
It creates leverage to balance the traditional American dominance over Pakistan.
Indeed, finally, it cannot be overlooked that One Belt One Road Initiative has a geopolitical dimension insofar as it counters the US’ strategy to encircle China and "contain" it.
Conceivably, the China-Pakistan Economic Corridor will galvanise Pakistan’s economy. Now, isn’t that a nice thing to happen if it prods our western neighbour to understand that getting rich is the smart thing to do?

If China succeeds in transforming Pakistan as a modern middle-income economy like Turkey or Malaysia, it can only strengthen regional security. But then, a paradox arises: If Pakistan does not collapse as a “failing state” and instead becomes a more prosperous country than India, what happens to Akhand Bharat?

The smart thing would have been to offer to the Chinese an economic corridor through our territory. It is advantageous to be a transit country.

Anonymous said...

https://twitter.com/makeinindia/status/765465794566250498

India moved 15th place to 66.
Pakistan is at 109th. It is expected that with China's help via CPEC it will become 9th within a decade.

Riaz Haq said...

Ramesh: "India moved 15th place to 66. Pakistan is at 109th. It is expected that with China's help via CPEC it will become 9th within a decade."

If you believe this ranking, you must also believe that UAE (41), Qatar (49) and Saudi Arabia (50) are way ahead of India in innovation.


http://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2016-intro5.pdf

Iqbal Singh said...

The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation. The operative word is not innovation success but the capacity for it.

Qatar and Saudi Arabia both fund many projects so their ranking is correct

Riaz Haq said...

IS: "The Global Innovation Index is an annual ranking of countries by their capacity for, and success in, innovation."

So why isn't US #1?

US dominates the list of top universities and spends 2.81% of its GDP and demonstrated of greater success than any other countryl

Iqbal Singh said...

US at #4 is an excellent rating. Mr. Riaz, I understand your reservations but many corporate businesses use this index in addition to other factors before they invest internationally.

Riaz Haq said...

IS: "many corporate businesses use this index in addition to other factors before they invest internationally. "

The primary motivation for US businesses is cheap labor. Be it Google, Apple, Cisco, etc, they all do real R&D in the United States and then use cheap labor for more mundane work in countries like India.

Besides, almost all of the basic research and development is funded by the US government that requires it to be done in US.

Major innovations like transistors, computers, networking as well as life-sciences have come from US taxpayer money put into DARPA, NSF, NIH, etc.

Jaishankar said...

"The primary motivation for US businesses is cheap labor. Be it Google, Apple, Cisco, etc, they all do real R&D in the United States and then use cheap labor for more mundane work in countries like India."


GE has set up shop in various countries to manufacture turbines to medical equipment. All that requires local engineering capacity to innovate (something the local firms were not doing). Boeing makes fuselages in the same manner. India makes auto parts for all the major Auto makers.
Your comment is only half true.

Riaz Haq said...

Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.


The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.

----

It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.

In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.

A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.


-----------

The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.

SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.

“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net

He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.


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A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.

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SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.


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http://thewire.in/62053/pakistans-coal-expansion-brings-misery-to-villagers-in-thar-desert/

https://vimeo.com/179874726

Riaz Haq said...

Few jobs, weak #industrial prod, bad loans. What’s #India celebrating? #AchheDin #MakeInIndia #Diwali http://qz.com/805686 via @qzindia

The world’s fastest-growing major economy may have hit an air pocket.
India’s 7.6% annual growth in the 2016 fiscal year has made it a standout performer amid a sluggish global economic environment. So far, this year, the GDP numbers look good and a bountiful monsoon will help further. Benign global oil prices will also add to the headline GDP number since India imports over 75% of its crude oil requirement.
But there are some reasons to worry. Data released over the last few weeks show that the bad-loan mess in the banking system remains serious, industrial production has fallen for two straight months, and unemployment is at a five-year high.

The index of industrial production (IIP), which measures the country’s factory output, fell for the second straight month in August, Central Statistics Office data showed on Oct. 10. The index fell 0.7% in August, following a 2.5% drop in July. Manufacturing and mining growth contracted in August, indicating that a recovery is still far away. In the first five months of the current fiscal year (April-August), the IIP contracted 0.3% compared to an expansion of 4.1% in the same period a year ago.

“Manufacturing performance continues to face headwinds from subdued business and investment environment,” the Reserve Bank of India said in its bi-monthly monetary policy review statement on Oct. 04.

Former RBI governor Raghuram Rajan’s goal of purging Indian banks of toxic loans remains unfulfilled, new data shows. On Oct. 10, Reuters reported that non-performing assets in the Indian banking system had shot up from $121 billion in December 2015 to $138 billion in June 2016, according to RBI data. The central bank has given banks a March 2017 deadline to make provisions for bad loans. So, many big lenders have posted massive losses in recent quarters. Yet, the bad-loan pile is only getting bigger.
Meanwhile, the government is now also planning to consolidate public sector banks to make the system more efficient. It will soon merge two large banks based in Mumbai, Reuters reported on Oct. 11.
Unemployment

In 2015-16, the unemployment rate in Asia’s third-largest economy stood at a five-year high, according to a Labour Bureau report dated Sept. 15 (pdf). This is critical at a time when the Modi government is pushing its ambitious “Make in India” initiative to boost manufacturing and job creation. Employment was a top item in the election manifesto of Modi’s Bharatiya Janata Party. The all-India survey by the Labour Bureau (pdf) showed that 77% of the households that participated in it did not have a regular salaried or wage-earning member.

Riaz Haq said...

Does India manufacture everything it needs? Here's the answer:


1. India's manufacturing value added per capita is about the same as Pakistan's. it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016. Pakistan's manufacturing value added is ranked 146th by the same report.

http://www.riazhaq.com/2016/08/indias-70th-independence-day-is-make-in.html

2. India runs huge trade deficits year after year because it imports bulk of of manufactured products it needs from China and elsewhere.


http://www.riazhaq.com/2010/05/soaring-chinese-imports-worry-india.html


Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:

"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."

http://indianexpress.com/article/opinion/columns/how-they-killed-our-factories/

Riaz Haq said...

#American engineers find #India's home-made first aircraft carrier is a dud. Need another 10 years to make it work http://blogs.wsj.com/indiarealtime/2016/11/30/u-s-effort-to-help-india-build-up-navy-hits-snag/?mod=e2fb When top American naval engineers recently inspected India’s first locally made aircraft carrier they expected to find a near battle-ready ship set to help counter China’s growing sway in the Indian Ocean.

Instead, they discovered the carrier wouldn’t be operational for up to a decade and other shortcomings: no small missile system to defend itself, a limited ability to launch sorties and no defined strategy for how to use the ship in combat. The findings alarmed U.S. officials hoping to enlist India as a bulwark against China, people close to the meeting said.

“China’s navy will be the biggest in the world soon, and they’re definitely eyeing the Indian Ocean with ports planned in Sri Lanka and Bangladesh,” said retired Admiral Arun Prakash, the former commander of India’s navy. “The Indian navy is concerned about this.”

The February carrier inspection, in the port of Kochi, formed part of U.S. plans to share aircraft carrier technology with India. Indian naval officials followed up with a tour of an American shipbuilding yard in Virginia and strategy briefings at the Pentagon in September, the people close to the meetings said.

The U.S. and India are drawing closer politically and militarily. The two have participated in joint naval exercises with Japan. The U.S. has agreed to sell New Delhi everything from attack helicopters to artillery. Washington has approved proposals by Lockheed Martin and Boeing Co. to make advanced jet fighters in India. And in August, the two countries signed a military logistics-sharing accord.

Riaz Haq said...

Vanguard News: #Nigeria military buying #aircraft, #helicopters from #Pakistan #Russia

http://www.vanguardngr.com/2016/12/nigerian-airforce-expects-aircrafts-helicopters-pakistan-russia/

Concerned about global politics surrounding procurement of sophisticated arms from western countries, Nigerian Airforce (NAF) is expecting arrival of war-planes and helicopters from Pakistan and Russia to boost its fleets. The Chief of Air Staff, Air Marshal Sadique Abubakar made the disclosure at a breakfast briefing with Editors of Online Media in Abuja at the weekend.

----

Air Marshal Abubakar said : “I want to say that we have been enjoying support from other countries. (Sometimes arm procurement) is shrouded in a lot of politics. Unfortunately, I’m not a politician, so I cannot be able to say much on that. But what I can tell you is that right now as I speak to you, we are expecting the Pakistani Chief of Air Staff in Nigeria soon. Pakistan has accepted to sell ten trainer airplanes. And that is why the Pakistan Chief of Air Staff is coming for the induction ceremony which is going to take place in Kaduna. “We are really getting support from many countries. Similarly, we have trained so many people in Pakistan, China. In the US, we have pilots that are training right now. We have other pilots that have just finished training from the United Kingdom. We have additional pilots that are training in South Africa. We have more pilots that are training in the Egyptian Air Force and so many other places including Russia…We are really getting support”, he said. On the competence of Nigerian fighter pilots, Abubakar said “In the last 18 months, we have flown almost 3000 hours with no incident. In terms of competence I can tell you that the Nigerian Air Force pilots are amongst the most competent. Because the training curriculum is very clear. And that is why now in the Air Force you look at the wings, pilots wear wings. We have categorized the wings according to their skill levels. We also organize simulation training for our pilots, we organize evaluation visits where pilots are evaluated without any notice. We have also sent over 700 personnel of the NAF to different parts of the world to train and acquire the skills required for them to be effective. The Chief of Air Staff said the air force is currently assisting the Nigerian Army and Navy in the North and South in countering criminal activities of terrorists and militants through operational strategy, air interdictions strategy and soft-core strategy. He explained that the main objective of is to create an enabling environment for the ground and surface forces, to be able to operate with little or no hindrance. He continued: “Another substrategy under this is the reactivation of airplanes. We have embarked on the reactivation of airplanes and today as I speak to you we are on the thirteenth aircraft. What I mean by reactivation is that aircrafts that were not in involved in any fight before the coming of the present federal government; they were parked before but are today part of the fight. “The thirteenth aircraft as I speak to you is being worked upon in Yola and we are hoping that before the end of this month that airplane will be flying. When you train, you must reactivate the platform to be used in flying.” The Air force boss also denied a recent rumour of helicopter crash in Makurdi. Explaining the incident involving Agusta AW 101 helicopter handed over to NAF by President Muhammadu Buhari, he said: “What happened in Makurdi was not a crash. Immediately we received the aircraft from the Presidency, we took one of them to Kaduna to paint it into desert camouflage. They removed the seal of the President and painted it into a combat machine.

Read more at: http://www.vanguardngr.com/2016/12/nigerian-airforce-expects-aircrafts-helicopters-pakistan-russia/

Riaz Haq said...

As #Trump vows to stop flow of #jobs overseas, U.S. plans to make #F16 fighter jets in #India https://www.washingtonpost.com/world/asia_pacific/as-trump-vows-to-stop-flow-of-jobs-overseas-us-plans-to-make-fighter-jets-in-india/2016/12/05/a4d3bfaa-b71e-11e6-939c-91749443c5e5_story.html?postshare=5781481094102076&tid=ss_fb&utm_term=.15dcc38aacee

NEW DELHI — As a new American president bent on retaining American jobs prepares to take office, the Obama administration and the U.S. defense industry are working on a deal with the Indian government to build iconic U.S. combat aircraft in India.

In recent months, Lockheed Martin and Boeing have made proposals to the Indian government to manufacture fighter jets — the F-16 Fighting Falcon and the F/A-18 Super Hornet — in India as the country seeks to modernize its rapidly aging fleet of largely Russian-built airplanes.

In both cases, the aviation companies would be building production facilities in India; Lockheed Martin proposes to move its entire F-16 assembly line from Texas to India, making India the sole producer of the single-engine combat aircraft.

The U.S. military is phasing out the F-16 for its own use, but other countries remain as likely customers.

The proposals have the strong backing of the Obama administration, which has sought a closer connection with the Indian military in recent years. Air Force Secretary Deborah Lee James said she was “optimistic” about the prospect of a deal after a visit to New Delhi in August, and Defense Secretary Ashton B. Carter is set to return to India this week, with procurement high atop the list of discussion topics.


But the election of a billionaire businessman focused on keeping jobs at home, rather than creating them overseas, has brought a measure of uncertainty to the talks.

“What will be the U.S. policy posture now that the new president-elect is in the mix?” said one high-level official at an American defense firm in India, who spoke on the condition of anonymity to discuss internal negotiations. “Is he going to continue the policy of engaging in India on co-
production and co-development? All of those are unknown at this point.”

On Thursday, President-elect Donald Trump appeared at a Carrier plant in Indiana, where his team had brokered a deal to save about 1,000 jobs, and on Sunday he let fire a series of tweets that implied a new tax penalty on goods produced by companies that leave the United States.

Riaz Haq said...

#Pakistan #Suzuki to invest $460 million to set up 2nd #automobile manufacturing plant http://www.pakistantoday.com.pk/blog/2016/12/15/pak-suzuki-motors-plans-to-invest-460m-on-second-plant/ …
After the announcement by the Korean and French auto giants to invest in Pakistan’s auto sector, the major incumbent Japanese player Pak Suzuki Motors has unveiled a plan to invest $460 million to set up a second assembly plant in the country.

Pak Suzuki Motors Managing Director Hirofumi Nagao called on the Finance Minister Ishaq Dar on Thursday and discussed his company’s plan of future investment in Pakistan.

The MD said that his company was ready to invest $460 million in Pakistan to set up a second plant. After completion of formalities, the new project would be completed within a period of two years and may start production by the end of 2018, he informed.

The minister asked the Pak Suzuki Motors MD to submit a complete plan with all the details to process the request in accordance with prescribed codal formalities and procedures. He said the government was committed to providing a level playing field to all the prospective investors.

The government has implemented a new auto policy from this fiscal year that provided tax incentives up to three years for the new players in the sector. The incentives were not offered to the existing three Japanese players. However they were provided incentives for modernization and expansion.

Japanese auto giants are demanding the similar policy incentives for making new investment in the country. The government may provide similar incentives to Japanese auto makers if they make investment in setting up new plants, an informed source said.

A week back a big Pakistani conglomerate announced that they planned to assemble autos in the country with the help of Korean auto giant Kia Motors. While a delegation of French company Renault formally informed the Finance minister in Paris that they planned to set up an auto manufacturing plant in Pakistan.

The minister said Pakistan has been projected by JETRO as the second best place for investment in the world. He said that the turnaround of Pakistan’s economy, macroeconomic stability, improvement of energy and security situation in the country has provided a conducive atmosphere to foreign direct investment.

