Home Investments PM Modi’s massive manufacturing push. Five Indian companies riding the tailwind

PM Modi’s massive manufacturing push. Five Indian companies riding the tailwind

by Ozva Admin

This was to target manufacturers of mobile phones and certain electronic components by offering financial incentives to start or build on their existing domestic manufacturing capacity.

The government had approved 32 beneficiaries under the scheme of which 10 (five foreign and five domestic companies) were approved for mobile manufacturing.

In the last two years, this scheme has been extended to fourteen sectors, including automobiles, steel and pharmaceuticals.

Through this scheme, the government seeks to boost manufacturing in the country, generate employment and promote technological innovations.

In the Union Budget for 2021-22, the government allocated a disbursement of $2 tons It expects to create 60 million jobs and generate $30 tons in production during the next five years.

Here are five companies that are in the tailwind.

#1 Dixon Technologies

First on the list is Dixon Technologies.

The company is engaged in the manufacture of products in the consumer durables, lighting and mobile phone/smart phone market in India.

Do you have plans to invest? $2 bn under the PLI scheme for the telecommunications sector.

The government had approved 32 beneficiaries under the PLI scheme for the manufacture of large-scale electronic products, of which 10 (five global companies and five national companies) were approved for the manufacture of mobile devices.

Dixon, being a national manufacturing company, had to invest $500 m to qualify for the PLI smartphone scheme and manufacture value phones $5 billion in the first year.

The company is now eligible to receive around $530 m for the first quarter of operations between October to December 2021, as an incentive for incremental sales.

It is the first company to obtain an approval for the disbursement of incentives under the PLI scheme. The incentive was approved for Padget Electronics, a wholly owned subsidiary of Dixon Technologies. The company’s manufacturing facility is located in Noida of Uttar Pradesh.

For fiscal 2022, Dixon’s revenue increased 66% year over year to $107 billion. However, operating profit increased only 32% year-on-year as raw material expenses increased.

#2 Tata Solar Power

Second on our list is Tata Power Solar.

The company is a wholly owned subsidiary of Tata Power. Tata Power Solar manufactures solar modules, solar cells and other solar products, and provides EPC services for solar power projects.

It benefits from the PLI solar scheme. On September 21, 2022, the government approved the second tranche of the production-linked incentive scheme (PLI) for solar modules.

According to the approved scheme, benefits for value $The government will grant 195 billion to solar PV manufacturers for five years after the commissioning of PV manufacturing plants.

In the five years, around 65,000 MW per year of fully or partially integrated solar PV module manufacturing capacity is expected to be installed. value of imports $1.4 tons will also be replaced by the national production of solar panels.

This is expected to boost the entire solar sector. It will be a win-win for everyone, PV manufacturers, solar power generation and distribution companies, and the government.

Tata Power Solar Systems has ordered 1.5 GW of utility-scale projects and has an order book of around 3 GW amounting to $120 billion as of March 31, 2022.

The company has recently received a letter of award (LoA) from $6 billion NHDC to establish a 125 MW floating solar project.

#3 Adani Infrastructure

Third on our list is Adani Infrastructure.

The company is a subsidiary of Adani Enterprises. It operates and maintains key assets in the Indian energy sector.

It has built the largest photovoltaic solar plant in the country with a capacity of 40 MW in Bitta, Gujarat. The project consists of amorphous silicon thin-film modules and is spread over 350 acres of land.

Adani Infraestructura is also a beneficiary of the PLI solar scheme. The government recently issued an award letter to Adani Infrastructure along with other companies for the first tranche of the $Plan of 45,000 million PLI in high-efficiency photovoltaic solar modules.

Adani Infrastructure cited an offer from $3,600 million to undertake the integrated manufacture of polysilicon modules with a capacity of 4,000 MW.

There are four stages in module manufacturing: polysilicon, wafers, cells, and modules. Currently, India’s existing 15 GW production capacity has no wafer or polysilicon production capacity.

The incentives are expected to add 10 GW of high-efficiency integrated solar PV manufacturing plants and generate direct investment of around $172 billion in photovoltaic solar energy manufacturing.

#4 Confidence New Energy

Fourth on the list is Reliance New Energy. The company is a wholly owned subsidiary of Reliance Industries.

Reliance New Energy has bid for the Production Linked Incentive (PLI) scheme for Advanced Chemical Cell (ACC) battery storage.

Advanced chemistry cells are new generation cells that can store electrical energy as either electrochemical or chemical energy and convert it back to electrical energy when needed.

Reliance New Energy has signed an agreement with Ola Electric and Rajesh Exports for the same. Under the agreement, companies will receive production-linked incentives under the $181 billion program.

The company must set up a manufacturing plant within two years. The incentive will be subsequently disbursed over a period of five years for the sale of batteries made in India.

This will be favorable for the electric vehicle ecosystem and the energy storage market, as it will support the demand for electric and renewable vehicles and attract investments in this sector.

Reliance Industries plans to create or enable capacity to generate at least 100 gigawatts of electricity from renewable sources by 2030.

It is developing the Dhirubhai Ambani Green Energy Giga Complex, one of the world’s largest integrated renewable energy manufacturing facilities.

This complex will have four giga factories, covering the entire spectrum of renewable energies.

#5 Larsen and Toubro (L&T)

Last on our list is L&T.

The company is a multinational conglomerate primarily engaged in providing engineering, procurement and construction (EPC) solutions in key sectors such as infrastructure, hydrocarbons and energy.

L&T also submitted a bid for the PLI scheme for advanced chemistry cell (ACC) battery storage. The engineering career plans to invest up to $200 billion in the construction of its green energy portfolio.

It has been evaluating prospects in green energy areas, including green hydrogen, battery storage, and offshore wind power, among others, as it looks to reduce its presence in the fossil fuel space and build new businesses around green energy. .

The PLI scheme is a step in that direction.

In addition to this, it has already commissioned its first hydrogen generation plant at the Hazira manufacturing facility in Gujarat.

The plant will produce 45 kg of green hydrogen daily through an alkaline electrolysis process and used for captive consumption at the company’s local manufacturing complex.

It also plans to focus on emerging business opportunities in offshore wind farms, which will address renewable energy requirements.

Whats Next?

After boosting local manufacturing, the government is now gearing up for another major transformational push that is imperative to the country’s Atmanirbhar goals.

Last week, the government released the National Logistics Policy (PNL).

Through the NLP, the government aims to reduce the cost of logistics to single-digit levels of 13-14% of the country’s gross domestic product (DGP). This is expected to accelerate growth and increase the country’s share of world trade.

It has set three key goals: to reduce the cost of logistics in India, to improve the logistics performance index ranking, and third, to create a data-driven decision support mechanism for an efficient logistics ecosystem.

It remains to be seen how this is resolved. In the meantime, stay tuned for more updates from this space.

Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

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