INDIA the Economic Scenario

3/2020

INDIA Contact: Rajesh Nath, Managing Director Please Note: Jamly John, General Manager Telephone: +91 33 40602364 1 trillion = 100,000 crores or Fax: +91 33 2321 7073 1,000 billions 1 billion = 100 crores or 10,000 lakhs E-mail: [email protected] 1 crore = 100 lakhs 1 million= 10 lakhs The Economic Scenario 1 Euro = Rs.82

Economic Growth The trade impact of the coronavirus epidemic for India is estimated to be about € 317 ($348) million and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade, according to a UN report.

Estimates published by United Nations Conference on Trade and Development (UNCTAD) said that the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a € 46 ($50) billion decrease in exports across global value chains. The most affected sectors include precision instruments, machinery, automotive and communication equipment.

Among the most affected economies are the European Union € 14($15.6) billion, the United States € 5.3 ($5.8) billion, Japan € 4.7 ($5.2) billion, South Korea € 3.5 ($3.8) billion, Taiwan Province of China € 2.4 ($2.6) billion and Vietnam € 2 ($2.3) billion.

India is among the 15 most affected economies due to the coronavirus epidemic and slowdown in production in China, with a trade impact of € 317 ($348) million. The trade impact for India is less as compared to other economies such as EU, the US, Japan and South Korea. Trade impact for Indonesia is € 284 ($312) million.

For India, the trade impact is estimated to be the most for the chemicals sector at € 117 ($129) million, textiles and apparel at € 58 ($64) million, automotive sector at € 31 ($34) million, electrical machinery at € 11 ($12) million, leather products at € 12 ($13) million, metals and metal products at € 25 ($27) million and wood products and furniture at € 14 ($15) million.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444 2 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Besides its worrying effects on human life, the novel strain of coronavirus (COVID-19) has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations. Any disruption of China's output is expected to have repercussions elsewhere through regional and global value chains. The 2% contraction in China's output has ripple effects through the global economy and thus far has caused an estimated drop of about € 46 ($50) billion across countries.

As for developing economies that are reliant on selling raw materials, the effects could be felt very, very intensely. Assuming that it is not mitigated in the short-term, it's likely that the overall impact on the global economy is going to be significant in terms of a negative downturn.

Meanwhile, the extent of the damage to the global economy caused by novel coronavirus COVID-19 moved further into focus as UN economists announced a likely € 46 ($50) billion drop in worldwide manufacturing exports in February alone. This is only bound to increase as the impact of COVID-19 is still not contained and continues to spread.

Discretionary spending in India may take a hit of $45 billion (₹3.3 lakh crore) per month due to Covid-19 outbreak according to a research. This is equivalent to 1.4% of GDP. On average, an Indian consumer spends about $80 or nearly ₹5,700 per month on discretionary items of which two-third is from urban regions and the balance from rural areas. It includes expenditure on clothing, footwear, household equipment, and recreation.

The discretionary spending per capita of the urban and rural consumer per month is about $53 (₹3,816) and $26 (₹1,872), respectively. More cases of Covid-19 infection are emerging in big states like Maharashtra, Delhi, Uttar Pradesh, Kerala, Karnataka, and Gujarat which together account for nearly half of the country’s gross domestic product (GDP). Any slowdown in the consumer spending from these states will significantly impact manufacturing and services sectors.

This also means the GDP growth for FY20 may dwindle. The personal final consumption expenditure was ₹112 lakh crore in FY19 and was estimated to be ₹122 lakh crore in FY20, according to the ministry of statistics and programme implementation (MOSPI). Based on the last year’s GDP of $2,700 billion (around ₹190 lakh crore), the per day GDP contribution works out to be about $7.4 billion (₹51,800 crore). Assuming that 20% of the daily GDP is impacted due to lockdown, it may reduce the GDP by $1.5 billion (₹10,500 crore) every day. With nearly second fortnight of March is affected due to lockdown, the CSO forecast of 4.7% GDP growth for the current fiscal now looks ambitious.

The Union Cabinet recently approved the Remission of Duties or Taxes on Export Products (RoDTEP), a scheme for exporters to reimburse taxes and duties paid by them such as value added tax, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism.

The scheme comes at a time when India’s exports declined for the sixth month in a row in January and face uncertainty due to the spread of the novel Coronavirus. India’s exports were € 241 ($265.26) billion in the April-January period, a 1.93% decline on-year. The country had clocked € 235 ($331) billion of exports in 2018-19.

The Finance Ministry had announced the RoDTEP last year to incentivise exporters at an estimated cost of € 6098 million (Rs 50,000 crore). The RoDTEP rates will be decided after industry consultations and that would take 6-8 months. It will replace the Merchandise Export from India Scheme (MEIS) that was found to violate the World Trade Organization rules as it was export focused. MEIS will be phased out.

The Finance Ministry has announced a slew of measures to deal with the economic distress caused due to the coronavirus pandemic and the subsequent lockdown announced to deal with the situation. Some measures earlier announced included extension of tax deadlines, easing minimum balance norms for savings account, and increasing threshold of insolvency filing to € 0.12 million (Rs 1 crore) from € 1220 (Rs 1 lakh).

Some of the other announcement are: PM Gareeb Kalyan Scheme will entail € 0.21 million (Rs 1.7 lakh crore). It will include both cash transfer and food security.

Provide insurance cover worth € 60,976 (Rs 50 lakh) for sanitation workers, ASHA workers, doctors, nurses, paramedics in case they need it as they are on the frontlines of the corona battle. Over and above 5kg of rice/wheat that is already given, another 5 kg per person will be given free to around 80 crore people through PDS. Besides, one kg of preferred and region-specific choice of pulse will also be given.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

3 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Industry Scenario

Infrastructure

Swiss firm IMR proposes 10-mn tonne steel plant in Andhra state Swiss company IMR Metallurgical Resources AG has proposed to set up a large steel plant with a 10 million-tonne capacity at an investment of over € 1463 million (Rs 12,000 crore). The company activities were currently spread across Indonesia, South Africa, Mexico, Columbia, Italy, Ukraine and India in the areas of coal, iron ore and gold mines, besides power production and steel manufacturing. Welcoming IMR's investment proposal, the government assured the company that they would provide all the basic infrastructure for the proposed steel project. IMR laid the foundation stone for another steel project with a proposed capacity of 3 million tonnes in the same district in December, 2019. This was to be taken up with government participation as part of the assurance given by the Centre during the bifurcation of the state.

ArcelorMittal, Nippon Steel sign € 4.68 ($5.14) billion loan pact to refinance Essar Steel buy AMNS Luxembourg Holding S.A., the joint venture between Nippon Steel Corporation and ArcelorMittal has entered into a € 4.68($5.14) billion term loan agreement to refinance a loan taken for acquiring the erstwhile Essar Steel India, now renamed as ArcelorMittal NipponSteel India (AM/NS India). For ArcelorMittal, this can be a game-changer since they get to refinance the borrowings at low rates of interest prevalent in Japan. The proceeds of the loan will be used to refinance in full the amounts borrowed by AMNS in connection with the acquisition of ArcelorMittal Nippon Steel India Limited. Japan's biggest steelmaker Nippon Steel Corp has entered into a 40:60 joint venture with ArcelorMittal for the acquisition of the former Essar Steel, as part of the auction of stressed assets under the Insolvency and Bankruptcy Code. The partners completed the acquisition in December 2019 after making an upfront payment of € 5217.7 million (Rs 42,785 crore) for the asset.

Railways to invite bids to redevelop New Delhi, Mumbai stations The Indian Railways will invite bids in April to redevelop New Delhi and Mumbai stations. Under the station redevelopment programme, their target is to redevelop stations without investing any money from the government. It has to be redeveloped into world class standards. They have finalised a few bids and that the list includes New Delhi and Mumbai railway stations. The company further highlighted the reworking of restructuring the Indian railways on freight loading, safety mechanism, digital transformation, upgradation of railway networks, stations and Infrastructure redevelopment of rail ecosystem. Stressing upon the roadmap for development of railway ecosystem, In order to achieve the target, prioritising projects is the major key element to be fulfilled by year 2022-23.

