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Mint
a day ago
- Business
- Mint
‘India Inc must make fresh investments instead of sitting on cash'
New Delhi: Indian companies need to make fresh investments instead of holding cash, since their profits have improved and have healthy balance sheets, chairman of the economic advisory council to the prime minister (EAC-PM) S. Mahendra Dev said in an interview with Mint. To be sure, private investments are showing early signs of growth, and will likely accelerate once global uncertainties subside, he said, before conceding that government capital expenditure remains central to short-term economic stimulus. He emphasised that investment-led growth is the most effective strategy for India, hoping that rural and urban demand gathering pace will catalyse increased private investments. US president Donald Trump has unleashed a disruptive tariff war against the world, causing a great deal of trade uncertainty and prompting companies to hold off on fresh investments. Dev emphasised that India's economy has the capacity to grow on a sustainable basis at rates needed for becoming a developed-country over the next 25 years—some estimates project a requirement of nominal growth of 11% to 12% and 7% to 8%, adjusted for inflation. However, states have to make more efforts to attract investments, both domestic and foreign, Dev said. India's economy expanded at 6.5% in FY25, with the nation's central bank projecting a same growth rate in FY26. Above-normal monsoon augurs well for higher farm output growth in FY26, Dev said in the email interview. While Central programmes are improving agricultural productivity and cash transfers are helping to raise credit and investment, states should continue reforms in the sector for faster growth and improved farmer incomes, he said. Artificial intelligence use offers both challenges and opportunities but is likely to have an overall positive impact on jobs in India, Dev said, citing studies on the subject. Dev emphasised the point that private investment growth needs to gain momentum given that there is no dearth of capital availability. 'There are some green shoots on private capex. Many state governments are also attracting domestic and foreign private investment. Corporate sector and banks are having more profits now and their balance sheets are in good shape. So, there is no problem of capital availability. Industry is positive about India's growth story. Corporate sector is probably holding investing in capacity expansion due to global uncertainties and overcapacity in some countries like China,' said Dev. 'Increase in rural and urban demand will facilitate more private investment. Many firms turned debt-free and doubled their cash on the books. India Inc has to make new investments instead of keeping the cash,' Dev said. To achieve this, there is a need for more progress on 'ease of doing business' at the state level, Dev added, citing the case for deregulation made in Economic Survey 2024-25. 'Hopefully, private capex will be more once the domestic demand increases further and global uncertainties are reduced. Once the tariff concerns are over, there will be more opportunity for Indian industry to invest. Factors such as ease of doing business, availability of land and other infrastructure, logistics, and needed manpower attract investment to states. States have to make more effort to invite foreign direct investment and domestic private investment,' he said. Dev also called for maintaining the thrust on government's capital expenditure in the meantime. 'It is generally argued that India's growth strategy should be driven by encouraging consumption. However, a study by C. Rangarajan and D.K. Srivastava indicate that an investment-led growth strategy is the best choice and that government expenditure still holds the key for stabilisation or short-term stimulation. Investment-led consumption is more sustainable,' Dev said, quoting from the study published earlier this month in the Economic and Political Weekly. Private final consumption expenditure, or household spending, the biggest component in India's national income, on the other hand, expanded faster at 7.2% in FY25 compared to a 5.6% growth in FY24, Dev said. 'Rural consumption played an important role in this growth. The India Meteorological Department (IMD) expects above normal monsoon this year and it augurs well for higher agricultural growth, rural consumption and lower inflation. Therefore, we can expect that rural economy will do well in FY26 as well,' Dev added. Although there is volatility in agriculture growth, resilience of agriculture to monsoon has increased over time due to increase in irrigation coverage and other measures. Agriculture output grew at an average annual rate of 4.6% during the last eight years--2017-18 to 2024-25, Dev said, adding that FY25 also recorded a growth rate of 4.6%, contributing significantly to gross value added (GVA) growth of 6.4% last fiscal. The Indian economy is resilient and continues to be the fastest-growing country among large economies, Dev said, adding that some estimates have projected a requirement of nominal GDP growth of 11-12% and real growth rates of 7-8% to achieve the goal of becoming a developed country by 2047. 