HIGHLIGHTS OF THE WEEK

• Credit card spending in India reached a historic high, surging to Rs 8trn, representing a substantial 25.4% increase from September 2023, fuelled by robust consumer activity during the festive season, with a notable focus on e-commerce platforms.
• The Uttar Pradesh (UP) state government has earmarked 2,350 acres of land for setting up mega drug parks across the state for manufacturing of pharmaceutical and medical devices as part of its target to increasing the state’s contribution to the nation’s pharma industry from 2% to 10-12%.

• The Indian government is closing in on an agreement with Tesla that would allow the US electric vehicles (EVs) manufacturer to ship its electric cars to the country from next year (2024) and set up a domestic manufacturing facility factory within two years (by 2026).

• Reliance Industries has committed to invest Rs 200bn in West Bengal in the next three years. The investments will be in three areas – digital life solutions through Jio 5G solutions, retail, and bio-energy.

• Smartphone exports in India in the first seven months of the current fiscal year (FY 2023-24, April – October) crossed US$8bn, mainly driven by iPhone Apple’s iPhones exports were worth more than US$5bn from India during this period, marking a 177% increase compared to the corresponding period of last year and accounted for over 60% of India’s total smartphone exports.

• Import of steel from China for the April–October period of FY 2023-24 stood at 1 million tonnes (mt), amongst the highest in six years and 50% higher than the year- earlier period, driven by lower prices and better acceptability in the domestic market. China managed to displace India’s traditional sellers like Korea, while in select categories of specialised steel, it even overtook Japan.

1.   Economy at a glance

    1.1.  Credit card spending touches record high in October¹

• Total credit card spending touched Rs 1.8trn in October recording a robust 38.3% year-on-year increase and 4% month-on-month growth, according to data released by the Reserve Bank of India (RBI).
  • Within this, spending at point-of-sale (PoS) terminals witnessed a solid 16% month- on-month rise, reaching Rs 577bn. Concurrently, e-commerce platform spending experienced significant growth, soaring by 30% month-on-month to a staggering Rs 1.2trn.

• The overall number of credit cards issued by domestic lenders increased by 7m in October, reached a total of 94.7m compared to 93m in September with HDFC Bank maintaining its dominant position, followed by SBI Cards, Axis Bank and ICICI Bank.

• While the surge in credit card transactions in October was influenced by the onset of the festive season and heightened consumer activity, there are indications that the industry may experience a moderation in loan growth. This follows the Reserve Bank of India’s recent directive, urging commercial banks and non-banking financial companies (NBFCs) to increase the risk weight for unsecured lending.

¹ https://www.livemint.com/industry/retail/festive-time-lifts-credit-card-spends-to-a-record- 11700764651642.html

https://www.business-standard.com/finance/news/credit-card-spending-in-india-rises-to-rs-1-78-trn-in-oct- sets-record-123112400423_1.html

https://bfsi.economictimes.indiatimes.com/news/financial-services/credit-card-spend-hits-record-rs-1-78-lakh- crore-in-oct-amid-rbi-crackdown-on-consumer-loans/105522314

2.   Government policy moves

     2.1.  State government aims to make Uttar Pradesh a pharmaceutical hub; earmarks 2,350 acres for developing pharma and medical parks in the state²