Cost of carrying freight likely to be reduced with 2 new dedicated freight corridors With the implementation of two dedicated freight corridors, the cost of carrying freight is likely to be reduced. The Government is implementing two Dedicated Freight Corridors (DFC) namely, Eastern Dedicated Freight Corridor from Ludhiana to Dankuni (1,856 Km) and Western Dedicated Freight Corridor from Dadri to Jawaharlal Nehru Port Trust (1,504 km). At present, the overall physical and financial progress of these two projects is 70% and 68%, respectively. A Concession Agreement was signed between the Ministry of Railways and Dedicated Freight Corridor Corporation of India Limited (DFCCIL) in February 2014 stipulating the modalities to run Indian Railways' freight trains on DFC network. Dedicated Freight Corridors have been designed to run freight trains with an axle load of 25 tonnes up to maximum speed of 100 km/hour. DFCCIL is expected to have better operational and manpower efficiency as compared to existing set up of Indian Railways, due to modern technology, faster speed and latest communication system, leading to reduced cost of carrying freight. Moreover, enhanced capacity with higher speed on DFCCIL is expected to offer assured transit time to customers and consequently substantial reduction in total logistic cost.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

4 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Automobile

Auto industry stares at € 1.82 ($2 bn) loss, as factories and dealers shut shop to stem Covid-19 contagion The automotive industry is expecting a loss of 7.5 lakh units in production and € 1.82 ($2) billion in revenue in March alone because of the lockdowns to combat the Covid-19 outbreak. Production has come to almost a standstill, as state governments have imposed lockdowns and companies themselves shut their factories to help break the chain of the coronavirus outbreak. Since these measures will remain in place at least until the end of March, companies are sure to lose a third of the output for the month. Even an improvement in the Covid-19 situation wouldn’t bring much respite to the industry in April as it would take a while for consumer confidence to become normal. Tata Motors was the first to announce, that it was shutting several plants. It was followed by Mahindra, Maruti Suzuki, Hyundai Motor India and Toyota Kirloskar on Sunday. Kia Motors, Renault Nissan Alliance, Yamaha Motor and TVS Motor from the southern automotive belt & Suzuki Motor Gujarat. Dealerships are also shut in districts that are under lockdown. Given the environment, at best, passenger vehicles and two-wheelers may register flattish growth. However, commercial vehicles will continue to decline next financial year. The estimated production shortfall in March includes more than 1 lakh cars, 12,000-15,000 trucks and over a half-million two-wheelers.

Flying car PAL-V to be built in Gujarat, MoU inked with Dutch firm Flying car-maker PAL-V of The Netherlands will set up a manufacturing plant in Gujarat and has set a target of commencing production by 2021. PAL-V stands for Personal Air Land Vehicle. A Memorandum of Understanding was signed in the presence of Gujarat Chief Minister between state Industries Principal Secretary and Vice President of PAL-V's international business development. The state government would help the Dutch carmaker in getting all necessary approvals from the Centre for the plant in Gujarat, the first to be set up by the firm in India. The company chose Gujarat for its world class infrastructure, ease of doing business and better port and logistic facilities. They had set a target of commencing commercial production by 2021 and cars manufactured here would also be exported, including to the United States and European nations.PAL-V has so far received orders to export 110 such flying cars. The PAL-V flying car, having two engines, can run at a speed of 160 kilometres on road and can fly at a speed of 180 kms. The car can turn into a flying vehicle in just three minutes and cover a distance of 500 km on a full tank.

Volvo-Eicher JV to go ahead with Bhopal factory plan VE Commercial Vehicles, a joint venture between Eicher Motors and Swedish truck maker Volvo, has decided to go ahead with its plan of setting up a new 40,000-units-a-year factory in Bhopal even as the Indian commercial vehicle market stares at its steepest decline in growth in a decade. Sales in the 16- 55 tonne truck segment plunged more than 50% year on-year in February. In April 2019-January 2020, VE Commercial Vehicles registered a decline of more than 23% year-to-year to about 39,000 units, with a market share of 6%. The company’s BS-IV stock has come to down to just five days and much of its production is aligned to retail demand. While the company is in the midst of severe cost-cutting plans and may defer some investment, it won’t stop strategic investments like expansion of the Bhopal factory, where production is set to begin from April.

Warburg Pincus to invest € 137 ($150) million in Apollo Tyres Global private equity investment firm Warburg Pincus is set to invest € 137 ($150) million in Apollo Tyres. The Board of Directors of Apollo Tyres today approved an issuance of compulsorily convertible preference shares in the company to an affiliate of Warburg Pincus, a leading global private equity firm focused on growth investing. The investment represents a primary capital infusion into the company and is subject to shareholder and regulatory approvals. The company will benefit from the backing of a large financial investor of their pedigree and their partnership will further strengthen Apollo Tyres’ board and governance.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

5 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Power

GAIL in talks to buy stake in ACME Solar Holdings GAIL has entered exclusive discussions to buy a stake in privately owned solar power generator ACME Solar holdings. Gas Authority of India is carrying out due diligence on solar power plants owned by ACME Solar. The state-run player could pick up anywhere between 49-74% stake in ACME Solar holdings if discussions progress towards a deal. The deal could involve an investment in the parent company and also separate investments in certain SPV’s that house individual projects. ACME Solar’s portfolio of 5.8 gigawatts places it amongst the largest standalone solar power generation companies in the country and could be worth over € 1.46($1.6) billion. ACME Solar has a pan-India portfolio of solar power generation plants covering twelve Indian states. Its operational plants produce nearly 3 gigawatts of solar energy which is supplied to state electricity boards with whom it has long term power purchase arrangements some of which extend upto 25 years. The company is also in the midst of setting up new solar plants that have the capacity to generate a further 2.8 gigawatts of power.

IndiGrid completes acquisition of ENICL from Sterlite Power Power transmission investment trust IndiGrid has completed the acquisition of its ninth transmission asset from Sterlite Power at a value of € 124.39 ($134) million or Rs 1,020 crore. With the acquisition of East North Interconnection (ENICL) from Sterlite Power, IndiGrid's assets under management (AUM) will increase by 10% to € 1.46($ 1.6) billion. Its portfolio will increase to nine power transmission projects with a total network of 20 power transmission lines spanning across more than 5,800 circuit kilometres across 13 Indian states. The acquisition has been funded by internal accruals, proceeds from the preference issue done in May last year and new debt. IndiGrid has another € 792.68 million (Rs 6,500 crore) worth pipeline of transmission projects under the framework agreement with Sterlite Power providing visibility of € 2,195 million (Rs 18,000 crore) worth of AUM over the next two years. ENICL is a part of the Inter State Transmission System (ISTS) network developed by Sterlite Power, and consists of two 400 KV transmission lines with a total 900 circuit kilometers across Assam, Bihar and West Bengal.

TVS, special situation funds in talks to infuse in CG Power TVS Group and a bunch of special situation investors, including AION Capital, India Resurgence Fund (a consortium of Bain Capital and Pirmal Group) and SSG Capital Management are in preliminary talks with CG Power and Industrial Solutions to put € 60.98 (Rs 500 crore) fresh equity into the company. The company has mandated SBI Capital Markets and Arpwood Capital to run a formal process for fund infusion in the company. Once part of Avantha Group, CG Power’s product portfolio ranges from transformers, switchgear, circuit breakers, network protection & control gear, project engineering, HT and LT motors, drives and power automation products. Established in 1937, CG Power also provides turnkey solutions in all these areas. For TVS, the entry into industrial power will be an add-on vertical to its existing flagship automotive business. The deal, if successful, will mark TVS’ entry into industrial electrical equipments.