He said that a number of new entrants have shown keen interest to invest in automobile manufacturing sector as well. The meeting was attended by senior officials of the Ministry of Finance and the members of the delegation of Pak-Suzuki.

Riaz Haq said...

#India cruise missile #Nirbhay missile test "an utter failure" http://www.thehindu.com/news/national/Nirbhay-missile-test-%E2%80%9Can-utter-failure%E2%80%9D/article16915750.ece A flight-test of subsonic cruise missile Nirbhay from the Integrated Test Range (ITR) at Balasore in Odisha on Wednesday was “an utter failure”, informed sources in the Defence Research and Development Organisation (DRDO) said. The sources added that the failure was caused by the wing-deployment problem in the second stage of the missile, which flies like an aircraft.

Out of four Nirbhay missions so far, three, including Wednesday's flight-test, have ended in failure.

On Wednesday afternoon, after the missile took off from Launch Complex-III of the ITR, it did not follow the required flight path.

“The booster engine in Nirbhay's first stage started working. The missile lifted off from its launcher. But it started veering dangerously towards one side in less than two minutes of its lift-off,” DRDO officials said.

The missile started flying beyond the safety corridor and threatened to fall on the land. So the “destruct” mechanism in its first stage was activated and it was destroyed.

The DRDO sources called the mission “an utter failure” because the missile started veering towards one side in the “initial phase” of the flight itself. They said, “It is a big failure. We should have a thorough re-look at what has been done so far. Out of four Nirbhay missions, three have ended in failure.”

The sources ruled out any problem with the missile's configuration. They said it could be “a hardware failure” that led to the mission being aborted. “This is a hardware element issue. This is a reliability issue with a component,” they explained.

A successful Nirbhay mission would have lasted for more than an hour. In a normal mission, the contraption will take off vertically like a missile, then a mechanism in its first stage will tilt the missile horizontally and the first stage, with its booster engine, will jettison into the sea. Then the second stage with the turbo-engine will start cruising horizontally like an aircraft with its wings spread out at a subsonic speed of 0.7 Mach.

The missile, conceived, designed and developed by the DRDO, can take out targets 1,000 km away. It can carry a 300 kg warhead.

Previous tests

Nirbhay’s debut flight on March 12, 2013 was a failure. After 20 minutes of lift-off, it deviated from its path and its “destruct” mechanism was activated to ''kill'' it.

The second flight on October 17, 2014 was a big success. The missile travelled 1,010 km instead of the targeted 800 km.

The third mission on October 16, 2015 was again a failure. After 70 seconds of its flight, when it was cruising like an aircraft after the first stage had fallen off as planned, it lost control and fell within the safety zone.

Riaz Haq said...

After Verizon Deal, Yahoo to Become ‘Altaba’ and Marissa Mayer to Step Down From Board

https://www.nytimes.com/2017/01/09/business/dealbook/yahoo-would-become-altaba-after-selling-its-internet-business.html


Still, Altaba (Yahoo's new name) is certainly an unusual name — and it also happens to be close to “Al-Taba,” apparently a manufacturer of scissors based in Pakistan.

http://www.al-taba.com/

Al-Taba Corporation established in 1980 is one of the largest private manufacturers and exporter of vast rang of Instruments. We specialized in Manufacturing Quality Medical Surgical Scissors and Beauty Scissors. It comprises of an integrated manufacturing facility, employing skilled craftsmen to produce broad range of professional Instruments. Its manufacturing process is running on automatic machines under the supervision of experts scissors technicians.

The fate of Yahoo’s $4.8 billion sale of its internet business to Verizon Communications may be uncertain. But in case it goes through, Yahoo has plans for what will remain.

In a regulatory filing, the company said on Monday that when that deal closed, it would rename itself “Altaba.”

Moreover, more than half of the company’s current board members — including Marissa Mayer, its chief executive — would step down.

Why Altaba?

It is essentially a play on the single biggest asset that would remain of Yahoo if and when the deal with Verizon closes: a 15 percent stake in the Chinese e-commerce giant Alibaba. Altaba would also own a 35.5 percent stake in Yahoo Japan. (A Yahoo spokeswoman declined to comment.)

Still, Altaba is certainly an unusual name — and it also happens to be close to “Al-Taba,” apparently a manufacturer of scissors based in Pakistan.

The company said in its regulatory filing that the directors who would remain after the name change would be Jeffrey Smith, the activist investor who helped prod change at the company; Tor Braham and Catherine J. Friedman, former investment bankers; Eric Brandt, a former chief financial officer of the chip maker Broadcom; and Thomas McInerney, a former chief financial officer of the media company IAC.

Among the directors stepping down would be Ms. Mayer; Yahoo’s chairman, Maynard Webb; and David Filo, a Yahoo founder. Mr. Webb would become chairman emeritus of the newly renamed Altaba.

Of course, all those changes depend on whether Yahoo can actually close on the sale of its primary internet businesses to Verizon, given the disclosure of two hacking episodes, the second of which affected more than a billion user accounts.

Verizon executives have said publicly that they are weighing their options, including potentially paying less than the agreed-upon $4.8 billion. Marni Walden, Verizon’s president of product innovation and new businesses, said last week of the transaction’s fate, “I can’t sit here today and say with confidence one way or another because we still don’t know.”

But Tim Armstrong, the chief executive of AOL, which is owned by Verizon, told CNBC that he was optimistic.

“I remain hopeful the deal will close, and I think we’ll see what the outcomes are of the Yahoo investigations in the meantime,” he said.

Riaz Haq said...

#India privatizing #defense industry as part of $11 billion sale of assets to cut #arms imports https://www.bloomberg.com/news/articles/2017-04-18/aircraft-carrier-maker-leads-sale-of-stakes-in-indian-arms-spree … via @business

Want to buy a stake in an aircraft-carrier builder? How about a fighter-jet maker?

India is about to start an $11 billion sale of government assets, including holdings in the shipyard and factories that supply India’s military, offering investors a share of some of the region’s more profitable manufacturers that are benefiting from soaring defense spending.

India is the world’s largest arms importer and Prime Minister Narendra Modi wants to change that while at the same time raising money to reduce the fiscal deficit. Among the biggest stakes to be sold are in Hindustan Aeronautics Ltd., or HAL, which is trying to build a domestic fighter, and Cochin Shipyard Ltd., currently building India’s first home-made aircraft carrier. The shipbuilder has seen profit almost double in the last five years, while earnings at most big global shipyards have slumped.

As India builds its status in the region, “it will find it even more essential that it becomes self-sufficient in designing and manufacturing high-tech weapon systems," said Deepak Sinha, a consultant with the New Delhi-based Observer Research Foundation. Non-state investors can help make the arms-makers more efficient and focused, he said.

Modi has pledged to spend $250 billion by 2025 on weapons and military equipment for a nation that has territorial disputes with Pakistan and China. India makes about 70 percent of its defense purchases abroad and has topped the Stockholm International Peace Research Institute’s list of the largest defense importers for the last seven years.

Riaz Haq said...

#Indian Army Vice Chief says #Pakistan's #defense #industrial base better than #India's. #military

http://indianexpress.com/article/india/pakistan-defence-industrial-base-better-than-ours-army-vice-chief-4766949/

Lt. Gen. Sarath Chand, Vice Chief of Army Staff (VCOAS), said the ordnance factories have not been able to keep pace with changing technology while "there is no competition whatsoever" and it is "an unsuccessful method of supporting our defence requirements".

A top Army general on Tuesday said Pakistan has a better military industrial base and exports more defence equipment than India, as he came down heavily on ordnance factories which manufacture weapons for the forces. Lt. Gen. Sarath Chand, Vice Chief of Army Staff (VCOAS), said the ordnance factories have not been able to keep pace with changing technology while “there is no competition whatsoever” and it is “an unsuccessful method of supporting our defence requirements”.
“I would even go to the extent of saying that Pakistan probably has a better industrial base, as far as defence production is concerned, than our country. In fact they export defence equipment abroad, definitely more than what we are doing,” he said.
He wondered whether the functioning of ordnance factories is because of the assured orders they have or the lack of accountability. “There is little or no research and development. They do not even have the capability of absorbing the industry through transfer of technology, and in some cases they have even failed to assemble products that have been imported from abroad,” Lt. Gen. Chand said.
“It is very hard to see ordnance factories changing in the present state. Overall it has become an unsuccessful method of supporting our defence requirements,” he said. He was speaking at the inaugural session of AMICON 2017, a two-day conference organised by the Army and the CII.

He noted that having indigenous industrial capability is very crucial for the country. He further cautioned that in an event of a war, one has to look abroad for its sustenance. “And very often, friends have let us down whenever the chips have been down,” Lt. Gen. Chand observed.
He said the ‘Make in India’ programme, the Defence Procurement Policy 2016, the strategic partnership model, and the creation of the Army Design Bureau (ADB), are major steps taken by the government for fast-tracking indigenisation in the sector.

Riaz Haq said...

After Spending #Indian Rs. 36 billion, Made-In-#India Akash #Missile Fails Tests, Says Auditor. http://www.ndtv.com/india-news/3-600-crores-later-made-in-india-akash-missile-fails-tests-says-auditor-1730496 … via @ndtv


3,600 Crores Later, Made-In-India Akash Missile Fails Tests, Says Auditor
The Akash and its newer variant, the Akash Mk-2, are a medium-range surface-to-air missile system designed to intercept enemy aircraft and missiles at a distance of 18-30 km.


As many as a third of the home-made Akash surface-to-air missiles have failed basic tests, says the country's national auditor, claiming the deficiencies of the missiles "posed an operational risk during hostilities."

The report of the Comptroller and Auditor General (CAG) is a big setback for the Make-In-India initiative which seeks to reduce India's dependence on imported arms. The report, given to parliament, says, "the missiles fell short of the target, had lower than the required velocity, and there was malfunctioning of critical units."

The Air Force has refused to comment on the report.

The Akash was produced by the state-run Bharat Electronics. The auditor says that though 3,600 crores have been paid to the manufacturer, none of the missile systems are installed at the six designated sites even though it has been seven years since the contract was signed.

The Akash and its newer variant, the Akash Mk-2, are a medium-range surface-to-air missile system designed to intercept enemy aircraft and missiles at a distance of 18-30 km. Tested extensively by the Indian Air Force, the Akash, which was first handed over in December 2008, was seen as a breakthrough indigenous system and in 2010, an additional six squadrons were ordered.

http://www.ndtv.com/india-news/3-600-crores-later-made-in-india-akash-missile-fails-tests-says-auditor-1730496

Riaz Haq said...

Here is one #surgical strike from #Pakistan #Indians eagerly await. #Sialkot #Trade #surgery http://economictimes.indiatimes.com/news/politics-and-nation/here-is-one-surgical-strike-from-pakistan-indians-eagerly-await/articleshow/59837835.cms … via @economictimes

The worsening of political ties between the two countries notwithstanding, India imports scissors, forceps and other surgical instruments such as needle holders and retractors from Pakistan, not only for domestic use but also for export to Afri can countries, among others.

Indian artisans sought to compete with their Pakistani counterparts but eventually gave up, suppliers told ET. "These instruments are manufactured with the aid of hammer forging, a technique available in Pakistan " said Vipin Yadav, owner of Leo Manufacturers.

"Setting up an industry having this technique will entail substantial cost, which we won't be able to bear without government support. While we manufacture 50 pieces a day, Pakistan, with the help of hammer forging, produces 5,000 pieces a day. And at a much cheaper price."

Read more at:
http://economictimes.indiatimes.com/articleshow/59837835.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst



Riaz Haq said...

Nikkei #India #Manufacturing PMI dips sharply in July 2017. #MakeInIndia #GST #Modi

http://www.business-standard.com/article/news-cm/nikkei-india-manufacturing-pmi-dips-sharply-in-july-2017-117080100274_1.html

Output slides following implementation of goods and services tax

PMI survey data indicated that the introduction of the goods & services tax (GST) weighed heavily on the Indian manufacturing industry in July. New orders and output decreased for the first time since the demonetisation-related downturn recorded in December last year, with rates of contraction the steepest since February 2009 in both cases. Consequently, companies purchased fewer quantities of inputs for use in the production process, leading to an overall decline in holdings of raw materials and semi-finished items. Cost burdens increased further, but factory gate charges were lowered as firms attempted to win new business.
At 47.9 in July, down from 50.9 in June, the Nikkei India Manufacturing Purchasing Managers Index (PMI) was at its lowest mark since February 2009 and highlighted the first deterioration in business conditions in 2017 so far. The downturn was widespread across the three broad areas of manufacturing, with intermediate goods producers the worst affected.

Incoming new work dropped for the first time in the year-to-date and at the steepest pace since early- 2009. Anecdotal evidence indicated that the GST launch hampered demand. Different to the trend for total order books, new export orders continued to rise in July. That said, the rate of expansion softened from June's eight-month high.

Lower sales triggered an overall accumulation in stocks of finished goods. The rise in holdings of manufactured products was marginal, but interrupted a two-year period of ongoing depletion.

Discouraged by the downturn in factory orders, companies lowered production in July. The fall ended a six-month sequence of growth, and the rate of reduction was the most pronounced since the global financial crisis.

Fewer output requirements caused a reduction in purchasing activity. Although moderate, the contraction in buying levels was the quickest in eight-and-a-half years. Subsequently, inventories of inputs decreased.

According to Indian manufacturers, higher tax rates sparked greater cost burdens in July. However, the pace at which input costs rose was moderate and much weaker than its long-run average. Reflecting attempts to win new business in the face of a competitive environment, some companies lowered their selling prices. Overall, the rate of discounting was marginal. Prior to July, charges had increased for 16 months in succession.

After having increased in June, payroll numbers fell in the current reporting month. But, with the vast majority of panellists signalling unchanged headcounts, the rate of job shedding was marginal overall.

The 12-month outlook for output remained positive in July, with companies expecting more clarity regarding the GST to support growth. New projects in the pipeline and improved product quality were also mentioned as reasons underpinning positive sentiment. The level of confidence was at an 11-month high.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, said: "Manufacturing growth in India came to a halt in July, with the PMI down to its lowest mark in almost eight-and-a-half years amid widespread reports that the sector has been adversely affected by the implementation of the goods and services tax. The reductions in output, new orders and purchasing activity were all the steepest since early-2009.

"The downturn was broad-based across all sub-sectors covered by the survey, with output scaled back among firms in the consumer, intermediate and investment goods categories amid falling order books.

Riaz Haq said...