'India has the potential to achieve these growth rates. The country is on its way to becoming the fourth-largest economy in the world at the end of FY26. It has also shown considerable progress towards nearly eliminating extreme poverty and reducing consumption inequality,' added Dev. Some increase in investment rate, including domestic and foreign private investment, efficiency in capital use and enhancement of total factor productivity will boost India's growth, he said. 'Rise in savings in the economy is important for higher investments. Structural transformation of economy in output and employment from agriculture to manufacturing and services is also important for higher growth. India is doing well in service exports. There are significant opportunities for manufacturing exports in spite of global uncertainties on trade. Some other sources of growth are India's fast growing young work force, rise in human capital and technology, fast growing digital technology including artificial intelligence (AI),' Dev said. A youth population with a median age of around 28 years, compared to the ageing population of developed countries, is another key driver of economic growth for India. Increasing urbanisation will need more city infrastructure and it will improve growth. Reduction in global uncertainties in future will add to higher growth. Increasing women empowerment will raise India's GDP. The 2047 goals also include inclusive growth and sustainability objectives,' added Dev. 'In achieving higher growth rate for India, states play an important role. It is a healthy sign that states are competing by announcing goals on GDP and GDP per capita. Many studies have shown that improving 'state capacity' and governance is important in raising incomes of people and delivering public services like education and health. Similarly, decentralization of resources to Panchayats and Municipal Councils is needed, added Dev.
Mint
4 days ago
- Automotive
- Mint
In charts: Thousands of Indian auto workers are losing fingers to unsafe factories
More than 4,000 workers have reported injuries in Indian automotive supply chains since 2019, with around 80% these being loss of fingers, according to an annual report by Safe In India (SII) Foundation. The report, titled Crushed, covered 7,500 auto workers in Maharashtra and Haryana who have suffered non-fatal injuries since 2019 and sought SII's help to get benefits under the Employees' State Insurance Corporation (ESIC) benefits. ESIC is a government social security and health insurance scheme for registered workers, designed to protect them and their dependants from financial distress because of sickness, disability, maternity break, or death at work. SII's growing database aims to plug the data gap that exists over accidents and injuries in the industrial sector, but it is not a national-level dataset and does not reflect the pan-India trend. 'Crushed reports have covered Haryana since 2019 and Maharashtra since 2022, based on when our worker assistance centres were established there," said VN Saroja, head of worker safety at SII. Crushed injuries The latest edition of the survey said there were at least 875 injuries in automobile supply chains in 2024, and 69.7% of these were 'crushed injuries' (lost fingers). Crushed injuries have surpassed other types of injuries, though their share in overall non-fatal injuries documented by SII fell from 85.3% in 2019 to 69.7% last year, it said. Both Haryana and Maharashtra fared equally poorly on crush injuries. In Maharashtra, 80% of auto workers lost a body part at the workplace between 2022 and 2024, and 78% suffered a similar fate in Haryana from 2019 to 2024. The latest government data from the Directorate General Factory Advice Service and Labour Institutes shows there were 56.9 fatal injuries per million workers and 154 non-fatal injuries per million workers in 2023. Industry-wise data is not available. The reported said the typical injured worker is a migrant youth with a level of education. About 60% of injured workers assisted by SII had left their studies between Class V and X. In contrast, only 4% of injured workers had a graduate degree or diploma. About 87% of injured workers in Haryana were migrants, and 62% in Maharashtra. Disregard for safety Power press machines and the lack of proper safety equipment for workers are the primarily reasons for crushed injuries, the report said. Power press machines, 78% of crushed injuries last year, also cause more serious injury than other machines in auto factories, it said. Power presses are machines used to cut and give shape to metal sheets. 'Crushed injury in power press machines is more severe as it results in a greater number of finger losses in case of accident/malfunction," the report said. A lack of safety gear compounds the problem, SII said. More than 70% of the workers it said they were not given protective gear such as safety tongs, earplugs and protection Economic Survey 2024-25 had also highlighted the issue, noting India's manufacturing (11.4% of the total workforce) and construction (12%) workers were prone to workplace accidents.