Investments in renewable sector fall 14% to € 8360 million (Rs 68,550) cr in 2019 Investment in the country's renewable energy sector dropped by 14% to € 8360million (Rs 68,550 crore) in calendar year 2019. In 2018, the estimated investment in the domestic RE sector was at € 9,708 million (Rs 79,606 crore). An estimated € 8360 million (Rs 68,550 crore) investment was made in the renewable energy sector in 2019. While the investment in 2015 was at € 8,899 million (Rs 72,972 crore), it zoomed to € 12,314.88 million (Rs 1,00,982 crore) in 2016. The investment dropped to € 9,887.80 million (Rs 81,080 crore) in 2017 and further to € 9,708 million (Rs 79,606 crore) in 2018. India has set an ambitious production target of 175 GW of renewable energy by 2022. A cumulative renewable energy capacity of 86.75 GW has already been installed in the country up to February 2020, and to achieve the balance target of 88.25 GW, an estimated investment of around € 51,446.46 million (Rs 4,21,861 crore) is required at present capital costs.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

6 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Paper & Printing

Century Pulp and Paper to add new evaporation line at Lalkuan pulpmill Century Pulp and Paper will be adding a new evaporation line for its pulp mill in Lalkuan, Uttarakhand, to meet the future needs of the mill’s ongoing pulp production capacity expansion. The evaporation line will be supplied by Valmet, a global developer of process technologies, automation and services for the pulp, paper and energy industries. The value of the order is estimated to be around € 10 million (Rs 82 crores). The new evaporation line is planned to start up during the latter part of 2020. The new plant should be commissioned by December 2020. This is its first evaporation plant installation in India. The project execution has begun and CPP and Valmet’s teams are working together for successful execution of the project. Valmet would be delivering a new seven-effect evaporation plant with a design capacity of 275 tonnes of evaporated water per hour, producing heavy liquor of 75% dry solids. The plant is designed to handle black liquor based on 60% bagasse and 40% wood. The delivery covers main evaporator effects, a surface condenser, an integrated foul condensate treatment plant, flash tanks, main supporting structures, and a vacuum system. The new evaporation line is based on proven tube evaporator design. The new evaporator line includes a stripper to treat foul condensate and internal condensate treatment for producing more clean-quality condensate for recycling in the mill.

Omega opens its third plant with a Komori GL40 Omega Printopack has opened new production plant in SIDCUL Haridwar. This is the company’s third production plant at the same location. This new plant will manufacture mono cartons. Towards this, the company has equipped the 2,700-sqm shopfloor with a new five-colour 28x40-inches Komori GL online coating printing press and a sheeting machine, supplied by PackSys India and manufactured by Hoi Sheng Machinery, Taiwan. The Lithrone G40 promotes green printing by reducing consumable and energy usage and lowering carbon footprint. The press comes with Komori’s KHS-AI technology and a maximum speed of 16,500 sheets per hour. The machine can run at the maximum speed of 16500 sheets/hour. The newly installed HSC 1400B can run at the speed of 300-cuts/min or 300-m/min. It can handle paper and board from 50- to 550-gsm and it is equipped with slitting, double decurler and web aligner.

Booming eCommerce sector to drive coated paper application Coated paper applications include packaging and printing products use in the shipping of goods. In the year 2019, total eCommerce sales in Europe grew to approximately € 621 billion. Packaging helps protect from spoilage, damage and wear-and-tear. Global coated paper industry size is projected to reach € 50 ($55) billion by 2026, with the packaging sector providing a major boost to the material demand. The packaging sector in India is growing at approximately 22 to 25% annually due to the developments in various sectors of the economy. Owing to the growing demand for coated papers in both packaging and printing solutions, several leading industry players are carrying out innovations to meet the changing manufacturing and consumer needs. Global coated paper market outlook will witness considerable momentum over the years to come with consistent packaging and printing demand as well as production of more eco-friendly paper.

Constantia opens new plant in India with three Comexi kits Comexi, has strengthened their relationship with the installation of three machines at the opening of the Constantia Ecoflex Ahmedabad. The new plant will focus on the production of more sustainable and fully recyclable flexible packaging material. The machines, one Comexi F2 flexographic press and two Comexi S2 slitters with double turret, will enable the Austrian company to delve deeper into a greener future. At Constantia Ecoflex Ahmedabad, production focuses on the more environmental-friendly packaging family EcoLam, which is part of Constantia Flexibles’ innovative product line Ecolutions. EcoLam is a lightweight mono-PE lamination suitable for a great variety of packaging applications. Due to its mono-material structure, it is fully recyclable, and its carbon footprint is approximately 32% lower than that of comparable products. The EcoLam family comes in different barrier grades (EcoLam, EcoLamPlus, EcoLamHighPlus) to deliver the barrier needs for a diversified range of products.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

7 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Ports & Shipping

At least one major port to be corporatized, listed To improve the efficiency of ports in the country, the government will set up a framework and look at corporatisation of at least one major port followed by subsequent listing on stock exchanges. The Government will come out with a framework for ports and will look into corporatizing at least one major port and subsequently its listing on stock exchanges. The government has been striving to improve the operational efficiencies of ports through mechanisation, digitisation and process simplification. India has 12 major ports - Deendayal, Mumbai, JNPT, Mormugao, New Mangalore, Cochin, Chennai, Kamarajar, V O Chidambaranar, Visakhapatnam, Paradip and Kolkata. The Government announced plans to corporatise at least one of the 12 major ports and subsequently list it on the exchanges is a positive step towards government disinvestment in the ports sector.

Covid-19 outbreak: Supply in parts, delays in full Supplies of parts for cars, smartphones, televisions and home appliances and some finished electronic items may be further delayed by a few days after the government ordered screening of all cargo vessels coming from the 12 worst-affected Covid-19 countries outside Indian ports to ensure that members of the crew were not infected with the virus. Cargo vessels coming from China, Thailand, Hong Kong, Singapore, Japan, South Korea, Vietnam, Indonesia, Malaysia, Iran, Nepal and Italy will be screened and declared suspect or healthy by the PHO. The healthy vessel will be given health clearance for port operations and suspected vessel will be cleared by PHO. This may further delay the shipping time to factory gates in India by 3-5 days, depending on the time taken for assessment of the cargo vessel by Indian authorities, leading to further production loss. Suspected vessels will be quarantined for at least 14 days as per the protocol for Covid-19 treatment.

Chennai Port Trust to buy government’s 67% stake in Kamarajar Port for about € 290 million (Rs 2,380 crore) Chennai Port Trust will buy the 67% stake it does not already own in Kamarajar Port Ltd for about € 290.24 million (Rs 2,380 crore). At this price, the equity of Kamarajar Port is valued at about € 434 (Rs 3,560 crore). Kamarajar Port is bigger and has much better infrastructure, including an LNG terminal. Kamarajar also has a huge breakwater which can be used to handle cargo. The Department of Investment and Public Asset Management (DIPAM) will sign a share-purchase agreement with Chennai Port Trust in March to finalise the deal, helping the government to account for the money just four days before the financial year 2020 ends. The Kamarajar stake sale would be the last disinvestment deal for the fiscal. The acquisition will make Kamarajar Port Ltd, India’s only major port that is run as a company among the dozen owned by the Centre, a 100% subsidiary of Chennai Port, which is run as a trust, a governance model the government will soon replace by converting the 11 port trusts into port authorities through an act of Parliament

India to seek € 64 ($70) million from World Bank for waterway connectivity grid in East The World Bank may provide a grant to develop India’s under-utilised network of rivers and canals as an alternative mode of transport. The Shipping Ministry will seek a technical assistance grant of € 64 ($70) million from the World Bank to build a transport connectivity grid linking waterways in the eastern region with its South Asian neighbors. The Eastern Waterways Connectivity Transport Grid (EWaCTG) project aims to provide seamless connectivity between National Waterway-1 (NW-1) and NW-2 through the Indo-Bangladesh Protocol (IBP) routes, and develop an economic corridor of 4,200 km of waterways and coastal shipping for Uttar Pradesh, Bihar, Jharkhand, West Bengal and the North- Eastern States. The aim is to pave the way for the regional integration of five countries India, Nepal, Bhutan, Bangladesh and Myanmar in the South Asian region. EWaCTG seeking technical assistance of € 64 ($70) million from the World Bank.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