#India's #Manufacturing growth slows to 1.2% from 10.7% last year as #GDP growth hits 3-year low of 5.7% #Modi #BJP

http://economictimes.indiatimes.com/news/economy/indicators/indias-q1-gdp-slips-to-5-7-from-7-9-in-the-same-quarter-a-year-ago/articleshow/60309685.cms

Gross value added (GVA) in the manufacturing sector fell sharply to 1.2 per cent, from 10.7 per cent year on year, as the businesses focussed more on clearing inventories rather than production ahead of the July 1 launch of GST.

A separate set of official data showed that growth of eight core sectors slowed to 2.4 per cent in July due to contraction in output of crude oil, refinery products, fertiliser and cement.

Uncertainty about new indirect tax rates under GST ..

Riaz Haq said...

India simply cannot afford to boycott “Made in China”

Devangshu Datta, Scroll.in

https://qz.com/1079903/india-simply-cannot-afford-to-boycott-made-in-china/


A few days after the Doklam standoff erupted in June, a series of bizarre online advertisements interspersed my surfing experience. A televangelist yoga teacher-cum-entrepreneur started exhorting Indians to start boycotting Chinese goods. Presumably the Indian conglomerate that the yoga teacher fronts sensed an opportunity to expand its product lines.
The yoga teacher wasn’t the only person advocating the boycott of Chinese goods. The Swadeshi Jagran Manch, the Rashtriya Swayamsevak Sangh (RSS), and other front organisations for the ruling dispensation all made similar high-decibel noises. The arguments they proffered in favour of Swadeshi are stupid.
Swadeshi is a stupid idea under most circumstances and especially so when it is applied to the India-China trade relationship. This is the argument its proponents offer:

China is an enemy.
India buys lots of Chinese goods.
If India stops buying Chinese goods, China would hurt more because it has a trade surplus with us.
Indians could start producing such goods domestically and, thus, stimulate the domestic industry.
If India stopped importing goods from abroad in general and produced everything domestically, it would have a strong economy.
On the face of it, this might seem a plausible set of premises connected by a glib chain of logic. So let’s address them one by one.


1. ‘China is an enemy’

Perhaps true. It is certainly very friendly with one of India’s neighbours, which New Delhi does not get on with. It also has live border disputes with India (and Bhutan) in multiple places. China has excellent relationships and huge economic ties with several other neighbours. In Facebook-speak, India’s relationship with some of these neighbours is complicated.

For instance, India’s relationship with Nepal has deteriorated because of objections over its new constitution, adopted in 2015. That year, it imposed an unofficial blockade of goods into the Himalayan nation to protest against it.
India’s relationship with Myanmar is more or less okay except that Naypyidaw was quite unhappy about Delhi tom-tomming surgical strikes against Naga insurgents in its territory in 2015.
Our relationship with Sri Lanka is so-so and likely to remain that way because of the ill-conceived military operation led by the Indian Peace Keeping Force in the island nation in the late 1980s.
With regard to Bangladesh, the enclave business has been largely sorted out with the historic land swap in 2015 but there are still disputes about river-water sharing. There is a knee-jerk tendency among Indians to scream about illegal Bangladeshi immigrants. There is also a knee-jerk tendency for Bangladesh to scream about being bullied by its bigger neighbour. There are also accusations that Indian separatists have havens in Bangladesh and that Bangladeshis are part of Islamic terror networks.

2. ‘India buys lots of Chinese goods’

Yes indeed, India buys all sorts of stuff ranging from solar power equipment and high-end electronics to plastic buckets, Hindu idols, and winter coats. China’s exports to India were an estimated $61 billion in 2016-17 while India’s exports to China were $10 billion in that period. So China has an enormous surplus with regard to India.
3. ‘If India stops buying Chinese goods, the Chinese would hurt more because China has a trade surplus’

Looking at India’s trade deficit with China in the context of gross domestic product or GDP, however, China has less exposure. Its exports to India amount to about 2.7% of India’s GDP (about $2.26 trillion in 2016, according to World Bank data) and about 0.5% of Chinese GDP (about $11.2 trillion in 2016, according to the World Bank). India’s exports to China amount to about 0.08% of Chinese GDP and about 0.45% of Indian GDP.

Riaz Haq said...

India simply cannot afford to boycott “Made in China” Part 2

Devangshu Datta, Scroll.in

https://qz.com/1079903/india-simply-cannot-afford-to-boycott-made-in-china/



If there was a trade war, India would have to source the same goods from elsewhere and ditto for China. India is internationally competitive in the things it offers to China. Similarly, China offers good value in its exports to India. But both India and China would also need to find other markets and that would not be easy since both nations are large markets themselves.
As a thought experiment, assume that both countries have to pay a 10% premium to source from elsewhere, China then pays the equivalent of 0.09% of its GDP and an absolute amount of about $11 billion while India pays the equivalent of 2.9% of GDP and an absolute amount of about $66 billion.
Which nation loses more?
4) ‘Indians could start producing those goods domestically and thus stimulate domestic industry’

Indians do not buy Chinese goods out of a desire to do charity. They buy them because imported alternatives are more expensive and India cannot produce the same things as cheaply at the same quality. If India tried to produce the same goods locally, or imported them from other nations, it would have to pay a premium either way. That premium would mean that Indians will have less money to spend elsewhere. More than that, it would mean the unproductive use of human resources and of capital.
5) ‘If India stopped importing goods from abroad in general and produced everything domestically, it would have a strong economy’

No it would not. India tried this idiocy for decades. It banned all imports (except the ones that were absolutely necessary) and produced shoddy overpriced Ambassador cars, fridges that did not cool, telephones that did not work, bottles with defective caps, paper cups with holes. Indians were fleeced by their compatriots for years in the name of swadeshi. What is more, producing goods domestically will not necessarily generate net employment. Chinese companies operating in India employ huge numbers. Those people would be laid off in a trade war.
There are also a few things India simply cannot produce domestically.
One is energy—India is woefully deficient in crude, high-grade coal and gas. It has to import these energy commodities and will always have to do so.
India is also deficient in rare-earth metals. These are required to produce solar power equipment, wind turbines, cellphones, laptops, and most other electronic gear. Guess which nation has a 90% global monopoly in rare earths? Here is a hint—its initials read “PRC.” As India moves further in the direction of clean, green energy, it becomes ever more dependent on Chinese rare earths.
At the beginning I had said that swadeshi is a stupid idea under most conditions, not just in the India-China context. Let me explain why in a series of Q&As.
As mentioned earlier, India will always have to import some commodities, so:
How does one pay for imports?
By generating foreign exchange from exports.
How does one generate foreign exchange from exports?
By producing globally competitive goods and services.
How does one produce goods and services that are globally competitive?
By focussing capital and human resources in areas where there is a competitive edge. Economic theory says that if Nation A has a competitive advantage over Nation B in producing two separate items, Nation A should nevertheless focus on producing the one item where it has the larger margin.
How does one produce goods and services that are uncompetitive?
By squandering capital and resources in uncompetitive sectors swadeshi ensures the production of uncompetitive goods and services.

Riaz Haq said...

#MakeinIndia is looking more and more like a bad joke.
#India #Modi #Manufacturing https://blogs.timesofindia.indiatimes.com/folk-theorem/make-in-india-is-looking-more-and-more-like-a-bad-joke/ … via @TOIOpinion

Flashback to September 2014, when PM Narendra Modi unveiled a scheme called, ‘Make in India’ (MII), with a gear-and-cogs lion logo. Three years later MII has, literally, gone off the rails. By October next year, work was supposed to start on the largest MII project: a $2.5 billion venture by America’s GE to make diesel-electric locomotives in Marhaura, in Chhapra, Bihar.
But two weeks ago, New Delhi switched off the Bihar project, saying electric trains were the future. Chief minister Nitish Kumar, who gambled his political future by breaking with a Congress-Lalu Yadav coalition to ally with BJP recently, isn’t amused. He says it’ll take ages to electrify India’s 1,10,000 km of tracks. As a two-time rail mantri and Bihari, Nitish should know.
Against government claims that 96% of Bihar villages are electrified, a 2015 survey found only 8% of households get electricity for 20 hours a day. A staggering 80% of homes don’t use electricity for lighting, but get by with kerosene lamps. An incensed GE wants India to pay it Rs 1,300 crore in compensation. Such irony: our loss-making, cash-poor railways will now pay to cancel MII investments. What is New Delhi smoking?
By the mid-2000s, most railways worldwide scrapped all-electric locomotives to pull the heaviest loads; without an internal combustion mechanism, electric engines take very long to accelerate or brake. Now the world’s most powerful locomotives, like 2015’s 4,400 horsepower (HP) EMD machines in the US or Iran’s Alstom 4,300 HP engines or China’s 6,250 and 6,300 HP HNX series, are diesel-electric combinations; Russia’s giant 11,300 HP Sinara locomotive is powered by a GT gas-electric engine.
New Delhi thinks electric trains will save India the cost of diesel. Is electricity made out of thin air? A study in the mid-2000s argued that it makes no sense to run heavy freight trains, moving under 100km per hour, with electricity. By shifting all freight trains to diesel, railways could save 20% of its power bills. The bijli could be diverted to industry and commerce, which now use diesel to generate power. Shunting the locomotive project could be the last nail in MII’s coffin, but there are other stupendous failures.
Someone fancifully called India the ‘pharmacy of the world’. This hype is busted by numbers. India contributes 0.9% of its GDP to research, compared to China’s 2.1%. Medicine is no exception. Last year, a team led by Samiran Nundy, one of India’s most respected medical doctors, found 60% of medical institutions produced no research. Those that did were mostly taxpayer-funded, with Delhi’s AIIMS at the lead. But even AIIMS produced less than a third of the nearly 5,000 research papers published by the Massachusetts General Hospital every year.
Another study found that of the top 316 medical R&D spenders worldwide, India had only eight (mostly state-owned), while China was host to 21. India does the grunt work of digitising global research or supplying human guinea-pigs to test therapies developed overseas. We pretend our medicine-makers are world beaters. Rubbish. Mostly, they import medical raw material (called Active Pharmaceutical Ingredients, or APIs) from China, package and sell them as desi brands. This adds some value to Indian exports, especially to the US, wary of importing bulk drugs direct from China. In 2000, India imported only 23% of APIs from China. Through 2014-16, when MII was supposedly in full throttle, we imported 52% of APIs from China, each year.

Riaz Haq said...

#Smartphones made in #India? #Manufacturing ambition hits hurdles. #MakeInIndia #Modi #Apple #Foxconn

http://www.reuters.com/article/us-india-manufacturing-smartphones/smartphones-made-in-india-manufacturing-ambition-hits-hurdles-idUSKCN1C70BH

India’s ambitions to become a smartphone-making powerhouse are foundering over a lack of skilled labor and part suppliers along with a complex tax regime, industry executives say.

Prime Minister Narendra Modi has championed a manufacturing drive, under the slogan ‘Make in India’, to boost the sluggish economy and create millions of jobs. Among the headline-grabbing details was a plan to eventually make Apple APPL.O iPhones in India.

Three years on, as executives and bureaucrats crowded into a Delhi convention center for an inaugural mobile congress last week, India has managed only to assemble phones from imported components.

While contract manufacturers such as iPhone-maker Foxconn Technology Co (2354.TW) and Flextronics Corp have set up base in India, one of the world’s fastest-growing smartphone markets, almost none of the higher value chip sets, cameras and other high-end components are made domestically.

Plans for Taiwan-based Foxconn to build an electronics plant in the state of Maharashtra, which local officials said in 2015 could employ some 50,000 people, have gone quiet.

According to tech research firm Counterpoint, while phones are assembled domestically because of taxes on imported phones, locally made content in those phones is usually restricted to headphones and chargers - about 5 percent of a device’s cost.

“Rather than feeling that India is a place where I should be making mobile phones, it’s more like this is the place I need to(assemble) phones because there is lower duty if I import components and assemble here,” a senior executive with a Chinese smartphone maker said.

He declined to be named for fear of harming business.

Riaz Haq said...

India plans to lessen its drug reliance on China

http://economictimes.indiatimes.com/articleshow/60990092.cms

Currently, India gets 70-80% of its medicines and medical devices supplies, including raw material for pharmaceuticals (Active Pharmaceutical Ingredient) from China. This poses a major risk of severe drug shortage if India's diplomatic relations with China worsen.

In fact, in 2014, National Security Adviser Ajit Doval had also warned the government about India's over-dependence on China for API and how the tension between the two countries can cause a crisis in the public health ..

Riaz Haq said...

Why Is Manufacturing More Expensive In India Than In China?

https://www.forbes.com/sites/quora/2017/12/13/why-is-manufacturing-more-expensive-in-india-than-in-china/#4cfa85506301

Why are manufacturing costs higher in India, compared to China? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Balaji Viswanathan, CEO of Invento Robotics, on Quora:

A number of my relatives run manufacturing plants in Tamil Nadu, a relatively developed state. My in-laws have also recently started importing from China (replacing their Indian suppliers) and I will tell you why costs are higher than in China.


Power availability: You start a plant and realize that power availability is not 24/7. In Coimbatore and other industrial places you get power for like eight hours a day. That means the machinery lies idle for sixteen hours and that wasted capacity adds to the cost.
Cost of power: In India, we subsidize the power to farmers so much (farmers are a huge political base to regional parties) that the electricity companies either have to go bankrupt or charge huge amounts for industries. Electricity cost is often higher than some developed countries.
Cost of labor: Getting good factory labor in places like Tamil Nadu has become extremely hard. Skilled people are already in high-paying industries. The unskilled ones are hard to deal with. When we get labor from the north, they often move out without much notice (go to Diwali on vacation and never return). Skill building is lacking. If you pay $250, the quality of labor you get in China is likely higher than what you get in India.
Cost of transportation: Given the poor roads, a shipment from India's north can take a week or more to reach India's south. Sometimes it is quicker and cheaper to actually get a shipment from Shenzhen than Kolkata. Time is money and all those delays add to your cost. If I could get something in two days, I could sell it immediately rather than wait two months to sell it (add up the interest costs).
Bureaucracy: Starting a new plant or to adding anything to an existing one is very costly in time and money. You need to fill out a huge number of forms and grease a lot of palms just to do something legal and useful. Shipping across states is also very delayed (this is why the industry is pushing for GST). Unless most of the Indian laws - especially the one dealing with factories and labor - are thrown out, corruption, delays, and inefficiencies will remain.
Anti-large enterprises: India grew up in the mindset that large industries are bad. While many laws have changed since 1991, some of our laws, especially in textiles, are structured around small enterprises. Small businesses do not have the scale to produce cheaply and take on massive factories in China or Bangladesh. Thus, in the huge lucrative market of ready-made garments, Bangladesh quickly took the number two spot - leading to huge improvements in women development, while Indians are clinging to outdated laws favoring small, cottage industries.
If India has to compete with China, we have to completely overhaul all of the economic laws - taxes, labor, factories - we have had in place since 1947. Otherwise we will continue to be costlier than Vietnam and Bangladesh.

