Arvind’s Newsletter

Foreign investments continue to flow into India in its automotive and aerospace industry, which is emerging as the third largest market in the world and potential sourcing location for exports to other countries

1.Nissan Motor and Renault said they would invest $600 million to make six new models in India, one of three markets in which the two automakers plan to coordinate closely in a revamped alliance announced last week.

"This investment is very significant not only on products but on technologies like EVs (electric vehicles) to really capture the growing Indian market, which is the third-largest market in the world, and also to use India as a base for export," Nissan Chief Operating Officer Ashwani Gupta told reporters.

The two companies said in a statement that each would make three new models in India, all built on joint platforms — components and engineering that can be shared between designs. Two models would be EVs, the companies' first in India; the others would be sports utility vehicles.

2. The Boeing Co plans to invest about $24 million in India to set up a logistics centre for airplane parts. India’s former state-run carrier Air India, which is now owned by Tata Group, is expected to announce a major deal this week for nearly 500 jets, Reuters has reported. A deal for purchase of 470 aircrafts ($80 bn), split between Boeing and Airbus, the largest order in the world, was announced by Air India, late on Tuesday.

India is the third-largest domestic aviation market in the world and would soon be number three internationally. "India is one of the most important civil aviation markets in the world … and that means there’s going to be huge opportunity in both narrowbody and widebody aircraft,” said Boeing’s India head.

3. However Apple, which is partially shifting manufacturing of iPhones and other products to India from China , is facing stumbling blocks in scaling up quality, reports the Financial times. Excerpts from this report:

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

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

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

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

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

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

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

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

Despite these teething issues, analysts say India’s potential for Apple is huge. Bain, the global consultancy, estimates that manufacturing exports from India could more than double from $418bn in 2022 to more than $1tn in 2028, driven by policy support and low costs. It estimates that electronics exports alone will grow at an annual rate of up to 40 per cent.

Tata has ambitious plans to become a full-service Apple supplier like the Taiwanese, and it has the approval and backing of the Indian government, according to people in India familiar with its plans.The Indian conglomerate is in talks to buy an iPhone assembly plant outside Bangalore in the neighbouring state of Karnataka from Wistron, a Taiwanese rival to Foxconn that is seeking to exit after experiencing labour unrest and protests in 2020.

Meanwhile, India’s government has given the preliminary go-ahead to Apple’s Chinese component suppliers to begin operation, in joint ventures with Indian partners, according to a person familiar with plans.

4.Hindenburg row and Adani shock rips through ESG funds in India. The Adani crisis is turning into a bad milestone for Environmental, Social and Governance(ESG). As the Adani group get stripped from indexes and are put under review amid allegations of improper use of offshore tax havens and stock manipulation, ESG investors are left wondering why a strategy intended to shield against risks such as greenwashing and bad governance did not protect them from the latest meltdown. Read on.

5.Finally, an article on Walmart’s Flipkart which is beating Amazon in India. Flipkart was Walmart’s biggest acquisition.Will it be able to stay India’s e-commerce leader. Long Read.