8 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Garment and Leather

Virender Sehwag launches own sportswear, sports equipment line 'VS' Virender Sehwag has launched his own line of sportswear and sports equipment under the brand name 'VS'. Launched nationally with India's first exclusive store in Ahmedabad, the Brand VS is run by Viru Retail Pvt. Ltd. a joint-venture between Sehwag owned World of Viru Pvt. Ltd. and Stitched Textiles Pvt. Ltd. With over 50 stock keeping units largely in sports and at leisure apparel, along with sports equipment, the brand is looking to tap the affordable consumer segment. While providing quality products, he would cater to the middle class affordability Also, going forward, they are looking at opening stores in Delhi, Mumbai and other major cities, apart from tapping the e-tail segment. By the end of calendar year 2020, Brand VS is looking at opening around 50 stores, thereby tapping a revenue of over € 2.73 ($3 million). Following the contract manufacturing model, the brand VS will provide its customers affordable yet quality range of sportswear, technical sportswear and sports equipment. The products are designed considering the importance of comfort while playing sports.

Coronavirus outbreak to take heavy toll on readymade garment exports Readymade garment exports dropped by around 4.51% to € 1.31($1.437) billion in February 2019. The COVID-19 outbreak will impact exports for the next few months. This is because nearly 80% of retail shops in western countries have shut due to the virus. As most countries are under lockdown, stores are shut due to restrictions by their governments. Sales have dropped by almost 80% in the last two weeks and this is going to continue until the virus is tamed. In Italy and France, where COVID-19 cases have been rising rapidly, all non-essential retail stores have been ordered to shut down. This forced Abercrombie & Fitch, New Jersey, Buck Mason, Everlane and Walmart to reduce working hours. This is expected to result in a moderation in debt coverage metrics. The impact is likely to be more pronounced for leveraged and smaller companies, with limited bargaining power with customers, and modest liquidity cushion. Volumetric decline in the US has been Rs 12% year-on-year (Y-o-Y) for apparel imports in Q3 FY20 and decline in nine months of FY20 has been 0.3%. This follows a Rs 17% and Rs 5% Y-o-Y decline in domestic retail sales of clothing and clothing accessories in the US in Q3 FY20 and nine months of FY20, respectively.

After retail stores, fashion brands’ online sales drop, too Retail therapy has taken a backseat in the tough times of the coronavirus pandemic. For fashion and lifestyle brands, which are already witnessing a steep decline in offline sales due to closure of malls in several states, sales are not happening through the ecommerce channel either due to poor consumer sentiment. While ecommerce sales of essentials like foodstuff and personal care items surged amid fears over the spread of the coronavirus, those of fashion and lifestyle goods are taking a beating as fashion brands from jeans to shoes are reporting a 10-20% drop in online sales in the last two weeks. As malls in multiple cities have shut over the weeks, brick-and mortar fashion retailers have seen an up to 60% decline in sales. The online channel on the other hand is also currently seeing a drop of around 15% due to overall consumer sentiment. Amid fears over the Covid-19 pandemic, various states including Karnataka, Tamil Nadu and Kerala have ordered closure of malls as a containment measure. It is unfolding everyday sales are already down 70% and still continuing to drop and day-by-day more stores are shut.

Pilot shopping festival planned in FY21 A pilot shopping festival at Bengaluru is proposed to be organized in 2020-21, which will subsequently be organized in other cities focusing on various sectors including gems & jewellery, textiles, handicrafts, and Yoga and Ayurvedic products. In addition to above focus sectors, the products to be showcased will include tribal products/handicrafts, products from Jammu & Kashmir, North East States and other Hill States. In order to promote e-marketing of handloom products, a policy framework was designed and under which any willing e-commerce platform with good track record can participate in online marketing of handloom products. Accordingly, 23 e-commerce entities have been engaged for on-line marketing of handloom products. A total sale of € 9.85 (Rs 80.76 crore) has been reported through the online portal.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

9 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

General

Industry players applaud governments move to boost manufacturing of APIs, med devices The government's move to promote domestic manufacturing of critical bulk drugs is a major step in the creation of a self-sufficient healthcare ecosystem in the country. The government approved a package comprising four schemes with a total outlay of € 1,678 (Rs 13,760 crore) to boost domestic production of bulk drugs and medical devices, and exports. The approved scheme will promote bulk drug parks for financing common infrastructure facilities in three bulk drug parks with a financial investment of €365.85 (Rs 3,000 crore) in the next five years. The package will also create a production linked incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/Intermediates and Active Pharmaceutical Ingredients (APIs) in the country with financial implications of € 846.31 (Rs 6,940 crore) for the next eight years. The announcement by the Government will help revive the API industry in the country and will help the sector regain the dominance that was lost over the years. India is the pharmacy of the world and contributes 20% to the global generics market. Every third tablet sold in the US is from India. However, the industry is currently dependent on China for many APIs & KSMs which go into the manufacturing of formulations.

GP Petroleums Ltd to invest € 12.20 million (Rs 100 cr) in Gujarat GP Petroleums Ltd an automotive and industrial lubricants player in India, part of UAE-based GP Global Group, plans to invest € 12.20 (Rs.100 crore) in a new state-of-the-art plant in Saronda, Gujarat. The plant would process over 300,000 kilo litres of lubricants, thus enabling the company to be present across the entire gamut of Indian lubes market. This will be GPPL’s second blending plant in India. Apart from the home grown IPOL brand, the plant may blend REPSOL branded automotive products as well. The new plant is part of the company’s global growth strategy to produce and market 500 million litres of lubricants across the world through both organic and inorganic routes. The new facility will accelerate their growth engine, which will be led by the automotive segment in tier two and three towns and cities.

Hero Electronix arm acquires chip design services firm T&VS Hero Electronix, a part of the Hero Group acquired Test & Verification Solutions (T&VS), a provider of chip design services. The acquisition was made through Tessolve, a Hero Electronix venture and an engineering solutions company. The acquisition provides impetus to Tessolve’s chip design offering taking its overall company strength to over 2,000 engineers and cements Tessolve as a leading end-to- end provider of semiconductor engineering services. T&VS is a provider of Design Verification solutions to semiconductor companies having expanded its offerings into Design for Test (DFT) and Embedded Software with a 400+ team across multiple markets including UK, India, Japan, US and Singapore. The addition of T&VS talent and technologies will enable to provide more integrated and optimized chip design solutions. This is the largest acquisition by Tessolve till date and a critical addition in building Tessolve into the largest semiconductor engineering services player in the world.

India to spend € 1.18 ($1.3) billion to boost pharmaceutical production India will set up a nearly (Rs 1 lakh crore) € 1.18 ($1.3) billion fund to encourage companies to manufacture pharmaceutical ingredients domestically after supply chain disruptions due to the coronavirus pandemic exposed the country’s dependence on China and raised the specter of drug shortages. The program includes spending on infrastructure for drug manufacturing centers, and financial incentives of up to 20% of incremental sales value over the next eight years. India imports almost 70% of its active pharmaceutical ingredients the chemicals that make a finished drug work from China. A number of those chemicals are sourced from Hubei province, the epicenter of the coronavirus outbreak. As the world’s single largest exporter of generic drugs, India is responsible for about 20% of the world’s supply.