This question originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

Manufacturing: Why are 53% of India's factories in only five states?
India: Is there a difference between Indian conservatism and American conservatism?
China: As an Indian what is your experience with China and its people?

Riaz Haq said...

#Modi, in #Davos2018 , Praises #Globalization Without Noting #India’s #Trade Barriers. #ModiAtDavos #China #tariffs

https://www.nytimes.com/2018/01/23/business/modi-in-davos-praises-globalization-without-mentioning-india-trade-barriers.html

“Forces of protectionism are raising their heads against globalization,” Mr. Modi said during a speech to the World Economic Forum here. “Their intention is not only to avoid globalization, but they also want to reverse its natural flow.”

Notably missing from the speech was any mention of recent moves by Mr. Modi’s own government to restrict imports into India as part of a broad industrial policy meant to force foreign companies to increase manufacturing operations in the country. In essence, he is pursuing a protectionist agenda, at odds with the mantra of globalization.

Mr. Modi’s speech reflects the tenor of the times. As President Trump pushes an “America First” strategy, global leaders are lining up to position themselves as a counterpoint, even if there is sometimes a disconnect between the rhetoric and the reality.

In Davos last year, President Xi Jinping of China positioned himself as a champion of economic globalization in a rebuke to Mr. Trump, who, as president-elect at the time, was threatening to impose steep tariffs. Yet China has long bent the rules of commerce to fit it own needs.

Mr. Modi is following a similar path in India, as he looks to nurture growth in his sprawling economy and to create jobs.

Last month, India’s government imposed stiff tariffs on imports of cellphones, video cameras and televisions. The move put heavy pressure on Apple, which ships most of the iPhones it sells in India from China, to do more manufacturing in India.

Mr. Modi’s government is also considering a recommendation by India’s Directorate General of Safeguards, Customs and Central Excise that the country impose 70 percent tariffs on imported solar panels. Such a move would appear to conflict with Mr. Modi’s call here for international action on climate change. Introducing such stiff tariffs could well encourage the production of more solar panels in India, but it could also make solar power far more expensive for Indian consumers and, in turn, hurt the fight against climate change.

At 70 percent, the tariffs that India is considering on imported solar panels would be more than double those that the Trump administration said on Monday it would impose on such panels. Mr. Modi did not indicate in his speech what his government might decide on the issue.

-------

A ranking of countries on pollution and ecosystem protection released here on Tuesday showed India falling to 177 out of 180, down from 156 two years ago. By comparison, China was No. 120 on the list, which was compiled by Yale’s Center for Environmental Law and Policy.

“They are driving economic growth, but not paying attention to what I would call the parallel challenge of sustainable development: avoiding environmental degradation,” Daniel Esty, the center’s director, said of India.

As in the United States, industrial policies in India meant to foster domestic manufacturing can collide with a push by environmentalists and clean-energy electric utilities for solar panels, even imported ones, to be deployed as widely and as cheaply as possible. Among the other people attending Mr. Modi’s speech was Sumant Sinha, chairman and chief executive of ReNew Power Ventures, a company based on the outskirts of New Delhi that builds clean energy projects.

-----------
Devendra Fadnavis, the chief minister of Maharashtra, the vast Indian state that includes Mumbai and big manufacturing cities like Pune, also attended Mr. Modi’s speech. He said that he saw growing interest among companies from outside India to manufacture in the country. Foxconn, the giant Taiwanese manufacturer that produces the bulk of Apple’s consumer electronics, is in negotiations with Maharashtra officials to set up a large factory there.

Riaz Haq said...

#NobelPrize-winner Paul Krugman warns #India could end up with huge mass #unemployment if it does not grow its #manufacturing sector. #Modi #MakeInIndia

https://economictimes.indiatimes.com/news/economy/indicators/nobel-winner-paul-krugman-warns-india-story-could-end-with-mass-unemployment/articleshow/63344124.cms

"There is this concept called artificial intelligence that you should be wary of. In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector," Krugman said while speaking at a News 18 event.

"Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one,” he said.

“India’s lack in the manufacturing sector could work against it, as it doesn't have the jobs essential to sustain the projected growth in demography. You have to find jobs for people,” he said.

On the other hand, India can also ride the next wave of globalisation on its demographic dividend. "India's growth story is quite unique. Services propelling growth to an extent that hasn't been seen anywhere else in the world and the possibilities of service globalisation has only just begun. Globalisation of service trade has a huge potential. That's one reason to be especially hopeful of India’s progress. It has the first-mover's advantage here," he said.

Riaz Haq said...

According to Counterpoint Research, in Q4 of 2016, Micromax had a 16% share of the smartphone market, which dropped to 5% in Q4 of 2017. Now, none of the Indian players figure among the top five.

While we 'Make in India', customers favor #Korean or #Chinese #mobile #handsets http://ecoti.in/W4GjoY via @economictimes #MakeInIndia #Modi #Manufacturing

The fall of Indian handset makers has been as dramatic as their rise. Almost 300 million devices are sold in India — a market second only to China, having overtaken the US in 2017. Yet, in this $20-billion business, Indian companies find the customer hanging up on them in favour of Korean, Chinese or even Russian brands.

Micromax has shifted to selling aircoolers, air-cons, washing machines and television sets. Consumer appliances are seen as stable in terms of technology — no need for tweaks every few months — with relatively better margins compared to the low single digits for handsets.

Riaz Haq said...

Manufacturing value added per capita and manufactured exports per capita

Source: United Nations Industrial Development Organization (UNIDO)

https://www.unido.org/sites/default/files/files/2017-11/IDR2018_FULL%20REPORT.pdf

Pakistan MVA per capita 2010 $134 2015 $146
Pakistan Manufactured Exports per capita 2010 $102 2015 $94

Bangladesh MVA per capita 2010 $122 2015 $182
Bangladesh Manufactured Exports per capita 2010 $121 2015 $152

India MVA per capita 2010 $228 2015 $298
India Manufactured Exports per capita 2010 $152 2015 $186

China MVA per capita 2010 $1,432 2015 $2,048
China Manufactured Exports per capita 2010 $1,132 2015 $1,601

Riaz Haq said...

Investor Jayant Bhandari: #Indians in the West are India's best. Those left in #India are unskilled. People who think India can ever compete with #China or even continue to grow without West's help do not understand ground realities. #MakeInIndia #Modi http://jayantbhandari.com/jay-taylor-india-china-hk-ff/

If I need to get plumbing work done in India, I do the job myself, despite that the cost of a plumber is a mere couple of dollars. In Canada, where a similar work might cost fifty times more, I might get someone to do the job. Why? Because the plumber in India will do a horrible job and will create five new problems. I started and ran Indian subsidiaries of two European companies. The so-called cost advantages of India always stayed an illusion. Anyone who thinks that India can ever compete with China or even continue to grow without constant technological help from the West has no understanding of the ground realities in India. Here is a conversation I recently had with Jay Taylor:


Indian government exists for the sole purpose of collecting bribes. Indian bureaucrats are lazy, incompetent, and sadistic, a case study on which I wrote here a few days back. But what one must remember is that India’s most fundamental problem is its tribal and unskilled populace.

https://youtu.be/H2a21SWjR9E

Riaz Haq said...

China: leading trade partner; contribute to 18 percent of India’s imports


https://www.moneycontrol.com/news/business/moneycontrol-research/how-dependent-is-india-on-china-here-is-what-trade-data-reveals-5346201.html

(India's) Import dependency on China for a range of raw materials (APIs, basic chemicals, agro-intermediates) and critical components (Auto, Durables, Capital goods) is skewed. To give a flavour, out of the respective imports, 20 percent of the auto components and 70 percent of electronic components come from China. Similarly, 45 percent of consumer durables, 70 percent of APIs and 40 percent of leather goods imported are from China.

-------------------

Trade figures suggest that India is the biggest importer of Chinese consumer goods. India imports almost seven times more from China than it exports to it. India has huge trade deficit with China – its largest with any country. In 2018-19, India’s exports to China were mere $16.7 billion, while imports were $70.3 billion, leaving a trade deficit of $53.6 billion.

It needs to be acknowledged that China’s exports to India account for only 2% of its total exports, so even if Indians boycott all the goods imported from China, it will not make as big an impact on China. Data also suggests that China is India’s largest trading partner, but the trade is heavily skewed in favour of China. Thus initiating a trade war when Indian manufacturing ability is limited is not going to favour India.


https://thewire.in/trade/china-goods-boycott-atmanirbhar-bharat

Riaz Haq said...

Wistron violence could sour #Apple's 'Make In India' plans. Thousands of workers angry over non-payment of wages, destroyed equipment and vehicles at a Wistron plant in southern #India, causing an estimated $60 million in damages. #Modi #MakeInIndia https://reut.rs/3npyHyy

Violence at a Wistron Corp factory in southern India is likely to stall the company’s and its client Apple Inc’s drive to expand local manufacturing, while forcing the government to redouble efforts to encourage foreign investors.


The Taiwanese company, one of Apple’s top suppliers, had been hiring in significant numbers at the plant that became operational earlier this year.

It assembled the second-generation iPhone SE there and was expected to start producing newer models, but the violence has led the company to shut the site and file a police complaint against more than 5,000 contract workers for destruction of property.

Wistron has not disclosed details, but one source familiar with the situation, speaking on condition of anonymity, said the area where smartphones are assembled and lines where delicate components, such as printed circuit boards, are mounted, have been damaged.

The company did not respond to a request for comment from Reuters. It said in a regulatory filing in Taiwan that it was doing its best to get the plant running again.

Apple also did not respond to a request for comment.

Two sources close to the situation, who asked not to be named because they were not authorised to speak to the press, said restarting could be difficult.

Riaz Haq said...

#Ford wakes up badly burnt from its #India dream. #US #carmakers believed they were buying into a boom - the next #China. Now they are pulling out after heavy losses. #Modi #MakeInIndia #manufacturing https://www.reuters.com/business/autos-transportation/ford-wakes-up-badly-burnt-its-india-dream-2021-09-17/

Riaz Haq said...

Cause of concern! Bank credit to manufacturing declines
Bank credit to 10 out of the 15 sectors declined in the last decade, an analysis by MVIRDC World Trade Centre (WTC) Mumbai shows.
By JOE MATHEW,  May 5, 2022 3 min read

https://www.fortuneindia.com/macro/cause-of-concern-bank-credit-to-manufacturing-declines/108032
The share of manufacturing sector in the total non-food bank credit declined from 24% to 13.5% in the last decade (2011-12 to 2020-21) due to banks' shift towards lending to personal loans, infrastructure, weaker sections and services sectors, an analysis by MVIRDC World Trade Centre (WTC) Mumbai shows. The outstanding bank credit to the manufacturing sector as a share of manufacturing GDP also declined from 16% in 2011-12 to 13% by 2020-21, it points out.

The analysis, based on Reserve Bank of India (RBI) data, also shows that bank credit to 10 out of the 15 sectors declined as a share of total bank credit. This includes sectors such as base metals, textiles, chemicals, food processing, engineering, automobiles and gems & jewellery.

Noting that the decline in bank credit exposure to manufacturing sector is also reflected in the slow growth in manufacturing investment in the country, WTC analysis says that gross capital formation (a proxy for investment in the economy) has grown at a tepid pace of 2% CAGR in the manufacturing sector during the last 10 years from 2011-12 to 2020-21, compared to a growth of 6% in overall investment in the economy. "The share of manufacturing in India's gross capital formation also shrunk from 17.2% in 2011-12 to 14.36% in 2020-21. On the other hand, sectors such as transport, storage, communication, trade repair, hotels and other services witnessed growth in their share of total capital formation in the economy," it says.

"The stagnancy in bank credit exposure to these core manufacturing sectors does not bode well for our Make in India and Aatmanirbhar program. It is welcome that the share of personal loans, credit to weaker sections and credit to the services sectors have been growing in the overall bank credit. At the same time, we need to promote bank lending to manufacturing sectors, especially in labour intensive segments such as leather, textile, food processing to prevent a situation of jobless growth," Vijay Kalantri, chairman at MVIRDC WTC Mumbai, says.

The analysis notes that in the last 13 years since 2008, the share of personal loans in total bank credit grew from 23% to 27%, while the corresponding figure for credit to weaker sections has grown from 4.8% to 7.5%. Similarly, the infrastructure sector witnessed higher share in overall non food credit, up from 9.3% to 10.2%. The WTC report says that as the central government establishes a dedicated financing institution for the infrastructure sector and as asset monetisation pipeline is implemented effectively, the burden of infrastructure financing on banks will reduce, which in turn may enable banks to focus more on funding to the manufacturing sector.


Riaz Haq said...

Elon Musk won't manufacture Tesla cars in India because government prohibits selling and servicing of EVs
Indian leaders have made multiple failed appeals for Musk to bring Tesla to India

https://www.foxbusiness.com/economy/elon-musk-manufacture-tesla-cars-india-government


Tesla CEO Elon Musk said the company will not manufacture cars in India if the country does not allow it to sell and service its electric vehicles.

When asked by a Twitter user Friday if Tesla would be manufacturing a plant in India in the future, Musk said the move cannot happen under the country's current rules.

"Tesla will not put a manufacturing plant in any location where we are not allowed first to sell & service cars," Musk tweeted.

The team Musk hired in India last year has since been instructed to focus on the Middle East and the larger Asia-Pacific markets.


Musk's comments come as the Indian government has yet to accept his demand to reduce import duties on Tesla cars.

Indian leaders have made multiple failed appeals for Musk to bring Tesla to India.

"Our request to him is to come to India and manufacture here. We have no problems. The vendors are available, we offer all kinds of technology and because of that, Musk can reduce the cost," Road Transport and Highways Minister Nitin Gadkari said during the Raisina Dialogue 2022 conference last month, according to TribuneIndia.com.


"India is a huge market and offers good export opportunities too. Musk can export Tesla cars from India," he added.

Gadkari said in February that Musk must first manufacture in India before Tesla cars can be driven on the roads.

Musk had tweeted in January that he could not release Tesla vehicles in India yet due to "challenges with the government." And last summer, the billionaire posted to Twitter that he would like to launch Teslas in India, but the country's import duties are "the highest in the world by far of any large country."

India currently levies a 100% tax on imported vehicles costing more than $40,000, inclusive of insurance and shipping expenses. Cars that cost less than $40,000 face a 60% import tax.

Musk also said on Twitter Friday that SpaceX is waiting on approval from the Indian government to provide the company's Starlink satellite internet to the south Asian country.

Riaz Haq said...