• The Uttar Pradesh (UP) state government has earmarked 2,350 acres of land for setting up mega drug parks as part of its ambitious bid to boost manufacturing and make the state a market leader in pharmaceutical and medical devices production.
  • The proposed manufacturing parks will come up in Lalitpur, Pilibhit, and Gautam Buddha Nagar (Noida) districts.
• The national government has roped in top scientific institutions, including the Council of Scientific and Industrial Research (CSIR) and Defence Research and Development Organisation (DRDO), as knowledge partners to develop low-cost drugs and medical devices. The UP state government has signed memorandums of understanding (MoUs) with more than 80 CSIR and DRDO labs for R&D on affordable drugs.
• The 2,000-acre Lalitpur park is the flagship project of the government. It will be dedicated to bulk drugs, starting from raw materials and active pharmaceuticals under the state’s new pharma The state has signed up Adani Gas for supplying piped natural gas to this park.
• A medical devices park in Sector 28 of the Yamuna Expressway Industrial Development Authority (YEIDA) in Greater Noida is proposed to position UP as a leading medical hub in south The third medical project entails a modern biotech park in Pilibhit to aid in cutting down on import of fermentation-based goods.
• UP state government has envisioned increasing the state’s contribution to the pharma industry from 2% to 10-12%. With the slew of pharma manufacturing hubs, UP is not only looking at catering the domestic market but tap the lucrative global pharma and medical export markets. The pharmaceutical industry in India, valued at US$42bn in 2021, is estimated to touch US$130bn by 2030.
• Currently, pharma shipments from India are valued at US$25bn. The domestic pharma industry is among the top three globally in terms of producing medicines by India is the global leader in supplying generic medicines by volume, commanding a 20% market share.

² https://www.business-standard.com/india-news/uttar-pradesh-government-eyes-10-12-share-in-india-s- pharma-sector-123112000850_1.html

https://www.business-standard.com/industry/news/2-350-acres-set-aside-for-pharma-and-medical-parks-in- uttar-pradesh-123102001313_1.html

https://www.dailypioneer.com/2023/state-editions/2-350-acres-of-land–earmarked-for–mega-drug- parks.html

https://invest.up.gov.in/wp-content/uploads/2023/10/2350-acres_211023.pdf

3.   Market watch

    3.1.  Tesla to set up factory in India within 2 years; start EV imports next year³

• The Indian government is on the verge of finalising a deal with Tesla Inc., the American electric vehicles (EVs) manufacturer, which would permit the company to import its electric vehicles into the country starting next year (2024) and establish a manufacturing plant within a span of two years hence (2026).

• The states of Gujarat, Haryana, Maharashtra, and Tamil Nadu are being considered for setting up Tesla’s EV manufacturing plant, given their well-established Karnataka and UP are also vying for Tesla’s investment.
  • Automakers usually prefer to set up manufacturing plants near sea ports, and the high number of auto components suppliers currently based in Gujarat and Tamil Nadu, give these states an edge over the others.

• However, Tesla has proposed that it is willing to set up a manufacturing plant in India only if the government approves a concessional duty of 15% on imported vehicles (completely built units – CBUs) in the first two years of operations in India.
• The tax reduction would allow Tesla to market-test its products before fully committing to the market and setting up a plant for manufacturing While the government is firm that import taxes will be only lowered only if the automaker agrees to eventually start work on manufacturing cars in India, commit to start sourcing components locally and provide bank guarantees towards any failure to meet their commitments.

³ https://www.businesstoday.in/technology/news/story/tesla-to-set-up-factory-in-india-within-2-yrs-start-ev- imports-next-year-406499-2023-11-21

https://www.livemint.com/auto-news/elon-musks-tesla-plans-to-invest-up-to-2-billion-in-indias-plant-but- with-riders-11700793323434.html

https://www.bloomberg.com/news/articles/2023-11-21/india-closer-to-agreement-with-tesla-to-import-evs- set-up-plant#xj4y7vzkg

https://www.autocarindia.com/car-news/tesla-india-launch-possible-in-2024-local-manufacturing-likely-by- 2026-429903

https://www.motorbeam.com/tesla-to-import-cars-in-india-from-2024-factory-being-considered-in-gujarat/

    3.2.  Reliance commits to investing Rs 200bn in West Bengal over the next three years⁴

• Reliance Industries (RIL) has announced plans to invest Rs 200bn in West Bengal in the next three years in sectors such as telecom (5G rollout), retail and energy (including bioenergy).
• The number of retail stores in the state will increase from 1,000 to 1,200 in the next two years and the company has brought about 550,000 grocery and general items (kirana) stores under the umbrella of JioMart.

• Reliance Industries also plans to set up CBG (Compressed BioGas) plants in West Bengal which will help farmers to increase their The company targets to establish 100 CBG plants in the next 5 years, consuming 5.5 million tonnes of agro-residue and organic waste, thereby mitigating nearly 2 million tonnes of carbon emissions, and producing 2.5 million tonnes of organic manure annually.