Epsilon Carbon to invest € 110 million (Rs.900 crore) in new carbon black plant in Karnataka Epsilon Carbon, a coal tar derivatives company, plans to invest € 110 million (Rs.900 crore) in setting up a carbon black facility at Bellary in Karnataka. The first phase of the new facility is expected to be commissioned by the third quarter of FY21 with an initial capacity of 1.15 lakh tonnes per annum (tpa). It will be further expanded to over three lakh tpa by FY24. Currently, Epsilon Carbon operates a 2.2-lakh tpa coal tar distillation facility that caters to 40% of the demand for pitch in the aluminum industry. The integrated carbon black complex will be the first of its kind manufacturing facility in India to use waste coke oven gas from steel plants as a fuel, making this an environment-friendly set-up with lower CO2 footprint. In addition, the plant with its captive low-sulphur feedstock, will have the lowest SOx/NOx (sulphur oxides and nitrogen oxides) pollutant levels which are much below those of the current carbon black manufacturing facilities in India.

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Focus State – Gujarat

Governor : Shri Acharya Devvrat Chief Minister : Shri. Vijay Rupani

General Facts Area (sq km) 196,024 sq kms Total Population 6.27 crores

Literacy Rate 79.31% Ahmedabad – Sardar Vallabhbhai Patel International Airport (AMD), Vadodara Airport, Surat Airport, Rajkot Airport, Jamnagar Airport, Bhuj Airport, Porbandar Airport, Bhavnagar Airport, Kandla Airport, Mehsana Airport, Amreli Airport, Keshod Airport, Ankleshwar Airport, Dholera Airports International Airport

Infrastructure

Roads National highways length in Gujarat is 5,456 km (as of February 2018). The Government of Gujarat, through GIDB, has prepared a vision document – Blueprint for Infrastructure in Gujarat (BIG) - 2020. Under this document, the state has identified a series of projects and investments required across the road sector to be implemented on priority basis for Gujarat’s inclusive growth. Under the State Budget 2019-20, government has allocated € 202.93 ($ 223) million to Mukhya Mantri Gram Sadak Yojana. Along with road infrastructure, the Government of Gujarat is focusing on the growth of transportation sector in the state. The Gujarat State Road Transport Corporation delivers transportation facility to about 24 lakh people every day. As of January 2018, 3,387 habitations were eligible under Pradhan Mantri Gram Sadak Yojana (PMGSY), out of which 3,052 were cleared and further 3,040 habitations were connected. As per of state budget 2018-19, government has allotted € 201.11 ($ 221) million for the development road transport.

Under the plan and non-plan head for Ports and Transport Department, the state government has allocated € 180.18 ($ 198) million during 2017-18. In March 2017, the Prime Minister announced investment of € 1.62 ($1.78) billion for upgrading 8 state highways to national highways in order to boost the infrastructure development in the state. Under the State Budget 2019-20, Gujarat has allocated 4.3% of its total expenditure for the development of roads and bridges. In August 2017, Government of India signed a loan agreement worth € 299.40 ($ 329) million for the Gujarat Rural Roads Project. The projects will be implemented to improve rural road connectivity and accessibility in 1,060 villages in the state. Funds accrued under Central Road Fund (CRF) for Gujarat reached Rs 486.61 crore € 61.37 ($ 67.44) million in 2018-19 (up to Sep 2018).

Railways Gujarat had total length of railway line are 5,258.49 route kms which consists of 3,506.55 kms of Broad Gauge (BG), 1,193.04 kms of Meter Gauge (MG) and 558.90 kms of Narrow Gauge (NG) lines. The rail traffic in Gujarat mainly falls under the following divisions of Western Railway: Vadodara, Rajkot, Bhavnagar, Ratlam, Mumbai & Ahmedabad. Ahmedabad, Anand, Bhavnagar, Bhuj, Godhra, Porbandar, Rajkot, Vadodara (Baroda) & Valsad are some of the important railway stations in the state. India's first National Rail and Transportation University which will be set up in Vadodara. Government of India has sanctioned construction of Ahmedabad Metro with a length of 36 km at a cost of (Rs 10,773 crore) € 1.47($ 1.61) billion. The project is expected to be completed by July 2020. Average capital investment is stood at

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(Rs 3,327 crore) € 419.62 ($ 461.12) million per year between 2014-19. The state government

is developing a High-Speed Rail passenger corridor from Ahmedabad to Mumbai with the cooperation of the Government of Japan. The length of the corridor is 508 km and total journey time for the train is estimated at 2.07 hrs with total estimated cost of the project is € 13.58 ($ 14.92) billion. About 81% of the funding for the project will come by way of a loan from Japan.

Airports The state has 10 domestic airports (the highest in any state) and one international airport. There are domestic airports at Bhavnagar, Bhuj, Jamnagar, Kandla, Keshod, Deesa, Porbandar, Rajkot, Surat, Vadodara, Mundra, Mandvi and Palanpur. Freight traffic at Vadodara and Rajkot airports reached 1,993 MT and 17 MT, respectively till October 2019.

Port The state has one of the strongest port infrastructures in India. It is the first state in India to take up port privatisation. Gujarat has 42 ports, including one major port at Kandla and 41 minor ports, along a 1,600 km coastline. GMB, which manages 41 non-major ports, has developed port privatisation models such as private/joint sector ports, private jetties, captive jetties and GMB jetties. During 2018-19 Deendayal (Kandla) port handled 115.40 million tonnes of cargo traffic. As per Budget 2018-19, the state government has made a provision of US$ 221 million for the port and transport department. During 2018-19, Essar ports will invest Rs 4.5 billion € 57.33 ($ 63) million in Hazira port in Gujarat to increase the cargo-handling capacity of the port to 50 million tonnes (MT), current capacity of the port, is 30 MT, raising the company’s capacity to 110 MT.

Gujarat has 2 LNG terminals that offer transportation facilities for natural gas, crude oil & petroleum products from the Middle East and Europe. The state has a vast hinterland surrounded by the northwest markets of Rajasthan, Delhi/NCR & Punjab. Together, these areas generate approximately 60% of India's cargo, of which a majority is currently handled by the ports of Gujarat. The state has a large external trade potential, given its vast coastline. There is an increase in connectivity to non-major ports due to development of the Delhi-Mumbai Dedicated Freight Corridor. More than 4,800 ships and 1,000 sailing vessels visit the ports of Gujarat every year. Private jetties in the state handled a total cargo traffic of 3.12 million tonnes in 2017-18(up to November 2017). Captive jetties handled total cargo of 159.9 million tonnes along with the coastline of Gujarat cargo handled during 2017-18 was around 110.07 million tonnes.

Power & Gas As of November 2019, Gujarat had an installed power generation capacity of 34,544.67 MW (comprising 8,565.57 MW under state utilities, 21,387.61 MW under private utilities & 4,591.49 MW under central utilities). Thermal power contributed 23,182.68 MW to the state’s total installed power generation capacity, followed by a contribution of 772 MW by hydropower, 559 MW by nuclear power & 10,030.99 MW by renewable power. Power capacity of 600 MW Solar Power Stations have been commissioned by 31 developers in Gujarat Solar Park. Further power capacity of 175 MW is under planning with an estimated cost of Rs 755 crore € 106.61 ($ 117.15) million. Energy requirement in the state for 2019-20 (up to October 2019) reached 67,567 MU. Investments of Rs 2.2 trillion € 27.75 ($ 30.49) billion are expected in Gujarat's renewable energy sector over the next decade. Gujarat has the most developed gas pipeline network in the country, which is operated by GSPL, GGCL and GAIL. Provision of € 26.51 ($ 29.13) million was channelled towards installation of 15,000 solar domestic energy systems and providing around 3,210 solar pumps for agriculture purpose across the scattered areas of the state, during 2016-17. For the provision of free power supply to the water works of each voluntary organization and gram panchayat of the state, the state government has proposed an allocation of € 56.50 ($ 62.08) million during 2017-18. GAIL primarily serves consumers who have been allocated natural gas by the Ministry of Petroleum and Natural Gas. Its pipeline network can be divided into three sections: South Gujarat Network, North Gujarat Network and ex-Hazira. GSPL is the nodal agency responsible for setting up a gas grid in Gujarat, operating on common carriage basis. In 2015-16, the company carried out the construction of a 366-km long pipeline and gas compressor station at Gana, Gujarat, with a pipeline capacity of 14 mmscmd. GGCL currently operates a 1,550 km and 350 km under construction/development pipeline network. It is planning to set up a pipeline network of about 3,000 km in Gujarat. GCL has a total gas pipeline length of about 2,700 km and services 230,000 customers. VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

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Telecom As of June 2019, the state had 41.41 million internet subscribers. According to Telecom Regulatory Authority of India (TRAI), as of September 2019, Gujarat had 68.74 million wireless connections and 1.20 million wire-line subscribers. By the end of September 2019, 30.55 million subscribers had submitted request for mobile number portability in Gujarat. The Government of India has approved Rs 1,652.97 crore € 233.39 ($ 256.47) million through Department of Telecommunications for implementation of BharatNet Phase-II in 7295 (6916 of Phase II + 379 from Phase-I) Gram Panchayats of Gujarat.