Why Multinational companies are quitting #India? 8 years after #Modi first urged foreign companies to “Make in India”, #Indian #economy is seeing thousands of foreign firms leaving. #MakeinIndia #Islamophobia #Hindutva #BJP #bigotry #violence #hate

https://www.deccanherald.com/business/business-news/why-mncs-are-quitting-india-1119422.html

Eight years after Prime Minister Narendra Modi first urged multinational companies to “Make in India”, Asia’s third-largest economy is seeing many foreign firms give up on the country

A slew of big names including German retailer Metro AG, Swiss building-materials firm Holcim, US automaker Ford, UK banking major Royal Bank of Scotland, US bikemaker Harley-Davidson and US banking behemoth Citibank have chosen to
pull the plug on their operations in India or downsize their presence here in recent years. That is a worrying trend at a time when India is trying to position itself as an alternative to China, in a post-Covid world where many MNCs are looking to diversify their supply chain.

A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament late last year. That is not a small figure, given that there are only 12,458 active foreign subsidiaries operating in India.

------

This might also explain why some of the world’s biggest chipmakers have not warmed up to India despite its government rolling out a red carpet for them by approving a $10 billion incentive plan last year to establish chip and display industries in the
in the country.

----------

When asked if he would consider setting up a factory in India, Tesla CEO Elon Musk tweeted last month that the automaker would not set up a manufacturing plant “in any location where we are not allowed first to sell & service cars”.

Musk will instead look for potential opportunities in Indonesia, known for its business-friendly policy and production of nickel, a critical ingredient in making EV batteries.


Riaz Haq said...

#India's #manufacturing activity hits 9-month low in June 2022. S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May, the weakest pace of growth since last September. #unemployment #jobs #Modi #BJP #economy https://www.business-standard.com/article/economy-policy/india-s-manufacturing-sector-activity-eases-to-9-month-low-in-june-122070200036_1.html

India’s manufacturing sector activity eased to a nine-month low in June as growth of total sales and production moderated amid intense price pressures, a monthly survey said on Friday.

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May, the weakest pace of growth since last September.



The June PMI data pointed to an improvement in overall operating conditions for the twelfth straight month. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“The Indian manufacturing industry ended the first quarter of fiscal year 2022/23 on a solid footing, displaying encouraging resilience on the face of acute price pressures, rising interest rates, rupee depreciation and a challenging geopolitical landscape,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Factory orders and production rose for the twelfth straight month in June, but in both cases the rates of expansion eased to nine-month lows. Increases were commonly attributed to stronger client demand, although some survey participants indicated that growth was restricted by acute inflationary pressures, the survey said.

According to the survey, monitored firms reported increase for a wide range of inputs — including chemicals, electronics, energy, metals and textiles — which they partly passed on to clients in the form of higher selling prices.

Lima further said there was a broad-based slowdown in growth across a number of measures such as factory orders, production, exports, input buying and employment as clients and businesses restricted spending amid elevated inflation.

According to the survey, inflation concerns continued to dampen business confidence, with sentiment slipping to a 27-month low. Elsewhere, input delivery times shortened for the first time since the onset of Covid-19.

“Fewer than 4 per cent of panellists forecast output growth in the year ahead, while the vast majority (95 per cent) expect no change from present levels. Inflation was the main concern among goods producers,” the survey said.

On the job front, employment rose for the fourth successive month, albeit at a slight pace that was broadly in line with those seen over this period.

Meanwhile, the Reserve Bank of India (RBI) in its financial stability report released on Thursday said persistently high inflation globally is to stay longer than anticipated as the ongoing war and sanctions take a toll on economies, threatening a further slowdown to global trade volumes.

The global economic outlook is clouded by the ongoing war in Europe and the pace of monetary policy tightening by central banks in response to mounting inflationary pressures, the RBI report said.

Riaz Haq said...

#Intel says it has no current plans to start #manufacturing #semiconductor #chips in #India. The comments came after India's transport minister said earlier in the day that the #chipmaker will set up a #semiconductor manufacturing plant in the country.

https://www.reuters.com/technology/intel-says-it-has-no-current-plans-start-manufacturing-india-2022-09-07/


Riaz Haq said...

China's dominance of manufacturing is growing, not shrinking
Country gaining market share in both low- and high-tech sectors

https://asia.nikkei.com/Opinion/China-s-dominance-of-manufacturing-is-growing-not-shrinking

William Bratton is author of "China's Rise, Asia's Decline." He was previously head of Asia-Pacific equity research at HSBC.

When it comes to discussions about China's manufacturing capabilities, there is an all-too-frequent disconnect between rhetoric and reality.

On the one hand, it is widely understood that Chinese producers are losing relative competitiveness. Higher labor costs, bitter trade frictions, rising geopolitical tensions and the domestic pursuit of zero-COVID are all encouraging exporters to leave the country.

China, it is thus argued, has passed "peak manufacturing" and its status as the world's manufacturer stands to be superseded by other countries in the region. By extension, this will materially impact China's economic trajectory and the region's evolving geopolitical balances.

On the other hand, there has been a lack of substantive evidence offered to support the above argument. Although anecdotes abound about certain companies relocating production out of China, the data suggests that such moves are not at the scale necessary to reverse the upward momentum of the country's manufacturing base, nor its international competitiveness.

The most obvious evidence of this is in trade flows.

It is not just that Chinese exports have remained remarkably robust despite COVID-related lockdowns. More than that, the latest numbers from the U.N. Conference on Trade and Development imply that Chinese producers have become more competitive in recent years, not less.

China's manufactured exports, for example, have been growing significantly faster than those of Germany, the U.S., Japan or South Korea. As a result, its share of global manufactured exports by value surged to a new high of 21% last year, compared to just 17% in 2017. The country is now a more important international supplier than Germany, the U.S. and Japan combined.

Furthermore, contrary to the view that supply chains are reducing their exposure to China, Chinese manufacturers have consolidated their primacy across the vast majority of sectors over recent years. In fact, what is particularly remarkable about China's evolving trade structure is that it has been able to simultaneously gain export share in both low- and high-technology industries, including those as eclectic as leather products, truck trailers and optical instruments.

Such gains are hardly indicative of an industrial base under stress. They instead highlight the hyper-competitiveness of China's producers, who increasingly dominate the East and Southeast Asian manufacturing landscape.

For all the chatter about companies leaving China and the changing geographies of supply chains, the reality is that it generated nearly half of the region's manufactured exports in 2021, compared to less than a third 15 years ago.

This competitiveness is derived from the complex and self-reinforcing interaction of multiple factors, many of which are a function of China's size. This allows the country to support far higher levels of domestic competition, innovation and specialization than its neighbors, and results in greater efficiencies and lower production costs, which regional rivals will always struggle to replicate. These scale benefits are subsequently magnified through aggressive industrial development policies that have no obvious precedent in terms of scope or ambition.

So China's manufacturing advantages must be viewed holistically, especially as it can be highly misleading, however tempting, to draw conclusions based on the trends of any specific factor.

Riaz Haq said...

China's dominance of manufacturing is growing, not shrinking
Country gaining market share in both low- and high-tech sectors

https://asia.nikkei.com/Opinion/China-s-dominance-of-manufacturing-is-growing-not-shrinking

William Bratton is author of "China's Rise, Asia's Decline." He was previously head of Asia-Pacific equity research at HSBC.


The country's rapidly rising wages, for example, attract much attention. But it would be a mistake to assume that this signals the loss of competitiveness in more labor-intensive industries.

Rather, it reflects dramatic improvements in productivity and a broader structural shift into higher technology sectors. Furthermore, the use of national averages masks the diversity of China's labor force, with a substantial pool still on relatively low wages.

This is seen in the irrefutable fact that the country's manufacturers are still gaining export share across low-technology and labor-intensive industries, including textiles. In other words, their innate advantages are so substantial and so overwhelming that higher labor costs by themselves have no material impact on their competitiveness.

As such, despite all the frequently cited anecdotes, there is no real evidence that the factors underpinning China's competitiveness are being reversed. Rather, Asia's manufacturing industries will continue to concentrate in China, further entrenching its status as the core of the region's economic system.

This is the challenge for the rest of the region. No matter how hard they try, few countries, if any, will be able to replicate or match China's natural advantages. And this will have profound longer-term economic and geopolitical consequences.

Against the onslaught of highly competitive Chinese products, emerging economies will struggle to develop the manufacturing sectors they need to achieve and sustain productivity-led growth over the long-term.

But even more advanced nations are not immune from the pressures created by China, with the hollowing-out of their industrial structures a very real danger. The displacement of Japanese and South Korean manufacturers from the global telecommunications equipment and shipbuilding markets demonstrates just how quickly China can engage with its neighbors at their own games -- and win.

So for all the suggestions that China's grip on manufacturing is weakening, the reality could not be more different. It is not the Chinese producers that are losing influence, but their rivals across the region.

In fact, the natural forces driving the country's competitive advantages are now both so substantial and entrenched that the rest of Asia is seemingly engaged in an unfair trade fight -- and one it is unlikely to win. The region's slide toward a clearly defined economic core-periphery structure -- with China dominating and the rest being disadvantaged -- now looks inevitable.

In turn, this is creating dependencies which will prove evermore difficult to disentangle, no matter how strong the apparent political commitment in some countries to do so.

This is seen in how recent attempts to diversify imports away from Chinese producers have been constrained by the lack of credible alternative suppliers. It is noticeable that Australia and India, countries positioning themselves as regional rivals to China, have increased -- not reduced -- their reliance on Chinese manufactured imports over the last three years.

It is true that this manufacturing mastery may not have been developed as a deliberate geopolitical tool. But in the same way the U.S. was able to use its post-World War II industrial leadership to advance its own interests, the reliance on Chinese products will naturally give Beijing unrivaled power and influence within Asia. As such, China's future economic and political dominance of the Asian regional economy is set to be underpinned by its vibrant, dynamic and hypercompetitive manufacturing industries, whatever the country's doomsayers may claim.

Riaz Haq said...

Wisconsin Is Coming to India and Not in a Good Way
Analysis by Tim Culpan | Bloomberg

https://www.washingtonpost.com/business/wisconsin-is-coming-to-india-and-not-in-a-good-way/2022/09/15/cba3a702-3531-11ed-a0d6-415299bfebd5_story.html


The project is fantastical: A $19 billion investment into semiconductor and display-panel sectors, with the creation of 100,000 jobs in a state with little experience in technology manufacturing.

If voters and taxpayers in India’s northwestern Gujarat state are excited about this “ landmark investment” they ought to read up on recent Wisconsin history. The US state bought into a similar pipe dream in 2017 when then-President Donald Trump teamed up with then-Governor Scott Walker to lure Foxconn Technology Group, whose Taipei-listed flagship is Hon Hai Precision Industry Co. The Taiwanese company said it’d invest $10 billion and hire 13,000 workers.

Wisconsin never hit its targets. And neither will Gujarat.

What’s playing out today in India is eerily similar to what happened in the US Midwest five years ago, but this time the people and government of Gujarat have no excuse for not being aware of what’s likely to unravel. Americans were told clearly that the project in Mount Pleasant didn’t make sense. But still, they went ahead.

It’s inconceivable that Foxconn truly thought it would spend as much as $10 billion to build a high-tech manufacturing plant in the middle of US farm country. But, as founder and Chairman Terry Gou said early on in the planning phase: “There is such a plan, but it is not a promise. It is a wish.”

So when Vedanta Ltd. chairman Anil Agarwal says his company will invest 1.54 trillion rupees ($19.4 billion), we ought to take it as wishful thinking, rather than a promise. And we can also pause to bathe in the sweet irony of his chosen venture partner: Foxconn, the same name behind the Wisconsin project. Though, to be fair, the Taiwanese are less a driving force behind this India project and more a consulting partner. The numbers, choice of location, and project scope are mostly decided by Vedanta, which is bearing most of the financial burden.

Foxconn made various pledges in Wisconsin that never came to fruition, with a promise for a state-of-the-art 10G liquid-crystal-display panel factory being the most egregious. At least it never committed to assembling iPhones, the product for which Foxconn is most famous.

The Taiwanese company’s perfidiousness was in some respects spurred by local and national governments intent on selling to their voters (and taxpayers) the assurance that a $3 billion incentives package — the largest in US history — would be worth the expense. It will be the “Eighth Wonder of the The World,” Trump proclaimed at the groundbreaking ceremony in 2018.

Governments from Washington to New Delhi don’t want to offer corporate welfare to lure hum-drum projects like chip-testing and assembly. They want to send press releases and tweets that hail their territory’s move into the upper echelons of industrial society. To meet that PR goal, they often tie incentives not to reasonable evolutionary steps in economic development, but to extravagant plans that people never dreamed of.

And the recipients of such sweeteners are more than happy to oblige, safe in the knowledge that there’s almost no downside in overpromising and under-delivering. And those who doled them out — either long gone from office, or safely entrenched — won’t be required to foot the bill either. Scott Walker lost his re-election bid, in large part because of the failure of the Foxconn deal; however, he didn’t lose his home like dozens of Wisconsinites who were displaced to make way for the “wonder” that never was.

Riaz Haq said...

Wisconsin Is Coming to India and Not in a Good Way
Analysis by Tim Culpan | Bloomberg

https://www.washingtonpost.com/business/wisconsin-is-coming-to-india-and-not-in-a-good-way/2022/09/15/cba3a702-3531-11ed-a0d6-415299bfebd5_story.html

Now it’s India’s turn to dream, until such time comes that it must face reality.

Perhaps it’s a coincidence that the project went to the home state of Prime Minister Narendra Modi. Neighboring Maharashtra state thought it was a shoe-in for the deal, going so far as to issue a statement two months ago announcing that the Vedanta-Foxconn venture would invest there.

Accusations and rancor were flying thick and fast in Maharashtra after Agarwal and Modi took to the stage to celebrate the winner. But in reality, the people of India’s second most-populous state may end up celebrating not that they lost the project, but that they dodged a bullet.

Indians — in Gujarat and Maharashtra in particular — can take this as a warning: You don’t want to be another Wisconsin.

Riaz Haq said...

India is now ever more dependent on Chinese #imports despite seeking self-reliance. #Indian imports from #China include iron & #steel, copper, #nuclear reactors, shoes, animal & vegetable fats, mineral fuels, inorganic chemicals. #MakeinIndia #Modi #trade

https://finance.yahoo.com/news/india-now-ever-more-dependent-061000412.html


For the past few years, prime minister Narendra Modi’s government has been pushing businesses to “make in India” and lessen his country’s reliance on China-made goods.

The idea is to reduce India’s trade deficit with its neighbour. A trade deficit happens when a country’s imports exceed its exports.