⁴ https://www.thehindu.com/incoming/reliance-to-invest-20000-crore-in-west-bengal-in-next-three- years/article67558375.ece

https://www.businesstoday.in/latest/corporate/story/reliance-plans-to-invest-rs-20000-cr-in-3-years-mukesh- ambani-at-bengal-business-summit-406571-2023-11-21

https://telecom.economictimes.indiatimes.com/news/industry/reliance-to-invest-rs-20000-crore-in-west- bengal-on-5g-retail-energy-mukesh-ambani/105389370

https://indianexpress.com/article/cities/kolkata/mukesh-ambani-announces-investment-of-rs-20000-crore-in- west-bengal-9036664/

    3.3.  iPhone make up more than 60% of India’s overall smartphone exports⁵

• Through its three Indian vendors, Apple has exported iPhones of over US$5bn in value in the first seven months of FY 2023-24 (April-October) from India, notching up a staggering year-on-year growth of 177%. As a result of this upsurge, India’s overall smartphone exports in the same period hit around US$8bn, marking 61% year-on-year growth and an average run rate of over US$1bn every month.

• In the corresponding period of last fiscal year India had exported iPhones worth US$1.8bn, while export of iPhones from India during the entire FY 2022-23 was worth US$5bn.

Source: Business Standard

• With Apple expanding production under the government’s Production-Linked Incentive (PLI) scheme, the iPhone’s share in total smartphone exports from India has significantly increased from 45% in FY 2022-23 to 62.5% in FY 2023-24 (April – October).

• Apple is aiming to produce iPhones worth Rs 1trn (US$12bn) in India by the end of FY 2023-24 as it is preparing to meet festive demand in the US and the West in December-January. Although due to global challenges, consumption, including electronics, is expected to be slower in the West this year.

⁵ https://www.business-standard.com/companies/news/5-bn-counting-iphones-consist-62-5-of-india-s- smartphone-exports-123112201249_1.html

https://www.digitimes.com/news/a20231121VL200/apple-india-iphone.html

https://www.news18.com/business/within-7-months-of-fy24-smartphone-exports-reach-8-bn-8676064.html https://inc42.com/buzz/apple-targets-iphone-production-worth-inr-1-lakh-cr-in-india-by-fy24-end/

    3.4.  India’s steel imports from China hit a six-year peak in April-October⁶

• Steel shipments coming into India from China for the April–October period of FY 2023-24 stood at 1.1 million tonnes (MT), amongst the highest in six years. The diversion of lower-priced offerings to trade, FMCG, and auto sectors, coupled with poor demand in Europe and better acceptability in the domestic market, saw imports from China jump by almost 50% on a year-on- year basis, making China the largest seller of steel to India.

• • China managed to displace traditional sellers like Korea, while in select categories of specialised steel, it even overtook Japan. In the April-October period steel imports from other major importing nations were South Korea (1.1 mt), Japan (0.5 mt),Vietnam (0.3 mt), and Taiwan (80,000 tonnes).

Sources: Ministry of Steel, The Hindu businessline

•  India’s steel imports from China in October were estimated at 2 mt, the highest monthly import figure in the April-October period of FY 2023-2024. The surge in steel imports are mainly attributed to the end of the monsoon season in India (July-September) coupled with lower prices for ex-China materials as compared to other foreign suppliers and local prices.

• Chinese steel prices were the most competitive in the market during the April-October period and especially in October when India became the second-largest buyer of hot rolled coil (HRC) steel from China, following Vietnam.
  • Notably, import prices for HRC steel from China were ranging at around US$580- US$585/mt in October, while local HRC prices were quoted at US$683-US$707/mt, including 18% GST, which made import of steel from China more lucrative.

⁶ https://www.thehindubusinessline.com/economy/indias-steel-imports-from-china-at-a-six-year-high-for- apriloct-period/article67576463.ece

https://www.steelorbis.com/steel-news/latest-news/indias-steel-imports-from-china-hits-six-year-peak-in-apr- oct-1316555.htm