NDTV
15-07-2025
- Automotive
- NDTV
Why Are Maruti, Tata, Mahindra Making Fewer EVs?
India's electric vehicle (EV) dreams have long symbolised its aspirations for a cleaner, more self-reliant future. But today, those dreams risk stalling at the crossroads of geopolitics and supply chain fragility. With China's April 2025 export curbs on rare earth elements, a critical question looms: can India steer its EV revolution onto a resilient, independent path before it's too late? The India EV revolution, which was running in high gear until some time ago, has now been thrown into turmoil, with manufacturers slashing their EV production targets across the board. Maruti, Tata, Mahindra, the two-wheeler giants - none has been spared. For the average Indian hoping to buy an affordable EV, these disruptions could soon mean higher prices, longer wait times and dwindling options. And with this, India's ambitious goal of 30% EV penetration by 2030 now hangs in limbo. Importance of Rare Earth Elements REEs are a group of 17 metallic elements, including samarium, dysprosium, and neodymium, which are critical to modern technology. They power everything from EV motors and missile systems to smartphones and wind turbines. China has achieved near-total dominance in this sector, not just by mining these elements but by mastering the far more complex process of refining them. With an almost iron grip on global processing - controlling roughly 85% of the market - the latest curbs by the Red Dragon have restricted access to these elements, impacting not only the global defence sector but also commercial industries, such as clean energy and electric mobility. A House of Cards India's EV penetration has surged to 7.7% in 2024, a nearly fourfold jump from 1.75% in 2021. But this remarkable growth is marred by a heavy reliance on China. According to a CRISIL report, last year, India imported over 80% of its 540 tonnes of magnets, critical for manufacturing EV motors, from China. This dependency stems from the fact that domestic manufacturing has struggled to keep pace with sector demands, despite the government's Production Linked Incentive (PLI) push over recent years. Ironically, India holds the world's sixth-largest deposits of rare earth elements - about 6.9 million metric tonnes - but has almost no domestic magnet production. The Economic Survey 2024-25 warned that EV production requires six times more minerals than conventional vehicles, with supply chains dangerously concentrated in a handful of countries, especially China. This stark reality exposes a brutal truth: India's electrification ambitions have outpaced its supply chain resilience planning. To make matters worse, Mint reports that the embargo and subsequent import hurdles could increase costs by as much as 8%, a burden likely to be passed on to customers. For India's cost-sensitive market, especially in the two-wheeler segment, this poses an existential challenge. Supply Chain Disruption The Centre for Science and Environment's State of India's Environment 2025 report highlights that component localisation has lagged due to a weak manufacturing base. Experts agree that building a full ecosystem - from mining to magnet production - demands sustained policy support, technical capacity, and major investment. Without swift action, India remains vulnerable to external shocks and geopolitical risks. While many states have launched EV policies with strong demand incentives, few have addressed supply chain security. Most rely on the Centre, and no state mandates local sourcing of critical components like batteries or motors. The PM-EDRIVE scheme does include localisation criteria, but state policies generally focus on consumer subsidies over R&D. Maharashtra stands out as an exception. Its policy explicitly promotes supply chain resilience and circularity, allocating ₹15 crore toward R&D in sodium-ion batteries, magnet-free motors, and recycling technologies. However, these efforts are still in early stages, and their outcomes will take time to unfold. Overall, sub-national policies have yet to fully grapple with the risks posed by global supply chain disruptions. Reducing Dependency Private participation in critical mineral mining became possible only after the 2023 amendment to the Mines and Minerals Act. Until then, IREL (India) Ltd held a monopoly, with rare earths classified as atomic minerals under the Atomic Energy Act. Following the reform, the government auctioned 13 exploration blocks in March 2025. Since then, progress has begun. Vedanta's subsidiary, Hindustan Zinc, recently announced plans to mine and process neodymium, a key input for permanent magnets. Sona Comstar - India's largest importer of rare earth magnets from China and a major supplier to Tesla and Stellantis - has also declared its intention to localise production and reduce dependence on Chinese imports. However, the transition from exploration to actual production takes time. The lithium auction in Jammu & Kashmir illustrates this challenge: despite relaxed rules, both rounds failed due to limited geological data, small block sizes, and technical complexities. This gap between ambition and on-ground readiness remains a key hurdle. Still, the liberalisation of mining policy marks a crucial step toward reducing import dependence and building a resilient domestic rare earth supply chain. A Bloomberg report indicates the government may temporarily ease localisation norms to