Yet, after spending billions of rupees to build such self-reliance, China’s trade surplus with India has only exceeded $1 trillion, The Hindu reported yesterday (Oct. 20).

Bilateral trade between India and China
Trade ties between India and China began to grow in the early 2000s, driven by imports to India from China.

A large portion of these imports, according to the Indian government, include footwear, iron and steel, copper, nuclear reactors, animal and vegetable fats, mineral fuels, and inorganic chemicals among others.

In the past five years alone, imports from China have increased by nearly 30%, the Indian informed parliament in July (pdf).

“In 2021, annual two-way trade crossed $100 billion for the first time, reaching $125.6 billion, with India’s imports accounting for $97.5 billion, pegging the imbalance at close to $70 billion,” according to The Hindu.

Calls for Boycott of Chinese products
The increase in Chinese imports has come amid growing calls in India to boycott Chinese products.

Indian customers’ attitude towards Chinese products turned so hostile by the end of 2020 that some Chinese firms switched the “Made in China” label on their products to “Made in PRC” where PRC stands for the People’s Republic of China. This made the products’ country of origin a little less clear.

Tensions between the two nations increased when India banned a host of Chinese apps and the Modi government reportedly advised all states to avoid signing any deals with China.

None of these moves has apparently helped India. The country is now dependent on China more than it ever was.

Riaz Haq said...

India needs to jump-start manufacturing. Here’s how to do it.
By Dhiraj Nayyar

https://www.washingtonpost.com/opinions/2022/11/24/modi-india-economy-boost-manufacturing/

If the Indian economy has an Achilles’ heel, it is the country’s manufacturing sector. Despite rapid economic growth since pro-market reforms began in 1991, the share of manufacturing in India’s gross domestic product has remained stubbornly low, at about 15 percent. (In China, it has been about 30 percent in recent years.) Indian growth has been driven by services, most famously in information technology.

The lack of a large, competitive manufacturing sector has consequences. One statistic more than any other captures the consequence of an underdeveloped manufacturing sector: Just over 40 percent of India’s total workforce is still employed in agriculture and allied activities that account for only 18 percent of GDP. Unlike advanced economies, India does not have an unemployment problem; instead, it struggles with underemployment. In the absence of significant social security, people cannot afford to go without jobs, so they are forced to content themselves with low-productivity, low-wage jobs in farming. Services have not been able to absorb this excess low-skill workforce. In fact, they have not done so in any country that has become rich.

Now that three decades of rapid growth have raised the expectations of the population, there are increasing calls for high-quality jobs. Ironically, China might lend a helping hand. Beijing’s strict “zero covid” policy is severely disrupting global supply chains. The recent shortage of iPhone supplies is just the most prominent example. China now poses a bigger risk to supply chains than at any point during its rise as the factory of the world over the past three decades. Xi Jinping’s consolidation of unchallenged control at last month’s Chinese Communist Party congress marks a firm break with the moderate era initiated by Deng Xiaoping. The deepening authoritarianism in Beijing translates into great unpredictability in the actions of the world’s second-largest economy. The world looks on with growing concern.

The problems don’t end there. Many critical supply chains outside China, for example, are in the neighboring East Asian region, where China has outsize influence. Over 80 percent of leading-edge technology semiconductors are manufactured in just two locations: Taiwan and South Korea, both of which face permanent threats in the form of China and North Korea.

The United States seems to have recognized the risks. Last month, the Biden administration announced what is in effect a “tech war” on China by banning the export of semiconductor chips as well as the technology and equipment used to manufacture them. U.S. allies that have access to similar know-how might follow suit. Given that the Trump administration also cracked down on trade with China, it is fair to assume there is now a bipartisan consensus in the United States on the need to contain Beijing and diversify critical supply chains.

Riaz Haq said...

India needs to jump-start manufacturing. Here’s how to do it.
By Dhiraj Nayyar

https://www.washingtonpost.com/opinions/2022/11/24/modi-india-economy-boost-manufacturing/

India is notorious for missing geopolitical opportunities — but this time might be different. In contrast to his predecessors, who mostly hailed from the agricultural heartland of North India, Prime Minister Narendra Modi comes from the western coastal state of Gujarat, which has long given priority to manufacturing. In Gujarat, manufacturing contributes 30 percent to the state’s GDP, a level comparable to China’s.

Having served as chief minister of Gujarat for nearly 13 years before he became prime minister, Modi is acutely aware of what manufacturing needs to thrive. Since he became prime minister in 2014, Modi has tried to make life easier for businesses by cutting regulations and incentivizing bureaucrats to speed up approval processes. Now, in his second term in office, he is going further by embracing industrial policy.

India’s long history of failed state intervention has made politicians wary of industrial policy. Yet in recent years, as manufacturing continues to lag, Modi has opted to intervene. His production-linked incentives program is designed to reward domestic and foreign-owned firms across 13 chosen sectors, from automobiles to pharma to advanced batteries. The aim is to ensure global competitiveness by achieving greater scale in production. The program is set to distribute about $25 billion to industry over four years.

The second intervention is his program for manufacturing semiconductor and display factories, which offers up to $10 billion in the form of capital subsidy to potential investors. (Disclosure: My company, Vedanta, has applied for subsidies from this program as part of its investment in a semiconductor and display manufacturing joint venture with Taiwan’s Foxconn.) Interestingly, the subsidy program was announced before Congress passed its Chips and Science Act this year.

Modi’s embrace of industrial policy is a gamble — but it might be India’s best hope. Subsidies on their own won’t be enough. Success depends on whether the Indian manufacturing sector can prove its ability to compete in global markets. That will likely require a whole host of other structural reforms — a huge challenge in India’s noisy democracy, where a multitude of vested interests complicates the withdrawal of protections and unproductive subsidies. This will require all of Modi’s considerable political skills (and perhaps a third term in office starting in 2024).

But the country’s manufacturers have no time to waste. Right now, firms exiting China are looking for other options. India needs to do everything to ensure it is the first choice.

Riaz Haq said...

Aakar Patel
@Aakar__Patel
manufacturing share of gdp has fallen after launch of make in india

a report by ashoka ceda’s ankur bhardwaj showed jobs in manufacturing in india had halved after 2017

the beauty of new india is that popularity is dissociated from performance/governance

https://twitter.com/Aakar__Patel/status/1596395004733202432?s=20&t=3-beXIpJ3EYu8_wlmKkSlQ

---------------

CEDA-CMIE Bulletin No 4: May 2021

With the second wave of the coronavirus pandemic battering India at present, the Indian economic outlook looks bleak for the second year in a row. In 2020-21, India’s real GDP growth is estimated to be minus 8%. This would also put pressure on India’s employment numbers. In previous bulletins, we have analyzed the impact of Covid-19 pandemic on employment, individual and household incomesand expenditures in 2020.

In this CEDA-CMIE Bulletin, we try to take a longer-term view of sector-wise employment in India. We base this on CMIE’s monthly time-series of employment by industry going back to the year 2016. For this bulletin, we have focused on seven sectors, viz. agriculture, mines, manufacturing, real estate and construction, financial services, non-financial services, and public administrative services. These sectors make up for 99% of total employment in the country.

https://ceda.ashoka.edu.in/ceda-cmie-bulletin-manufacturing-employment-halves-in-5-years/

Riaz Haq said...

India will soon overtake China as the world’s most populous country
But it will struggle to reap the benefits of a young workforce


https://www.economist.com/graphic-detail/2023/01/05/india-will-soon-overtake-china-as-the-worlds-most-populous-country

You might expect production to shift to labour-rich India. That is especially so as relations between China and the West become more hostile. But companies, especially in more advanced industries, tend to set up production in places where there are already suppliers and skilled workers. That is where India has a problem.

India’s development has relied less on industry than that of other emerging economies. Manufacturing generates 14% of Indian GDP, compared with 27% in China. What industry India does have clusters in the relatively prosperous south and west. But it is the poorer northern states that are making more babies (see map). Uttar Pradesh, for instance, is home to 17% of India’s population but has only 9% of its industrial jobs. That mismatch will hamper India’s economic growth.

Internal migration would help. Road, rail and air connections are improving. The government is investing massively in digitisation, which should encourage people to move by helping them to hold on to their ID cards, welfare benefits and voting rights and to communicate with their families at home.

Yet these efforts will take years, maybe decades, to pay dividends. Even as India’s population grows, it will struggle to capitalise on the potential of its young workforce.

Riaz Haq said...

India will take 40 yrs to draw level with China's car penetration: Bhargava
As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive

https://www.business-standard.com/article/companies/india-to-take-191-yrs-to-reach-chinese-car-penetration-levels-r-c-bhargava-122122000775_1.html

Maruti Suzuki India Chairman R C Bhargava on Monday at a media interaction said that even with the number of cars per 1,000 population projected to grow by three to five per year, India would still take 40 years to draw level with China.

In the past five years, car penetration on average grew by a mere one per 1,000 population, especially with the closure of plants and disruption of sales during the pandemic.

The key drivers for the car industry’s sluggish growth — and consequently penetration — are twofold: high taxation and higher cost of regulatory compliance, especially for small cars.

Bhargava pointed out that currently, the penetration ratio in India is 30 cars per 1,000 population, as opposed to China’s 221 cars per 1,000 population.

“Based on this calculation, we will take around 40 years,” he said.

The message clear: the Indian car market is not growing as fast as it ought to.

He said the low penetration is reflected in a torpid passenger car market.

“In the first decade of this century (2000-2010), the passenger car market grew at around 10-12 per cent per annum. In the next 12 years, the average growth was a mere 3-4 per cent.”

Unlike other developed countries like Germany that build their manufacturing prowess on the strength of their automotive (auto) industry, India, he said, continues to be dismissive of cars as a product of luxury.

“Government policies are such that they treat cars as luxury products that need to be heavily taxed,” he lamented, adding, “Car affordability is not at all related to income.”

“Taxation on cars in Japan is 10 per cent; in Europe, 19 per cent. Apart from the goods and services tax (GST), cess, state taxes, and a one-time road tax, the tax incidence in India is anywhere from 40 per cent to as high as 60 per cent for premium sport utility vehicles. It’s a call the government has to take,” he said.

At present, four-wheelers are taxed at 28 per cent GST, with additional cess ranging between 1 per cent and 22 per cent, depending upon the type of vehicle.

Cars imported as completely-built units attract Customs duty ranging between 60 per cent and 100 per cent, depending upon engine size and cost, insurance and freight value being less or above $40,000.

He said the cost of regulatory compliance (implementing Bharat Stage VI norms, for instance), especially on smaller and cheaper cars, has been going up. While the cost of doing so is similar for both versions, the impact as a percentage of cost is far higher on a smaller car.

As a result, the small car market has been shrinking as two-wheeler customers shelve or delay plans to upgrade to a four-wheeled drive.

For instance, the market share of a Rs 5 lakh and below car has fallen from 25.8 per cent in 2018-19 to a meagre 10.3 per cent in 2021-22. In the same period, the market for cars of Rs 7 lakh and below fell from 60 per cent to 43 per cent.

Bhargava also took a contrarian view on India’s decision to go in for free trade agreements (FTAs) with different countries — a move strongly resisted by many auto companies that feared the absence of tariff barriers opening the floodgates to imported vehicles entering the country.

Riaz Haq said...

Ritesh Kumar Singh
@RiteshEconomist
While domestic #demand is hampered by high taxes on both vehicles, fuels, motor insurance and repair and maintenance as well as traffic congestion that jack up the cost of owning #vehicles relatively stronger rupee is hurting #Exports, for instance, of 2W.


https://twitter.com/RiteshEconomist/status/1611901898642321409?s=20&t=FIhHrWvDf922ge89Kn5sKg

Two-wheeler sales stuttering, how long before it gets better?
After signs of recovery, two-wheeler sales slipped in December showing weakness in domestic demand as well as exports. Expectations are that improving rural demand will drive sales, albeit after a couple of quarters

https://www.moneycontrol.com/news/opinion/two-wheeler-sales-stuttering-how-long-before-it-gets-better-9814021.html


ighlights December saw leading two-wheeler firms report a sales drop both year-on-year and month-on-month Domestic demand is yet to grow beyond 2019 pre-pandemic levels Rural sentiment is turning positive but yet to translate into two-wheeler purchases Exports were hit due to devaluation in currencies of importing markets After a couple months of improvement, a weak December for two-wheeler (2W) sales is a setback for forecasts of recovery in 2023. This auto segment registered a marginal year-on-year (yoy) sales rise, while declining compared to the previous...

Riaz Haq said...

Two-wheeler volumes drop to FY 10/12 levels. Huge drop in entry level Motorcycle sales indicate pain in rural/semi-urban areas. Experts say at least 50% capacity lying idle at two-wheeler factories.
Point to deeply worrying economic realities.


#India 2-Wheeler Sales Volume Declines to 2012 Level: 12.2 Million in 2022. Capacity utilization down to 50%. #Modi #MakeInIndia #Manufacturing #Unempolyment #economy https://timesofindia.indiatimes.com/auto/bikes/two-wheeler-market-set-back-by-decade/articleshow/97265718.cms



https://timesofindia.indiatimes.com/auto/bikes/two-wheeler-market-set-back-by-decade/articleshow/97265718.cms

https://twitter.com/haqsmusings/status/1619198354780733441?s=20&t=d3h_DKx1k036mIzWLp4Aig

Riaz Haq said...

#Apple’s #manufacturing shift from #India to #India hits stumbling blocks. Only 1 out of every 2 components coming off the #Indian casing production line is in good enough shape to eventually be sent to Foxconn for assembly. #MakeinIndia #Modi #Quality https://www.ft.com/content/0d70a823-0fba-49ae-a453-2518afcb01f9


Apple is hitting stumbling blocks in its effort to increase production in India, as the US tech giant faces pressure to cut its manufacturing reliance on China.

The iPhone maker has been sending product designers and engineers from California and China to factories in southern India, to train locals and help establish production, according to four people familiar with the operations.

It comes as Apple attempts to unwind its dependence on a China-centred supply chain strategy, following months of Covid-19 disruption that led to it reporting its first decline in quarterly revenues in three and a half years earlier this month.

Apple is building up nascent operations in India in an overdue diversification strategy, following the blueprint it set in China two decades ago, with engineers and designers often spending weeks or months at a time in factories to oversee manufacturing.

While Apple has been producing lower-end iPhones in India since 2017, last September was significant with Indian suppliers building flagship models within weeks of their launch in China, where virtually all iPhones and other Apple hardware are made.

But its experience in recent months has demonstrated the scale of the work to be done in the country.

