Last week, we had published early success stories in electronics, automobiles, defense, railways and aviation, under the aegis of “Make in India” campaign. This week, we continue analyzing other sectors that have shown promise under this program. At the cost of repeating ourselves, we need to understand that these are early stages of the program. Decisions are still being made and investments have just started trickling in. Final outcomes regarding job creation, quantum of exports, trade deficit, etc will be known only two-three years down the road.
Modi government has announced setting up of 42 new mega food parks in the next 4 years. These food parks will provide incentives for small businesses to set up their facilities under various schemes. One of the premier objectives is to increase the quantum of food processing from 10% (2010) to 25% by 2025. The Reserve Bank of India has also identified food processing as a priority industry and has set aside a corpus of Rs 2000cr, where entrepreneurs can get their projects financed at an attractive rate (lower than the market rates).
Unlike the sectors discussed earlier, the success of food processing is hugely dependent on the participation and contribution of small scale entrepreneurs. The MNCs will continue their focus and some like Pepsico CEO Indra Nooyi has thrown her weight behind the campaign, by committing to increase capacities. From another perspective, the food processing is an “old” industry, in terms of foreign interest in the Indian market. Many players like Unilever, Pepsico, Coca Cola and dare I mention, Nestle, have been active in India, since time immemorial. The Bangladeshi food and beverages processing company, the PRAN Group, has set up a plant in Tripura at a targeted investment of Rs 200cr. Indian Tobacco Company (ITC) also joined the bandwagon, by setting up a food processing park in Khurda in Odisha.
Energy and Power
It is interesting to note that, for the “Make in India” program to succeed, uninterrupted, quality power is the necessary condition. At the same time, the government needs to ensure that this sector needs to source its products from domestic manufacturers. Power Minister Piyush Goyal has also stated that his ministry his working towards making India the largest producer of renewable energy by 2030. By focusing on renewable energy, the minister is also targeting to reduce the overall carbon emission, where the power sector contributes approx. 38% of all emissions.
Alstom T&D India will manufacture two substations, including the components, completely in India, for the first time. These substations will be located in Betul in Madhya Pradesh and Navsari in Gujarat. Essel Group has formed a joint venture with JA Solar, leading Chinese solar energy producer, to manufacture solar cell and module company in India. Azure Power India, an independent power producer, has announced the commissioning of its largest (100 MW) solar photovoltaic (PV) plant under India’s National Solar Mission (NSM) policy in Jodhpur, Rajasthan. Equipments for 60MW were made in India. Bajaj Group also recently commissioned 660 MW thermal power plant at Lalitpur in Uttar Pradesh. To complement the Central government’s target of 175GW by 2022, Odisha government has also planned for 3GW of renewable energy capacity. At the same time, Maharasthra government also approved generating 14.4GW of renewable energy from the current installed capacity of 6.7GW.
In the light of successful auctions of coal mines, we can expect auctions for various other mining facilities iron ore, bauxite, etc. The fact that sector is under government’s control makes it easier to implement the “Make in India” program.
Karnataka Iron Ore Corporation Limited (KIOCL) is offering its pellet plant and blast furnace units to overseas companies under the ‘Make in India’ program, by using it as a tolling plant, wherein KIOCL will convert imported ore or concentrate into pellets and supply back to the customers. National Aluminium Company (NALCO) has approved significant capacity expansion plan to set up a one million tonne alumina refinery at Damanjodi, Koraput, Odisha at a proposed investment of Rs 5,540cr. NALCO sees increase in demand due to the “Make in India” program, due to which it has decided to ramp up production, despite surplus imports from China.
Media and Entertainment
This is a sector where considerable ground work is needed before investments start pouring in. Firstly, infrastructure like optical fibers, internet access, etc need to be provided for the sector to operate new age media. At the same time, the government must look to liberalize some sectors that are under its control. We have been hearing news in this direction. Early this year, the government approved 18 new FM radio channels for the north-eastern states and 15 new FM channels for Jammu & Kashmir. Not only does this help in inclusion of these areas with rest of India, but creates new opportunities in the region. In addition, government has indicated that it will allow FM stations to broadcast news, albeit under certain conditions. As for foreign investment in the “news” media, there are no indications whatsoever about the government allowing editorial control to foreign owners. With the advent of internet and social media, the government must shed this inhibition. This will allow India to benchmark with the best in the world.
Government has held discussions with the USIBC (US-India Business Council) to explore opportunities in making India the film-shooting destination. The government has indicated that it will set up a ‘Film Facilitation Unit’ to promote the concept of ‘single-window clearance’. Representatives from The Walt Disney Company, Time Warner, Viacom 18 and the Motion Picture Association (MPA) have expressed interest in this regard. With the objective to create a $100bn Media and Entertainment Industry in India by 2020, significant measures need to be taken to prevent piracy – which is a big concern.