allow imports of fully-built motors. While this offers short-term relief, it does little to advance long-term atma-nirbharta. What's needed is a strategic, well-resourced response. First, KABIL's overseas mineral missions in Argentina, Australia, and Chile must be fast-tracked to shield India from future supply shocks. Second, a strong circular economy push is vital - scaling battery recycling can recover up to 90% of critical minerals like lithium and cobalt. Third, the Economic Survey 2024-25 calls for greater R&D investment in next-gen batteries like sodium-ion to further de-risk and secure supply chains, along with tech transfer agreements to share costs and diversify supply chains. Fewer EVs today, Resilience Tomorrow? The supply chain shock is already visible - Maruti has slashed production targets for its upcoming EV, an early warning sign. If rare earth shipments don't resume soon, Indian manufacturers may be forced to import fully built motors from China, raising costs by 5-10%. Ironically, this disruption may succeed where years of policy have fallen short: pushing India toward genuine automotive self-reliance. While diplomatic outreach to China is underway, it remains a short-term fix. Meanwhile, the Hon'ble Prime Minister's recent visit to Ghana set the tone with a high-stakes agreement on rare earth mineral mining - an important step toward long-term resilience. As RMI notes, India's success in renewable energy proves that self-sufficiency is achievable when backed by coherent, risk-aware policy. With global uncertainties mounting, India must accelerate efforts to localise its EV supply chain. The question isn't whether rollout will be slow - it will - but whether this crisis will finally drive the structural reforms needed to secure India's electric future.
Time of India
08-07-2025
- Business
- Time of India
India negotiating trade agreements on its own terms: S Mahendra Dev, Chairman, EAC-PM
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India is negotiating trade agreements with countries, including the US, on its own terms and keeping in view the national interest, said. Several domestic tailwinds will help India grow 6.5% in FY26 despite global headwinds, he said in an interview with ET. Edited excerpts:India is negotiating trade agreements with countries on its own terms and keeping in view the national interest always. Talks are going on with the US, New Zealand, Oman, Chile, Peru and the EU. The UK-India free trade deal is expected to vastly boost trade between the nations. It will have an advantage over other countries on tariffs once the FTAs are signed and boost our the global trade itself is lower, there are issues pertaining to protectionism. So in that environment, given the constraints, India will enter into FTAs only if it is in our interest. In the case of the US also, the government will protect the interest of agriculture and industry. If duties imposed on Indian goods are lower than Vietnam or some of those countries or China, India will benefit much more from the China +1 consumption is picking up on the back of sustained agricultural growth of 4.6% in the last six years. This year we expect a good monsoon and so the rural consumption will benefits and lower inflation can boost urban consumption and the uptick could be higher during festival time, as stated by the finance are some green shoots on private capex. Increasing government capex will have an impact on private sector investment. There are no 'twin balance' sheet problems now and many state governments are also attracting domestic and foreign private investment. Corporate sector, however, is probably holding off investing in capacity expansion due to global uncertainties and overcapacity in some countries like is a need for more progress on 'ease of doing business' at state level. Economic Survey 2024-25 argues for deregulation and easing 'compliance burden'. Hopefully, 'animal spirits' will be back once the domestic demand increases further and global uncertainties are reduced.A 6.5% of GDP growth for FY26 is feasible despite global headwinds like the twin shocks of geopolitical tensions and trade policy uncertainties. There are many domestic tailwinds such as low inflation, rate cuts, expected good monsoon, trade diversion to India, measures in the last budget like rising capital expenditure, tax reduction, etc. that may raise rural and urban demand by raising both investment, consumption and some push to medium-term growth prospects seem to be robust with sound fiscal and exports are two engines of growth. Some increase in investment rate including domestic and foreign private investment, efficiency in capital use and enhancement of total factor productivity will boost are significant opportunities for exports in spite of global uncertainties on other sources of growth are India's fast growing young workforce, rise in human capital and technology and fast growing digital technology, including can transform India is education and skilling, which is being pushed by the government while creation of quantity and quality of employment is the most important element of inclusive can benefit from the trends in global industrial diversification, supply chain restructuring and China+1 strategy. India can lead new flying geese for global value chains (GVCs). Although the share of GVCs is lower now, government is following appropriate policies to enhance India's role and integrate with GVCs.