At a casings factory in Hosur run by Indian conglomerate Tata, one of Apple’s suppliers, just about one out of every two components coming off the production line is in good enough shape to eventually be sent to Foxconn, Apple’s assembly partner for building iPhones, according to a person familiar with the matter.

This 50 per cent “yield” fares badly compared with Apple’s goal for zero defects. Two people that have worked in Apple’s offshore operations said the factory is on a plan towards improving proficiency but the road ahead is long.

Jue Wang, consultant at Bain, said Apple is at the start of its expansion into India. “We’re not talking the same scale of the Zhengzhou factory” — a factory hub in China known as “iPhone City” that employs some 300,000 workers — “and everybody acknowledges there will be different efficiency, but it is happening”, she said.


In China, suppliers and government officials took a “whatever it takes” approach to win iPhone orders. Former Apple employees describe instances in which they would estimate a certain task might take several weeks, only to show up the next morning to find it already completed at inexplicable speed.

Operations in India are not running at that sort of pace, said a former Apple engineer briefed on the matter: “There just isn’t a sense of urgency.”

A person involved in Apple operations said the process of expanding to India is slow in part because of logistics, tariffs and infrastructure. This person said Apple’s diversification into south-east Asia has been smoother thanks to the Regional Comprehensive Economic Partnership, a free trade agreement among 10 regional nations.

Mark Zetter, president of Venture Outsource, a consultancy for the contract electronics industry, said such inertia has been a problem for years.

Five years ago, when Zetter did research for the Indian think-tank Gateway House, he found contract manufacturers would “frequently claim they can fulfil any need” for an electronics client. But in reality they would be “slow to respond to customer concerns after the deal is signed” and “lack flexibility” to respond to changes.

The Apple engineers have also, at times, been housed at city-centre hotels in Chennai, the capital of the southern Indian state of Tamil Nadu, two hours away from the factories where they are working. This requires four hours of daily commuting, with occasionally poor WiFi connections along the route.


Riaz Haq said...

Ritesh Kumar Singh
@RiteshEconomist
Most of incentives and #tax breaks funded by the Indian taxpayers are being used to buy Chinese materials and parts to assemble in #India, be it #Electronics #EVs or #SOLAR power #equipment
#PLI #exports #imports #GreenEnergy

https://twitter.com/RiteshEconomist/status/1632237841370566656?s=20

Riaz Haq said...

US becomes India's biggest trading partner in FY23: Report

https://www.livemint.com/news/india/us-becomes-india-s-biggest-trading-partner-in-fy23-report-11681689914529.html


(Indian) Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.

--------------

The US has emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries.

According to the provisional data of the commerce ministry, the bilateral trade between India and the US has increased by 7.65 per cent to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22. It was USD 80.51 billion in 2020-21.

Exports to the US rose by 2.81 per cent to USD 78.31 billion in 2022-23 as against USD 76.18 billion in 2021-22, while imports grew by about 16 per cent to USD 50.24 billion, the data showed.

On the other hand, during 2022-23, India's two-way commerce with China declined by about 1.5 per cent to USD 113.83 billion as against USD 115.42 billion in 2021-22.

Exports to China dipped by about 28 per cent to USD 15.32 billion in 2022-23, while imports rose by 4.16 per cent to USD 98.51 billion in the last fiscal. Trade gap widened to USD 83.2 billion in the last fiscal as against USD 72.91 billion in 2021-22.

Experts believe that the trend of increasing bilateral trade with the US will continue in the coming years also as New Delhi and Washington are engaged in further strengthening the economic ties.

Federation of Indian Export Organisations (FIEO) President A Sakthivel said that increasing exports of goods such as pharmaceutical, engineering and gems and jewellery is helping India to push its shipments to America.

"The trend of increasing trade with the US will continue in the coming months also," he said.

FIEO Vice President Khalid Khan said India is emerging as a trusted trading partner and global firms are reducing their dependence only on China for their supplies and are diversifying business into other countries like India.

"The bilateral trade between India and the US will continue to grow as our exporters are getting good orders from that country," Khan said.

Rakesh Mohan Joshi, Director of the Indian Institute of Plantation Management (IIPM), Bangalore, too said that India provides huge trade opportunities for the US as India is the world's third largest consumer market and the fastest growing market economy.

"Major export items from India to the US include petroleum, polished diamonds, pharmaceutical products, jewellery, light oils and petroleum, frozen shrimp, made ups etc. whereas major imports from the US include petroleum, rough diamonds, liquified natural gas, gold, coal, waste and scrap, almonds etc," Joshi said.

America is one of the few countries with which India has a trade surplus. In 2022-23, India had a trade surplus of USD 28 billion with the US.

The data showed that China was India's top trading partner since 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner.

In 2022-23, the UAE with USD 76.16 billion, was the third largest trading partner of India. It was followed by Saudi Arabia (USD 52.72 billion), and Singapore (USD 35.55 billion).

Riaz Haq said...

UNIDO Report 2022 Industrial Stats (Manufacturing Value Added Per Capita)

https://www.unido.org/publications/international-yearbook-industrial-statistics


Afghanistan $28

Bangladesh $356

Brazil $875

China $3,076

Germany $8,270

India $331

Indonesia $776

Iran $712

Iraq $123

Japan $8,110

Kenya $145

Nepal $48

Malaysia

Pakistan $176

Philippines $656

Russia $1,394

Turkey $2,271

UK $4,202

USA $7,343

Riaz Haq said...

#Modi's #semiconductor #manufacturing plan flounders as firms struggle to find #tech partners. Modi has made it top priority for #India's economic strategy to "usher in new era in electronics manufacturing" by luring global companies. #MakeInIndia
https://www.reuters.com/world/india/india-chip-plan-stalls-after-tower-intel-deal-setback-modi-2023-05-31/https://www.reuters.com/world/india/india-chip-plan-stalls-after-tower-intel-deal-setback-modi-2023-05-31/

NEW DELHI/OAKLAND, California, June 1 (Reuters) - Big companies including a Foxconn joint venture that bid for India's $10 billion semiconductor incentives are struggling due to the lack of a technology partner, a major setback for Prime Minister Narendra Modi's chipmaking ambitions.

A planned $3 billion semiconductor facility in India by chip consortium ISMC that counted Israeli chipmaker Tower as a tech partner has been stalled due to the company's ongoing takeover by Intel, three people with direct knowledge of the strategy said.

A second mega $19.5 billion plan to build chips locally by a joint venture between India's Vedanta and Taiwan's Foxconn is also proceeding slowly as their talks to rope in European chipmaker STMicroelectronics (STMPA.PA) as a partner are deadlocked, a fourth source with direct knowledge said.

Modi has made chipmaking a top priority for India's economic strategy as he wants to "usher in a new era in electronics manufacturing" by luring global companies.

India, which expects its semiconductor market to be worth $63 billion by 2026, last year received three applications to set up plants under the incentive scheme. They were from the Vedanta-Foxconn JV; a global consortium ISMC which counts Tower Semiconductor (TSEM.TA) as a tech partner; and from Singapore-based IGSS Ventures.

The Vedanta JV plant is to come up in Modi's home state of Gujarat, while ISMC and IGSS each committed $3 billion for plants in two separate southern states.

The three sources said ISMC's $3 billion chipmaking facility plans are currently on hold as Tower could not proceed to sign binding agreements as things remain under review after Intel acquired it for $5.4 billion last year. The deal is pending regulatory approvals.

Talking about India's semiconductor ambitions, India's deputy IT minister Rajeev Chandrasekhar told Reuters in a May 19 interview ISMC "could not proceed" due to Intel acquiring Tower, and IGSS "wanted to re-submit (the application)" for incentives. The "two of them had to drop out," he said, without elaborating.

Tower is likely to reevaluate taking part in the venture based on how its deal talks with Intel pan out, two of the sources said.

Riaz Haq said...

Bridge under construction in #India has collapsed - for the second time in just over a year, once again raising questions about the quality of its construction. #BridgeCollapse #infrastructure #Modi #BJP #Hindutva #Islamophobia #Corruption https://www.cnn.com/2023/06/06/india/india-bihar-bridge-collapse-intl-hnk

A four-lane concrete bridge being built across the River Ganges in the east Indian state of Bihar has collapsed for the second time in just over a year, once again raising questions about the quality of its construction.

Video shows the 3-kilometer (1.8-mile) bridge dramatically crashing into the river on Sunday, sending a plume of debris and dust into the sky and waves rippling across the holy river.

The Sultanganj Bridge has collapsed twice since construction began in 2017, the first time in April last year before Sunday’s catastrophic failure. It’s not clear why the bridge collapsed last year or if those problems had been rectified.

Crowds of people on the river bank can be seen filming the bridge and shouting as it tumbles down. CNN has not been able to confirm reports of any injuries.

On Monday, Bihar’s chief minister Nitish Kumar said he had ordered an inquiry into the incident.

In a statement Monday, the Canadian design and engineering firm behind the bridge, McElhanney, it was aware of the “partial collapse” of the bridge and is “deeply concerned” about the safety and well-being of those affected by the incident.


The company will “cooperate with any investigation,” the statement added.

CNN has reached out to SP Singla Constructions, who was building the bridge, but did not receive an immediate response.

According to McElhanney, the bridge was expected to include four lanes of traffic and a footpath, providing “an important new link across the Ganges.”

It was also expected to ease congestion on the state’s three existing road bridges, the firm said on its website.

The Sultanganj Bridge is not the only one to have collapsed in India in the last year. Last October, a suspension bridge gave way in the town of Morbi in Gujarat, killing 135 people.

Riaz Haq said...

Chris Kay
@christopherkay
The more India tries to ramp up production, the more it depends on China for components and raw materials, report
@vrishtibeniwal

https://www.bloomberg.com/news/articles/2023-06-08/modi-s-make-in-india-goal-relies-on-china-factories-for-supplies?sref=zsRxy7Ix

https://twitter.com/christopherkay/status/1666641446869544960?s=20

----------------

Fun Zoo Toys is an Indian manufacturing success story. The maker of heart-shaped cushions and “Little Ganesha” dolls started out as a family business in 1979 and has grown to be one of the nation’s major manufacturers of fluffy toys.

Sales doubled after Prime Minister Narendra Modi’s Made-in-India push saw import duties on toys ramped up from 20% to 70% over three years to 2023. But that’s just half of the story: the production surge to meet those sales wouldn’t have been possible without raw materials like metallic pins, integrated circuits and LEDs imported from China.

--------------

The Make in India dream keeps colliding with the Chinese reality

Read more at:
https://economictimes.indiatimes.com/news/economy/policy/the-make-in-india-dream-keeps-colliding-with-the-chinese-reality/articleshow/100675067.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Last month, External Affairs Minister S. Jaishankar said Indian businesses need to stop looking for a "China fix", while terming the Make in India programme a strategic statement to spur the country's manufacturing.

Jaishankar was voicing the general sentiment that China's cheap imports de-industrialise India, take away millions of jobs and keep it dependent on China, therefore India's trade imbalance with China calls for more local manufacturing. India's trade gap with China widened to $83.2 billion in the last fiscal as against $72.91 billion in 2021-22. Exports to China dipped by about 28 per cent to $15.32 billion in 2022-23, while imports rose by 4.16 per cent to $98.51 billion in the last fiscal.

The solar dilemma
India's solar industry is an example of how India faces a complex challenge to fulfill its Make in India ambition. India might cut its import duties on solar panels to half, Reuters has reported recently. The renewable energy ministry has held talks with the finance ministry to approve its request to cut the import tax on solar panels from 40% to 20%,

India's nascent solar modules industry, which has been growing in the shelter of high tariffs, dread such a steep cut in import duties. The duty cut will deliver a blow to India's ambition of quickly expanding local production.

But local plants can’t keep up with rising demand and India must import solar modules to fill the gap. India is aiming to install 280 gigawatts of solar generation by 2030, compared to about 64 gigawatts now, as it overhauls its coal-dominated power grid, according to news agency Blomberg. That would require the addition of 27 gigawatts of capacity every year for the rest of the decade — more than double the volume installed last year.

While its local industry can't meet the rising demand, India must import more solar modules. But that imperils its nascent domestic industry which must grow to support the solar energy targets. “Such volatile changes in government policy show that businesses can’t be dependent on policy support,” Vinay Rustagi, MD at Bridge To India, a renewable energy consulting firm, told Bloomberg recently. “It’s a dampener for domestic manufacturing prospects.”

The China conundrum
Even when India tries to become more self-reliant by increasing local manufacturing capacity, it still has to depend on China for critical intermediate inputs. Take the case of Apple's iPhones made in India by Tata. Almost 90% components used for Apple phones by Tata are sourced from Mainland China, even as Apple looks to shift manufacturing to India, ET has reported recently. Items such as brackets, industrial glues, screws, mesh, pressure sensitive adhesives and metal parts are all shipped from China as per Apple’s instructions.

Riaz Haq said...

The Make in India dream keeps colliding with the Chinese reality


The China conundrum
Even when India tries to become more self-reliant by increasing local manufacturing capacity, it still has to depend on China for critical intermediate inputs. Take the case of Apple's iPhones made in India by Tata. Almost 90% components used for Apple phones by Tata are sourced from Mainland China, even as Apple looks to shift manufacturing to India, ET has reported recently. Items such as brackets, industrial glues, screws, mesh, pressure sensitive adhesives and metal parts are all shipped from China as per Apple’s instructions.

Only Apple’s old-time vendors such as Foxconn, Pegatron and Wistron manufacture “end-to-end” phones in India. In FY23, India accounted for 5% of iPhone’s total global production and exported phones worth $5 billion, a near four-fold surge compared with a year ago.

Localisation of manufacturing, the domestic value addition, however, can't happen before manufacturing achieves critical mass. Till then, India will have to depend on China for imports of intermediate goods. If you add to it the import of finished items where India cannot compromise growth, such as in the solar sector, it indicates a heavy reliance on China. It means India's project to become self-reliant in manufacturing must depend on imports from China, at least initially.

Many electric two-wheeler companies cornering subsidies, aimed at promoting domestic manufacturing to meet the ambitious green mobility goals, from the government without fulfilling the localisation requirements is a case in point. Many parts are imported from China due to lack of sufficient local manufacturing.

What are the prospects?
Global supply chains are not easy to shift from countries where they got embedded in a vast local manufacturing ecosystem. The countries trying to do that must develop comparable ecosystems which can't happen overnight. Meanwhile, they will have to depend on imports from China. Tariffs alone can't help local industries.

