🏭️ India's electronics manufacturing

Good morning and Happy Friday. You know the drill - hope you have a good weekend when it arrives 🫶 

- Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

• 🇮🇳 India's limited progress with 'China Plus One'

• 🏭️ India's electronics manufacturing

• 🗞️ Bite-sized summaries

  • ⚔️ Army innovations

  • 🇺🇸 India can engage with the US

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock markets surged significantly. The rally was driven by IT stocks and positive global cues, with foreign investors turning net buyers.

🌍️ International

• Stock markets retreated from recent record highs. The decline was attributed to profit-taking and concerns over upcoming economic data releases. Investors also showed caution ahead of the Federal Reserve's next policy meeting, anticipating potential shifts in monetary strategy.

CHINA PLUS ONE

🇮🇳 India's limited progress with 'China Plus One'

India’s journey to position itself as a key player in the evolving global trade dynamics is fraught with challenges and untapped potential.

A recent NITI Aayog report shows how the nation has struggled to leverage the 'China Plus One' strategy as effectively as Southeast Asian peers like Vietnam, Thailand, Cambodia, and Malaysia.

These countries have attracted multinational corporations with competitive advantages like cheaper labour, simplified tax laws, and robust Free Trade Agreements (FTAs), allowing them to capture larger global export shares.

While global supply chains shift in response to U.S. tariffs and stricter trade controls on Chinese goods, India has yet to capitalize fully on the opportunity. Its share in labour-intensive global trade sectors continues to decline, revealing gaps in competitiveness across key product categories, even as it aspires to become an alternative manufacturing hub.

Despite these setbacks, India holds a strong foothold in developed markets like the U.S., U.K., and Germany, offering a foundation upon which to build. However, the report emphasizes the need to explore emerging markets and address domestic barriers to manufacturing growth, particularly in high-tech sectors critical for long-term sustainability.

Compounding these challenges is the European Union's upcoming Carbon Border Adjustment Mechanism (CBAM), which is set to significantly impact India’s iron and steel exports—key contributors to its EU trade portfolio.

With iron and steel representing 23.5% of India’s EU exports, the sector faces steep tariffs, compliance costs, and competitiveness hurdles due to stringent emissions standards. Given that the EU is India’s second-largest trading partner, contributing 17.4% of total exports in 2023-24, adapting to CBAM is not just important but essential.

The report highlights an urgent call to action: India must strengthen its trade policies, enhance manufacturing competitiveness, and adopt sustainable practices to navigate these global shifts and secure its place in the future of international trade.

Read more: Economic Times

INDIAN MANUFACTURING

🏭️ India's electronics manufacturing

India’s electronics manufacturing sector is hitting new highs, exemplified by Apple’s iPhone production crossing a $10B freight-on-board value in the first seven months of FY25. This milestone reflects the growing contributions of key suppliers like Foxconn, Pegatron, and India’s Tata Electronics.

Notably, Tata’s rapid rise in the supply chain signals its ambitions to rival Taiwan’s Foxconn, as it expands beyond smartphones by pursuing partnerships with tech giants such as Microsoft and Dell.

• Fueling this growth is the government’s Production-Linked Incentive (PLI) schemes, which have boosted local assembly and exports.

• However, the focus is now shifting toward increasing local value addition, which currently stands at 15-18%.

• The government aims to elevate this to 35-40% within the next five years, targeting critical non-semiconductor components like batteries, camera modules, and printed circuit boards.

• This push is projected to drive India’s electronics component demand from $45.5B in 2023 to an impressive $240B by 2030.

India’s potential as a manufacturing hub is further amplified by shifting global supply chains, with businesses seeking alternatives to China amidst geopolitical tensions and trade barriers. Yet, competitors like Vietnam and Thailand have surged ahead in the ‘China Plus One’ race, leveraging streamlined tax policies and proactive Free Trade Agreements to attract investments.

Encouragingly, Tata’s success has sparked interest from other Indian industrial giants such as Murugappa Group and Pidilite, which are now venturing into component production. To support this momentum, the government is planning a ₹40,000 Cr. incentive package to strengthen the domestic electronics ecosystem.

Overall: Despite these advancements, challenges persist. To firmly establish itself as a global electronics hub, India must address structural inefficiencies and policy roadblocks. The shift from mere assembly operations to robust component manufacturing and supply chain integration is critical for long-term growth.

As India enters this transformative phase, the partnership between the government and industry leaders will be key. Together, they can redefine "Make in India" into a comprehensive strategy that cements the nation’s role in the global electronics value chain.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

⚔️ Army innovations - The Indian Army showcased 22 standout innovations at Inno-Yoddha 2024-25, selected from 75 entries designed to enhance operational efficiency, logistics, and training. These innovations will now progress to production under the Army Design Bureau’s guidance. Chief of Army Staff General Upendra Dwivedi lauded the soldiers’ creativity, underscoring the pivotal role of innovation in shaping the Army’s future capabilities. Over the past four years, the initiative has resulted in 26 Intellectual Property Rights filings and successful technology transfers to private industries. Notable successes include the Exploder by FC Tech and Agniastra by Red Kite Digital Tech, reinforcing the Army’s drive toward self-reliance and operational excellence.

🇺🇸 India can engage with the US - External Affairs Minister S. Jaishankar expressed confidence in India’s ability to strengthen ties with the incoming Trump administration, citing a historically positive relationship. He emphasized India’s advantageous position compared to other nations facing challenges with Trump's policies. Jaishankar highlighted progress in free trade agreements with the EU and UK, despite complexities, and stressed the importance of Europe as a stable, predictable market. He underscored the Modi government’s focus on MSMEs, manufacturing zones, and competitive logistics while addressing concerns about unfair competition in FTAs. Jaishankar noted the global shift in India’s perception over the past decade, showcasing its growing geopolitical and economic significance.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Air India taking steps to deal with fog, poor visibility in winter season.

• NASA astronauts Sunita Williams and Butch Willmore hit six-month mark in space, countdown to Earth is on.

• Indian businesses shouldn't be excessively dependent on one supply chain: Jaishankar on trade with China.

• Nykaa Fashion CEO Nihir Parikh quits with immediate effect.

• India targets 1080 million tonne coal production for this fiscal: Minister.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Pushpa: The Rule - Part 2 review: the film is crushed under the weight of its own vaulting ambition.

• Hollywood’s biggest winners and losers of 2024: from Joe Rogan to Kevin Costner.