Urban With household income of more than € 1.73($ 1.9) billion by 2018, Surat is expected to emerge As a new metro in India. Gujarat has 8,188 villages and 159 towns connected with Narmada based Water Supply Grid through Bulk Pipeline and Distribution Group network. In order to develop and improve urban areas of Gujarat, the state government has announced plans to invest € 1.76 ($ 1.93) billion as per the budget 2018-19. For construction of individual, community and public toilets and solid and liquid waste management, the Government of Gujarat has announced plans to invest € 10.81 ($ 108.12) million during 2018-19. Under the State Budget 2019-20, (Rs 1,955 crore) € 254.41 ($ 279.57) million has been allocated to grants-in-aid to municipal corporations under Swarnim Jayanti Mukhya Mantri Shaheri Vikas Yojana.

Under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), 19,892 check dams were constructed in Gujarat. As per the state budget for 2017-18, € 39.41($ 43.31) million was allocated by the state government for improving and reinforcing the Six cities in Gujarat, namely Ahmedabad, Surat, Vadodara, Rajkot, Dahod and Gandhinagar are shortlisted to be transformed into smart cities under the central government’s Smart City Mission. The state will receive an amount of around € 0.45 ($ 0.49) billion for the development of smart cities. A large number of projects are anticipated to be established under the mission. As of July 2018, (Rs 700 crore) € 95 ($ 104.42) million have been released for smart city projects in Gujarat. As per State Budget 2019-20 government has allocated (Rs 2,606 crore) € 339.31 ($ 372.87) million for urban health service. The Government of India has released € 98.80 ($ 108.57) million to the state under AMRUT scheme in April 2018-Feb 2019. The scheme covers 31 cities in the state. As of December 2017, Ahmedabad had utilized the 40.89% of the funds provided or smart city related projects.

Economy

At current prices, Gujarat’s GSDP was about (Rs 17.01 trillion) € 221.54 ($ 243.45) billion during 2019- 20. The state’s GSDP grew at a CAGR of 13.53%, during 2011- 12 to 2019-20. The state’s per capita GSDP stood at (Rs 2,18,023) € 2958 ($ 3,250) million during 2017-18 in comparison with (Rs 101,075) € 1918.28 ($ 2,108) during 2011-12. Gujarat’s per capita GSDP increased at a CAGR of 13.67% between 2011-12 and 2017-18. Gujarat’s NSDP was about (Rs 10.18 trillion) € 138.10 ($ 151.76) billion during 2016-17. The state’s NSDP expanded at a CAGR of 13.83% from 2011-12 to 2016-17. Gujarat’s per capita NSDP& was (Rs 156,527) € 2123 ($ 2,333) during 2016-17 in comparison with (Rs 87,481) € 1659.84 ($ 1,824) during 2011-12. The state’s per capita NSDP increased at a CAGR of 12.34% between 2011-12 and 2016-17.

During 2017-18, the tertiary sector contributed 35.72% to the state’s GSDP (at current prices), followed by shares of secondary (43.91%) and primary (20.37%) sectors. The primary sector increase at a CAGR of 11.18% between 2011-12 and 2017-18. At a CAGR of 14.84%, the secondary sector has been the fastest growing sector, during 2011-12 and 2017-18. Growth in the sector was driven by expansion of manufacturing, construction and electricity, and gas & water supply industries. The tertiary sector increased at a CAGR of 12.78% between 2011-12 and 2017-18. Growth was driven by trade, hotels, real estate, finance, insurance, transport, communications and other services sectors. According to the DPIIT, FDI inflows to Gujarat totalled € 21.09 ($ 23.18) billion from April 2000 to June 2019. The Vibrant Saurashtra Expo and Summit was held in Rajkot in January 2016. MoUs worth € 311.11 ($ 341.88) million were realised for the development of various sectors of the state during the event. The 2018 edition of the expo will be held in April 2018. Domestic companies which have disclosed their investment commitments include Reliance Industries, Suzlon, Aditya Birla Group, and Videocon. Foreign companies who have committed investments include Rio Tinto, Suzuki and CLP Holdings. The lifting of suspension from 3 industrial clusters — Vapi, Vatva, and Ankleshwar including Panoli is VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

13 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office expected to boost employment, investment and growth opportunities in the respective industrial areas.

Up to October 2019, 367 investment intentions worth Rs 218,611 crore € 28.46 ($ 31.28) billion were filed in Gujarat. Total exports from the state stood at € 61,335 ($ 67,401) million during 2018-19 and € 30,190.16 ($ 33,176) million in April-September 2019. Major items exported from Gujarat are Petroleum Product and Organic Chemicals etc. During 2018-19, total exports of Petroleum Product from Gujarat stood at € 19,977.23 ($ 21,953.99) million which was 39.19% of the total exports.

Social Infrastructure

Education Gujarat has a literacy rate of 79.31% the male literacy rate is 87.23% and the female literacy rate is 70.73%. Gujarat’s government set up Indian Institute of Information Technology college near Vadodara approved by Central government. The IIT (Vadodra) based on a public-private partnership model. According to State Budget 2019-20, (Rs 5,272 crore) € 686.43 ($ 754.32) million has been allocated for providing assistance to nongovernment secondary schools.

Health Gujarat is at the forefront of establishing & maintaining a good health infrastructure.Gujarat’s health infrastructure facilities have 2,124 primary health centres, 9,700 sub-centers, 3,472 community health centres, 393 sub district hospitals, and 54 district hospitals. In the State Budget 2019-20, € 1.40 ($ 1.54) billion has been allocated by the state government for Department of Health & Family Welfare under Plan & Non-Plan expenditure. Under the State Budget 2019-20, € 339.31 ($ 372.87) million (Rs 2,606 crore) and € 117.02 ($ 128.6) million (Rs 899 crore) have been allocated towards urban health services and rural health services. Under medical services, the following provisions have been made for 2017- 18:

• Provision of € 18.2 ($ 20) million upgradation and modernization of civil hospital Ahmedabad. • Provision of € 5.65 ($ 6.21) providing free treatment to BPL and lower income families at cancer, kidney and cardiac public institutions. • Provision of € 14.12($ 15.52) million under Medical Policy 2016.

Industrial Infrastructure

Gujarat has 106 product clusters. The Cluster Development Scheme has been launched for furthering the growth of product clusters. Some of the successful clusters include ceramics cluster at Morbi, brass- parts cluster at Jamnagar, fish-processing cluster at Veraval and power-looms cluster at Ahmedabad. There are 13 major industry groups that together account for around 82.05% of total factories, 95.85% of total fixed capital investment, 90.09% of the value of output & 93.21% of value addition to Gujarat’s industrial economy. Gujarat is a leader in industrial sectors such as chemicals, petrochemicals, dairy, drugs, pharmaceuticals, cement, ceramics, gems, jewellery, textiles & engineering. The industrial sector of the state comprises of around 603,000 micro, small & medium industries which provide employment to about 3,851,000 people. As per Budget 2018-19, state government announced plans to invest € 620.80 ($ 682.2) million for the growth of industrial sector of Gujarat. Product Clusters The state has announced an Incentive program for the Industries (General) from 2016-2021 in accordance with the New Industrial Policy of 2015. The scheme aims to attract increased investments to the state in the manufacturing sector to create more employment opportunities.