Hindustan Times
02-07-2025
- Business
- Hindustan Times
₹1L-crore R&D push for private sector unveiled
The Union Cabinet on Tuesday cleared a scheme with a corpus of ₹ 1 lakh crore to channel funding to the private sector for accelerating research, development, and innovation in sunrise and strategic sectors in the country. Union I&B minister Ashwini Vaishnaw during a cabinet briefing in Delhi on Tuesday. (ANI) The Research Development and Innovation (RDI) scheme, shaped through wide consultations with industry experts, will provide long-term financing or refinancing at low or interest-free rates . It will back projects that have moved beyond early-stage research and reached the prototype stage,said union minister Ashwini Vaishnaw at a press briefing on the cabinet's decisions. 'When a company moves beyond the prototype stage, it often faces the 'valley of death,' a critical phase where many innovations fail due to lack of support,' said Vaishnaw. 'This is exactly when timely assistance is needed to turn a promising prototype into a viable product.' The scheme will target sunrise sectors such as clean energy, climate tech, deep tech (quantum applications, robotics, space teach), AI in key areas, biotech, digital agriculture, and also interestingly technologies required for strategic reasons, economic security, self-reliance or public interest. 'Countries that invest heavily in R&D see long-term gains in productivity and technological advancement across industries,' said Vaishnaw. The Economic Survey 2024-25 noted that even though India has increased the gross expenditure on research & development (GERD) from approximately ₹ 60,196 crore in 2011 to about ₹ 127,381 crore in 2021, it still is a mere 0.64% of its GDP. The survey noted that this remains 'insufficient and remains low compared to many countries that have forged ahead in R&D.' A Press Information Bureau release said the government will give ₹ 1 lakh crore to the Anusandhan National Research Foundation (ANRF) as a 50-year interest-free loan. ANRF, a government body set up to boost research and innovation, will create a special fund that offers concessional finance to second-level fund managers, who will then evaluate and select individual projects for funding. In some cases equity investments in startups may also be considered, the PIB release said. Contributions to the Deep-Tech Fund of Funds, announced in Budget 2025, or any other fund of funds meant for RDI may also be considered, the release added. The RDI scheme will be guided by the ANRF governing board, chaired by the prime minister. Its executive council will set guidelines and recommend fund managers and project types. A group of secretaries, led by the cabinet secretary, will approve changes and review progress. The secretary of the relevant sector will be included in the group. For instance, if a project involves AI, the secretary of the IT ministry will be part of the decision-making body. The department of science and technology will be the nodal agency for implementation. Industry insiders described the scheme as transformative. 'DeepTech is the final frontier in the Indian Startup ecosystem. This ( ₹ 1 Lakh crore over 5 years) is a massive commitment from the Government of India to catalyze private sector R&D and deep tech innovation,' said Rajan Anandan, Managing Director at Peak XV Partners and former head of Google in India and Southeast Asia on X. Nikhil Agarwal, managing director, foundation for innovation and technology transfer (FITT), IIT Delhi, said, 'For the first time, our private sector has a real runway to dream bigger, build deeper, and compete globally. This move can transform India from a service-driven economy into a true innovation powerhouse. It's a defining moment for our nation's future.' He pointed out that for young founders building in AI, space, biotech or semiconductors, access to R&D capital has always been the missing link. This scheme fills that gap, he said, calling it a structural reform that re-imagines how India competes globally.