But India's concerted push for self-reliance in manufacturing, powered by hefty production-linked incentives, is not without results. India's imports of electronic goods such as laptops, personal computers, integrated circuits and solar cells from China declined during 2022-23, according to a report by economic think tank Global Trade Research Initiative (GTRI). The fall in imports is notable in electronic items where the incentives scheme is operational. Import of medical equipment declined 13.6 per cent to $2.2 billion last fiscal year as compared to 2021-22. Similarly, import of solar cells, parts, diodes slumped 70.9 per cent to $1.9 billion in 2022-23.

However, import of lithium-ion batteries surged about 96 per cent to $2.2 billion last fiscal year. India's green mobility goals will only increase these imports steeply. For India to keep its growth steady, meet its energy goals and expand its manufacturing base, the Make in India must be supported by Make in China.

Read more at:
https://economictimes.indiatimes.com/news/economy/policy/the-make-in-india-dream-keeps-colliding-with-the-chinese-reality/articleshow/100675067.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Riaz Haq said...

Fingers ‘turned to powder’: maimed workers of #India’s #automobile hub in #Haryana. Poor training, shoddy equipment leave thousands of auto workers injured. 52% of accidents happen on power press machine, 47% of workers had low-quality safety gear. #MakeInIndia #safety https://www.aljazeera.com/economy/2023/8/4/crushed-fingers-hands-mar-indias-auto-manufacturing-hub

At the break of dawn, thousands of workers walk out from dusty and congested maze-like alleys to work at nearby factories in Manesar, one of India’s leading automobile hubs, about 50km (31 miles) south of the capital.

In India, the automobile industry employs around 3.7 million people and contributes 7.1 percent to the gross domestic product (GDP). Just in Manesar and the next-door city of Gurugram, both in Haryana state, approximately 80,000 workers are employed in different automobile units of Hero MotoCorp, Maruti Suzuki, Yamaha, and other global companies.

Waiting restlessly outside a government dispensary for his turn, Manish Kumar, 20, a worker at one such factory in Manesar, quickly covers his bandaged hand with a piece of cloth as a group of workers walk past him. In February, Manish lost two fingers when a power press machine, used in the manufacturing of car windows, came crashing down on his hand.

“I came to Manesar like thousands of other workers to support my family and for a better future. But little did I know, instead, this place would make me dependent on someone for the rest of my life,” Manish told Al Jazeera.

“The incident is fresh in my mind and I get traumatised when someone asks me what happened to your hand, and that’s why I try to hide it most of the time,” he said.

Before the outbreak of the COVID-19 pandemic, Manish worked as a casual labour in his central Indian state, Madhya Pradesh. To meet his daily ends and support his ailing parents, he boarded a bus to Manesar, like hundreds of others from his village, in search of a better job opportunity. Soon at the recommendation of a friend, he landed a job that would earn him 13,500 rupees ($163) per month in a small factory manufacturing parts for auto major Maruti Suzuki.

“The factory owners don’t care about our safety; their main agenda is production should not stop at any cost … The machine I was working on malfunctioned for a week, and still I was made to work on it instead of getting it repaired. The machine crushed my two fingers due to their negligence, turning them into powder.”

“It has been over a month, and still, I don’t know whether I will ever be able to work again,” said Manish while struggling to clear drops of sweat dripping from his face. He said he is yet to receive any compensation for his injury.

Like Manish, thousands of others have been injured while working in this sector in India. “Crushed”, a report published by Safe in India Foundation (SII) revealed that, on average, 20 workers lose their hands and/or fingers daily while working in automobile factories spread in the Manesar and Gurgaon areas. Around 65 percent of injured workers are under the age of 30.

The automobile manufacturing sector in India recorded 3,882 incidents of injuries including 1,050 deaths in 2020, according to data from the Directorate General Factory Advice Service and Labour Institutes (DGFASLI). That year, the state of Haryana reported 50-60 nonfatal accidents, it said. However, SII says that figure is far from reality as each year it helps at least 4,000 workers suffering from a range of injuries in the state’s auto sector.

Riaz Haq said...

Ritesh Kumar Singh
@RiteshEconomist
India's premature #deindustrialisation: 12 out of the 23 #manufacturing industries that make up the IIP (Index of Industrial Production) are at levels lower than 7 years ago
@moneycontrolcom

https://twitter.com/RiteshEconomist/status/1691499535170674698?s=20


-----------------

India's industrial growth falls to 3.7% in June


https://www.moneycontrol.com/europe/?url=https://www.moneycontrol.com/news/business/economy/indias-industrial-growth-falls-to-3-7-in-june-11161921.html#:~:text=At%203.7%20percent%2C%20the%20latest,12.6%20percent%20in%20June%202022.



India's industrial output grew by 3.7 percent in June, according to data released by the Ministry of Statistics and Programme Implementation on August 11.

At 3.7 percent, the latest industrial growth figure as per the Index of Industrial Production (IIP) is at a three-month low. It is also below the consensus estimate of 5 percent.

Industrial growth had come in at 5.2 percent in May - now revised to 5.3 percent - and was 12.6 percent in June 2022.

For the first quarter of 2023-24, IIP growth stood at 4.5 percent, down from 12.9 percent in April-June 2022 when the data was boosted by a favourable base effect.

Industrial growth in June was dragged down by a weaker increase in the manufacturing output, which rose by 3.1 percent year-on-year compared to 5.8 percent in May.

The performance of the manufacturing sector has an outsized impact on the headline industrial growth number as the sector accounts for more than three-fourths of the IIP.

While manufacturing output grew at a slower pace, that of mining and electricity rose at a faster clip. In June, mining output rose by 7.6 percent, up from 6.4 percent in May, and electricity production was up 4.2 percent. In May, electricity production was up a mere 0.9 percent.

The improved performance of mining and electricity sectors was down the low rainfall in June as drier conditions allow increased mining activity.

"IIP growth print in June has disappointed," said Suman Chowdhury, chief economist and head of research at Acuité Ratings & Research.

"Clearly, the manufacturing sector has not been able to sustain the growth trend that had been seen in the first two months of the last quarter. The manufacturing output grew only by 3.1 percent and actually saw a sequential contraction of almost 1 percent," Chowdhury added.

"Within manufacturing, output in metals exhibited a healthy performance while export-intensive categories such as textiles and wearing apparel continued to remain pressured," noted Rajani Sinha, chief economist at CareEdge.

In terms of the use-based classification of goods, there were some big shocks. While production of primary and intermediate good rose at a greater rate in June - 5.2 percent and 4.5 percent, respectively - there were weaknesses in other spheres, with output of consumer durables falling 6.9 percent in June after rising for the for the first time in six months in May.

Capital goods' output was up just 2.2 percent - down from 8.1 percent in May - while that of consumer non-durables rose a mere 1.2 percent. in May, it had posted a growth of 8.4 percent.

Output of infrastructure goods grew by 11.3 percent - the same as in May.

According to Aditi Nayar, ICRA's chief economist, the performance of most high-frequency indicators improved in July relative to June, although there were some laggards in the form of vehicle registrations and finished steel consumption.

"Based on these trends, ICRA expects the IIP growth to witness an uptick to 4-6 percent in July," Nayar said.

Riaz Haq said...

Ritesh Kumar Singh
@RiteshEconomist
Replacing a supplier from China with one in a friendly country would seem to make a supply chain more resilient to a potential China-US conflict; but it may create a false sense of security, considering that many friendly suppliers still rely on China for key inputs
@Kanthan2030

https://twitter.com/RiteshEconomist/status/1692848048144335220?s=20

------------

https://www.project-syndicate.org/commentary/populist-economic-policies-easier-sell-than-liberal-orthodoxy-by-raghuram-rajan-2023-08?barrier=accesspaylog

Aug 18, 2023
RAGHURAM G. RAJAN
Since the 2008 global financial crisis discredited the old liberal orthodoxy, the door has been open for simplistic policies, in part because most people tend to focus only on a policy’s first-order effects. Unfortunately, everyone will have to learn the hard way why such policies fell out of favor in the first place.

CHICAGO – Even in the best of times, policymakers find it difficult to explain complex issues to the public. But when they have the public’s trust, the ordinary citizen will say, “I know broadly what you are trying to do, so you don’t need to explain every last detail to me.” This was the case in many advanced economies before the global financial crisis, when there was a broad consensus on the direction of economic policy. While the United States placed greater emphasis on deregulation, openness, and expanding trade, the European Union was more concerned with market integration. In general, though, the liberal (in the classical British sense) orthodoxy prevailed.

So pervasive was this consensus that one of my younger colleagues at the International Monetary Fund found it hard to get a good job in academia, despite holding a PhD from MIT’s prestigious economics department, probably because her work showed that trade liberalization had slowed the rate of poverty reduction in rural India. While theoretical papers showing that freer trade could have such adverse effects were acceptable, studies that demonstrated the phenomenon empirically were met with skepticism.

The global financial crisis shattered both the prevailing consensus and the public’s trust. Clearly, the liberal orthodoxy had not worked for everyone in the US. Now-acceptable studies showed that middle-class manufacturing workers exposed to Chinese competition had been hit especially hard. “Obviously,” the accusation went, “the policymaking elites, whose friends and family were in protected service jobs, benefited from cheap imported goods and could not be trusted on trade.” In Europe, the free movement of goods, capital, services, and people within the single market were seen as serving the interests of the EU’s unelected bureaucrats in Brussels more than anyone else.

Riaz Haq said...

India Made It to the Moon. That Doesn’t Make It a Top #Industrial Power. #Chandrayaan3Landing will not move big roadblocks on #India’s path to becoming a top industrial power. #Modi's “Make in India” hasn’t done much. #MakeInIndia #manufacturing #BJP
https://www.barrons.com/articles/india-moon-landing-industrial-power-3414fc0f

India took a giant leap into the ranks of advanced industrial nations when its Chandrayaan-3 unmanned spacecraft landed near the moon’s south pole on Aug. 23. At least to hear Prime Minister Narendra Modi tell it. “Science and technology are the foundations of a bright future for our nation,” the 72-year-old Modi, who is favored to win a third term next year, told ecstatic staff at the Indian Space Research Organization, or ISRO.
----------

Manufacturing’s share of gross domestic product is stuck at about 18%, according to S&P Global. That compares with 28% for China.

Modi’s (not very realistic) target is 25% by 2025. One big obstacle is policy-related: His government remains keen on import tariffs, some of which hit inputs needed to raise exports. “The Indian government has consistently raised tariff and nontariff barriers to protect domestic suppliers across most sectors,” the United States Trade Representative wrote in a recent report.

Another is a lag in transport infrastructure. Indian ports can’t accommodate the biggest container ships, so freight has to be transshipped through Singapore or Hong Kong. “To become the global manufacturing destination of choice, India will need massive upgrades in rail, port, and freight corridors,” write S&P researchers. That won’t happen by gazing at the moon.

Riaz Haq said...

Sushant Singh
@SushantSin
Even after PLI subsidy, iPhones assembled in India are 13% more expensive. This makes little sense.

https://x.com/SushantSin/status/1707950330653159901?s=20

--------------

Apple absorbs higher costs on 'Made in India' iPhones despite PLI scheme
Under the PLI scheme, Apple's contract manufacturers get incentives ranging from an average of 4-6 per cent annually

https://www.business-standard.com/companies/news/why-iphones-are-still-pricier-in-india-despite-made-in-india-production-123092901177_1.html

Riaz Haq said...

Apple CEO Tim Cook: This Is the No. 1 Reason We Make iPhones in China (It's Not What You Think)China is much more than a source of low-cost, low-skilled labor.

https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html


Apple CEO Tim Cook: "I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is"

And China has an abundance of skilled labor unseen elsewhere, says Cook:

The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the U.S., you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields.

The number one reason why we like to be in China is the people. China has extraordinary skills. And the part that's the most unknown is there's almost two million application developers in China that write apps for the iOS App Store. These are some of the most innovative mobile apps in the world, and the entrepreneurs that run them are some of the most inspiring and entrepreneurial in the world. Those are sold not only here but exported around the world.

Highly skilled software developers developing apps for the App Store are one reason Apple likes to be in China. But the depth of highly skilled labor in the manufacturing space is why Apple makes its iPhones there:

China has moved into very advanced manufacturing, so you find in China the intersection of craftsman kind of skill, and sophisticated robotics and the computer science world. That intersection, which is very rare to find anywhere, that kind of skill, is very important to our business because of the precision and quality level that we like. The thing that most people focus on if they're a foreigner coming to China is the size of the market, and obviously it's the biggest market in the world in so many areas. But for us, the number one attraction is the quality of the people.

Citing an example of the type of a highly skilled supplier Apple works closely with, Cook talked at length about recently visiting one company that it has collaborated with for several years:

I visited ICT--they manufacture, among other things, the AirPods for us. When you think about AirPods as a user, you might think it couldn't be that hard because it's really small. The AirPods have several hundred components in them, and the level of precision embedded into the audio quality--without getting into really nerdy engineering--it's really hard. And it requires a level of skill that's extremely high.

And the idea that Apple simply hands over the design to a company like ICT, which just manufacturers according to spec, is simply untrue, says Cook:

It's not designed and sent over--that sounds like there's no interaction. The truth is, the process engineering and process development associated with our products require innovation in and of itself. Not only the product but the way that it's made, because we want to make things in the scale of hundreds of millions, and we want the quality level of zero defects. That's always what we strive for, and the way that you get there, particularly when you're pushing the envelope in the type of materials that you have, and the precision that your specifications are forcing, requires a kind of hand-in-glove partnership. You don't do it by throwing it over the chasm. It would never work. I can't imagine how that would be.

Addressing the designed-in-California, made-in-low-cost-China impression that many people have--an impression reinforced by the tagline that is printed on every box containing a new iPhone--Cook had this to say:

Riaz Haq said...

Unlike China, which has developed its end-to-end supply chain solutions over the last four decades, India’s manufacturing sector has been small relative to its agricultural sector. India has yet to develop its capability to produce electronic parts domestically. India imported $12 billion worth of China-manufactured electronic parts in a five-month span last year, making up more than a quarter of its China imports. Netherlands-based Philips said in October that, despite the call to derisk from China, it will continue to source Chinese components including nuts, bolts, plastics, electronics, monitors, and other semi-finished goods for its operations around the world.


https://www.barrons.com/articles/india-bureaucracy-will-hold-back-economic-growth-a9354f77

To develop a connected national market, the Indian government is building motorways, airports, and railroads to stimulate material and people movements between states. However, even when this new infrastructure is put in place, there will be wide gaps between states. GDP per person in Uttar Pradesh is around $4,000, compared to $10,000 in Kerala.

Besides the income gap, there is a cultural gap. Unlike China, where 92% of the population belongs to the Mandarin-speaking Han ethnic group, India has a very diverse population that speaks many languages. Cultural differences, language problems, and state-specific business regulations make expanding a business from one state to another a challenge.