Gujarat ranks first in terms of total area covered under SEZs in India. It is also a leading SEZ state with the highest geographical area of 29,423.9 hectares under SEZ development. As of November 2019, Gujarat had 20 operational SEZs. In addition to operational SEZs, Gujarat had four SEZs with valid in- principle approvals, 28 SEZs with formal approvals and 24 SEZs with notified approvals. Gujarat is the first state to formulate an SEZ policy, which includes flexible labour laws and exit options for investors. SEZs in Gujarat receive a 10-year corporate tax holiday on export profits (100.0% for the initial five years and 50.0% for the next five years). Surat accounts for more than 120 units of SEZs and supplies products to various locations around the world. Some of the key clients of the Surat SEZ include Adorn Gioielli, Flexit Laboratories Pvt Ltd., Priyank Cord & Tassels Ind. Ltd., Flair Impex Corporation and Pidilite Industries. Other large SEZs in Gujarat include M/s. Adani Port & Special Economic Zone Limited., M/s. Reliance Industries Ltd. and Sterling SEZ & Infrastructuring Ltd. In 2017-18, 264 units operate in Kandla and export products across the globe. The employee strength in Kandla SEZ is around 25,433. Overall exports from Gujarat increased 22% in 2017-18 to € 60 ($ 66) billion.

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Key Industries in the State

Agro & Food Processing Gujarat accounts for the largest share in the total investments in the food processing sector of India. Cotton, groundnut, bajra, paddy, maize, jowar, sesamum, castor & tur (pigeon pea), along with fodder & vegetables, are the major kharif crops in the state. Normal area under kharif cultivation is 8.6 million hectares. As of March 2019, 79 Agricultural Produce Market Committees (APMCs) are linked with the National Agriculture Market (eNAM). GAIC promotes agricultural activities at the ground level & aids the development of agro industries in the state. To provide an impetus to the development of farmers, Gujarat announced ‘Agro Business Policy 2016-21. Food processing units and agriculture infrastructural projects would be provided with various kinds of assistance to ensure that the crops and fruits cultivated in the state last longer and get exported on a large scale. In the budget 2018-19 for the state of Gujarat, an outlay of € 949.49 ($ 1043.4) million was allocated for the Agriculture, Co-operation and farmer Department. Initiatives for the agro & food processing sectors include: Provision of € 55.51 ($ 61.01) million for the Rashtriya Krishi Vikas Yojana. Allocation of € 53.69 ($ 59) million for the development of fisheries In 2018-19, exports of major agriculture commodities from Gujarat stood at € 4.87 ($ 5.36) billion. Gujarat’s dairy sector consists of 17 district milk producers’ unions, with around 14,598 milk co- operative societies. The state’s milk production, which stood at 13.57 million tonnes during 2017-18, was the fifth largest state in India with 7.69% of India’s share. As per the State Budget 2019-20, an allocation of € 750.41 ($ 824.63) million has been made to the Agriculture, Cooperation and allied activities sector. In 2018-19, the production of cotton, rice, total foodgrains and total oilseeds reached 5,053 thousand tonnes, 1,909 thousand tonnes, 5,053 thousand tonnes and 4,152 thousand tonnes, respectively.

Textiles and Apparel As per the Government of Gujarat’s survey report, technical textiles are a key emerging area, with over 860 units in Gujarat. The textile industry contributes around 6% to the total industrial production in the state (organised sector). Gujarat is the largest producer of denim in India (65-70%) and the third largest producer in the world. Surat is the largest manufacturing centre of silk fabric and produces over 40% of silk in the country. About 24-28 per cent of fixed investment, production value and employment of SSI is from the textiles sector. Gujarat has extended full support to entrepreneurs who want to invest in the technical textile market in the state. In 2014, state Government of Gujarat introduced textile policy. In order to promote the textile policy in the state, Gujarat state government had allocated € 80.48 ($ 88.44) million for implementation of this policy under budget 2017-18. On the basis of capital investments worth € 2.9 ($ 2.3) billion, the textile policy of Gujarat has been successful in providing large scale employment opportunities in the state. The Government of Gujarat has introduced various schemes to provide assistance in the form of:

• Interest subsidy, power tariff and VAT exemption. • Support to technical textiles. • Assistance for energy conservation, water conservation and environmental compliance to the existing unit. • Assistance for technology. • Acquisition and upgradation. • Assistance for apparel training institutions and trainees. The state government has announced plans for the setting up of brown and green field projects to facilitate environment friendly processing standards in the textile units of the state.

Gems and Jewellery Gujarat accounts for around 72% of the world’s share of processed diamonds and more than 80% of diamonds processed in India. It also accounts for 95% of diamonds exported from India. About 90 of diamonds in Gujarat are processed by about 10,000 diamond units located in and around Surat. Eight out of 10 diamonds in the world are polished in Surat. The state has the highest labour productivity in the jewellery sector, with major jewellery clusters at Ahmedabad, Surat and Rajkot. It is also internationally renowned for the production of unique hand-made silver ornaments (85% of total silver jewellery production of India). Renowned institutions such as the Indian Diamond Institute, Gujarat Hira Bourse, and the Gems and Jewellery Export Promotion Council provide skilled manpower for the industry.

Oil and Gas Gujarat is a preferred destination for MNCs like BASF, Bayer, DuPont, GE Plastics, Solvay, Cairn Energy, Shell, British Gas, etc. Gujarat is known as India’s chemicals and petrochemicals hub. The state has eight chemical clusters, 14 industrial estates and three SEZs, which are primarily dedicated to the chemicals and petrochemicals industry. Oil and gas reserves are located at Ankleshwar, Mehsana, Tapti High, Hazira, Bharuch, Gandhar, Dahej, Jambusar, Palej and Kalol. Isolated gas fields are located around Ahmedabad. As of July 2018, Gujarat had four refineries with a combined capacity of 101.9

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MMTPA. In March 2018, Indian Oil owned Gujarat refinery of Vadodara city announced that it will invest about (Rs 24,174.00 crore) € 3.41 ($ 3.75) million on new projects and expansions till 2022 which includes capacity expansion to 18 MMTPA, these will generate huge employment in the state. In Gujarat, Oil and Natural Gas corporation (ONGC), 406 wells are proposed to be drilled for the development at a cost of Rs 2,403 crore € 312.87 ($ 343.82) million. Exports of petroleum products from Gujarat reached € 22,917.92 ($ 25,184.83) million in 2017-18 and € 19,978.13 ($ 21,953.99) million in April-December 2018. Gujarat consists of 47% of total domestic gas connections in the country. Gujarat, with Maharashtra and Delhi, accounts for 96% of domestic connections of piped natural gas and 92% of commercial connections.

Pharmaceuticals and Biotechnology Gujarat has over 3,300 pharmaceutical manufacturing units and contributed 30-35% to India’s pharma sector’s turnover and around 28% to India’s pharma exports during 2014-15. The state accounts for 80% of intravenous sets manufactured in the country. About 75,000 people are employed in the pharmaceutical sector in Gujarat. It has the largest number of clinical researches organisations in India and over 100 companies with WHO compliant manufacturing units. The state accounts for 40% of the pharma machinery production of India. The landscape of the Gujarat biotechnology industry consists of more than 50 biotechnology companies and 66 support organisations. Gujarat holds the maximum number of patents among all Indian states, with 3,637 licensed units engaged in drug manufacturing. Key initiatives taken by the government for the industry are as follows: (1) Gujarat is the only state in the country to issue sales license through IT application with the help of National Informatics Centre. Setting up SEZs dedicated to the pharmaceutical sector to boost investments. (2) Establishment of National Institute for Pharmaceutical Education and Research for human resource development. Exports of drug formulations from Gujarat reached € 1740.63 ($ 1,912.78) million in 2018-19 and stood at € 1,877.11 ($ 2,062.76) million during April November 2019.

Chemicals and Petrochemicals Gujarat’s chemicals and petrochemicals industry is one of the fastest growing sectors in the state’s economy and is the leader in the production of chemical and allied products in India. Gujarat is the hub of chemical industry in India, accounts for 62% of India’s petrochemical production, 35% of other chemicals production and 18% of India’s chemical exports. Gujarat produces 6,500 chemicals & petrochemicals products and largest supplier of bio fertilizers, seeds, urea and other fertilizers. The state has 500 large and medium scale industrial units, about 16,000 of small-scale industrial units and other factory units in chemical and petrochemicals industry. Exports of organic chemicals from Gujarat reached € 3,206.61 ($ 3,523.75) million in 2017-18 and € 3,392.60 ($ 3,728.13) million in 2018-19.

A Roadmap for doing Business in Gujarat

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State Acts and Policies Garment and Apparel Policy 2017 Creation of 100,000 jobs in the state.

Tourism Policy 2015- 2020 To attract domestic and international tourists so that Gujarat ranks amongst the top five tourist destination states in India by 2025. To promote various kinds of tourism including medical and adventure tourism.

Solar Power Policy 2015 To promote power generation of green and clean power in the state using solar energy. To lower the cost of generation of renewable energy.

Gujarat New Industrial Policy 2015 To develop Gujarat as a global manufacturing global hub. To induct more entrepreneurial and skill development processes in order to support the “Make in India” initiative.

Electronics Policy, 2014- 19 To promote semiconductor manufacturing sector in Gujarat. To establish an electronic manufacturing cluster in the state.

IT Policy, 2014-19 To attract IT companies to Gujarat. To accumulate US$ 15 billion from IT sector in Gujarat by 2020.

E-Governance Policy, 2014-19 To provide cost efficient services in Gujarat through information and communication technologies. To broaden the scope of e-governance.

Wind Power Policy 2013 To promote green energy in the state and accelerate investments in the renewable sector. To set the tariff of wind power in the state.

Gujarat Textile Policy2012 To transform the state cotton industry as a leader in manufacturing of yarn, fabric and garments with a policy to work on five F’s – Farm, Fibre, Fabric, Fashion (Garment) & Foreign (Export).

Shipbuilding Policy 2010 To explore potential as well as resources available on the Gujarat coast for shipbuilding. To enhance industrial growth in the state by encouraging establishment of downstream ancillary industries.

Power Generation Policy 2009 To develop the state of Gujarat as a power-generation hub. To have adequate availability of power in the state for agriculture, households, industry etc.

Integrated Township Policy 2007 To promote economic development, and facilitate the creation of efficient, equitable and sustainable urban settlements. To facilitate public private partnerships for urban development.

Gujarat State Biotechnology Policy 2007 To accelerate activities in Gujarat’s biotech sector.

Gujarat State Mineral Policy 2003 To explore opportunities in the sector of mineral resources of the state. To enhance efficiency by adopting e-governance.

Gujarat State Mineral Policy 2003 To facilitate investments in the road sector. To induct more scientific principles of resource allocation for maintenance and new construction programmes

Gujarat Port Policy To promote Gujarat’s share in ports. To attract private sector investment in the existing minor and intermediate ports.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

17 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

SEZ Policy of Gujarat, 2002 To encourage investment and export-oriented units in the state through specified facilities and concessions.

Agro Industrial Policy, 2000 To make Gujarat the destination of choice for investors and processors, both global and domestic.

Gujarat Aerospace & Defence Policy To establish Gujarat as India’s leading hub for indigenous aerospace and defence manufacturing. To develop competitive talent in the sector. To promote R&D investments to drive innovation in product design.

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

18 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Seminars & Exhibitions

Automation Expo 2020 Date Venue Organizer Profile Products/ Participants

.Advance Manufacturing BEC IED Communications The 15th Edition is .Automation in Renewable

20 Ltd an ideal platform Energy Mumbai for the Indian and .Building Automation’ 64, Empire Building, global automation Control Rooms Retrospect 134/136, Dr D N Road, industry to .Electric Automation 2019 Mahendra Chambers, converge and .Environment Above McDonald's, Fort, showcase the Management Mumbai, Maharashtra cutting-edge .Factory Automation Total Visitors: 400001 technologies, .Field Instrumentation 12th September 12th 47,894 Appx. advancements, .Hydraulics & Pneumatics – Tel: 022 2207 3370/ 22- systems, and .Industrial Automation 22079567 services in the field .Industry 4.0 & IIoT Total No. of of Automation .IT in Automation Email: .Material Handling

ber 2020 2020 ber Exhibitors: 625 beni@industrialautomat .Process Automation & ionindia.in Control Countries: 25 .Robotics eptem Website: .Safety & SecuritySystems https://www.automationi .Turnkey Solutions ndiaexpo.com/ 09thS

POWTECH INDIA 2020 Date Venue Organizer Profile Products/ Participants

BEC Nuernberg Messe India . Building material Pvt. Ltd. India’s Leading Manufacturers Mumbai Technology Expo . Chemical manufacturers

German House, 2, Nyaya for Processing, . Construction industry Analysis and .Cosmetic manufacturers 20 Marg, Chanakyapuri, New Retrospect: Handling of Powder 2016 Delhi 110 021, .Consultants, engineers, IndiaKoelnmesse YA & Bulk Solids, is an project managers, facility Tradefair Pvt Ltd exhibition for managers Area: 3107 sq experts in powder .Food manufacturers

September and bulk solids .Feed manufacturers Tel: 011 4716 8830 th technology .Glass, ceramic and 1 Exhibitors: 114 Fax: 011 2611 8664 1 mineral products – manufacturers Countries: Email: priya.sharma@nm- .Machinery and plant India, india.com engineering Germany, UK, manufacturers Czech Website:

Republic, http://www.powtechindia.c

China,Malaysi om/home Sptember 2020 2020 Sptember a,Spain, th 9 Switzerland, 0 USA,

Visitors: 1662

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444

19 Indian Economic and Industrial Scenario, 3/2020 VDMA INDIA Office

Activities & services of the VDMA India Office Promote sales of members in participating divisions within VDMA especially exports, including participation in exhibitions.

Organize symposia and similar presentations of German companies in India.

Participate and service bilateral programs such as those in existence, with governmental participation between Germany and India.

Furnish information about the complete product program of the German industry to assist Indian companies to identify right partners for mutual business relationship.

Provide information on market trends, prospects, future development, new projects and tenders.

Contact: VDMA INDIA SERVICES PRIVATE Mr. Sandip Roy, Regional Head LIMITED Telephone: +91 33 40602364 Fax: +91 33 2321 7073 E-mail: [email protected] Mr. Rajesh Nath, Managing Director GC 36, Sector III, Salt Lake Mr. Rijoy Sengupta, Regional Manager- Kolkata– 700106, India North Telephone: +91 33 40602364 Telephone: 01204255029 Fax: +91 33 2321 7073 Mobile: 7044080755 E-mail: [email protected] Email: [email protected]

Ms. Jamly John, General Manager Mr. S Manohar, Regional Head Telephone: 022 6818 1087 / 88 Telephone: 08025595901 / 43007722 Mobile: 9819045109 Mobile: 9663310403 Email: [email protected] Email: [email protected]

VDMA India Quarterly Newsletter-German Machinery Industry

The VDMA India office publishes a Quarterly Newsletter-German Machinery Industry. This Newsletter informs the Indian industry about the development in the German Machinery industry in various industrial sectors. This Newsletter has a circulation of around 7000 copies in different industrial divisions. The VDMA member companies have the possibility of giving an advertisement in this Newsletter at a discounted rate.

For further details, please contact:

Mr. S Manohar: [email protected]

VDMA-Newsletter “India”, Edition 3/2020 Contact: Oliver Wack, Phone: +49 69 6603-1444