Development Watch – Week #1 June ’23

Development News

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Incentives for Battery Storage Projects

India is offering incentives worth $455.2 million to encourage battery storage projects with a total capacity of 4,000 MWh. Private firms are expected to invest $765 million into the scheme to develop large-scale battery storage systems. The Indian government aims to boost the share of renewables in the country’s energy mix while reducing its dependence on fossil fuels. It ill help India’s ambitious plans to expand its renewable energy capacity to 500 GW by 2030. It will also cut the cost of battery energy storage from the current 5.5 – 6.5 rupees per unit. Battery storage, used to back up intermittent renewable power supply to stabilize the grid. It is an evolving technology. There are presently very few large-scale operational projects in the world. The government will provide viability gap funding, to cover risks of developers of critical infrastructure projects.

Projects in Middle East for Indian engineering companies

Engineers India Limited has raised the strength of its staff from 23 to 84 in Abu Dhabi to cater to middle east region. The company, which was previously focused on oil and gas infrastructure, is expanding into other businesses such as hydrogen, carbon capture, biofuels, fertilizers and steel. The share of international business in new orders in FY23 is 30% compared to 15% in FY22. EIL is executing projects for companies including Hindustan Petroleum Corp, Indian Oil, Mangalore refinery and Petrohemicals, among others. EIL is also building a refinery in Mongolia, a urea project in Africa, and Dangote refinery in Nigeria.

Haj flights from Kerala in June

Air India Express is set to start Haj flights from Kannur and Kozhikode in Kerala on June 04. Air India Express has also introduced colour-coded pouches for elderly pilgrims to carry their boarding passes. Brightly colored luggage tags would also help with easier identification and to prevent baggage mishandling. In the first phase, Air India Express will operate 44 flights from Kozhikode and 13 flights from Kannur to Jeddah. A total of 8,236 Haj pilgrims will be flown. Each pilgrim will also be offered a 5-litre can of Zam Zam water upon arrival at return.

India to be world’s most important new aircraft market

India is showing one of the highest traffic growth rates in the world. In the Defence domain, India’s spend of USD $81.4 billion was globally the fourth largest in 2022. This is after US, China and Russia. India has been the biggest importer of defence equipment, even ahead of Saudi Arabia. This acocunts for 11% of global military equipment imports during 2018-22. According to a report by Barclays, the fleets of Indian aircrafts are skewed toward narrow body. Hence, airlines like Airbus may be better positioned than Boeing, driven by A320 family’s competitive position. India is currently the 3rd largest aviation market in the world in terms of domestic traffic. It is only behind the US and China. UDAN Regional Connectivity Scheme by the government has also made India a key source of demand for new aircrafts. Indian airlines also have the 2nd largest order book, only after the US. India currently takes 7% of all Boeing and Airbus deliveries. Air traffic in India is forecast to remain 2% above the long-term global average.

Revenue forecast for SaaS startups drops

Chiratae Ventures (a venture capital firm) and Zinnov (a global management consulting and strategy advisory firm) have marked down projections of revenue for Indian SaaS startups. There has been a 74% reduction in the revenue forecast from $100 billion to $26 billion in their latest annual report titled “India SaaSonomics: Navigating Growth and Efficiency”. Though recession looms large for Indian SaaS industry, it has displayed remarkable anti-fragility to withstand turbulent times. There are mainly 3 challenges plaguing the industry, namely, customer churn, customer demand slowdown, and delayed sales cycles.

Downward pressure on cash flows has also been caused by macroeconomic headwinds. Previously the industry was estimated to grow at 50-50% levels, but that has changed. In the past 3 years, employees of 21 Indian SaaS unicorns have founded 186 SaaS startups. Experts expects the companies to grow in 2023. SaaS startups are also actively reevaluating their product and sales strategies to offset losses in their margins. India has over 1,650 funded SaaS startups.

Solar energy generation becoming dominant renewable tech

The technology of solar energy generation is becoming more dominant as the world is moving towards net zero carbon emissions. The union minister for Power and NEw and Renewable energy said at the standing committee meeting of the International Solar Alliance. The 8th ISA meeting was held in New Delhi on June 6. India is the current president of the ISA. The meeting focused on ISA demonstration projects in member countries, Solar technology Application Resource Centre (STAR-C), ISA SolarX startup challenge, solar finance facility and preparations for the 9th meeting of the ISA standing committee. They also discussed preparations for the 6th session of the ISA assembly. Solar PV market in India has maintained a record-breaking streak with new capacity installations totaling 175 GW in 2021.

High expenditure by Railways on safety

The railways have spent over Rs. 1 lakh crores on safety between 2017-2018 and 2021-22. This is according to official document released by the Indian Railways. Railways also reply to CAG report. This has been released in the aftermath of triple-train accident in Odisha’s Balasore which claimed 275 lives and injured more than 1,000 people. Opposition members have pointed that according to 2022 CAG report, “Derailment in Indian Railways”, funding for Rashtriya Rail Sanraksha Kosh (RRSK) by 79%. However, data in the document showed otherwise.

In fact in February 2022, the government extended validity of RRSK by another 5 years. In total, the railways spent Rs. 58,045 crores on track renewal during 2021-22. The Railway Board has also launched a signaling safety drive in all 19 zones after the Balasore train tragedy. All 19 zones and dedicated freight corridors (DFCs) have been asked to submit a report of deficiencies and irregularities by June 14. The commissioner of railway safety (South Eastern Circle) is also holding a statutory enquiry in connection with the accident.

QR Codes replace token sales in Delhi Metro

More than 74 lakh QR code-based paper tickets have been sold to Delhi Metro commuters after their launch in early May. Sale of tokens has dipped by over 30% since then. The urban transporter hopes that commuters will gradually start using fewer physical tokens. However, travellers have complained about technical issues faced at AFC gates which using paper tickets. Around 50% of the AFC gates have been made QR code compliant so far.

Need for focus on track safety before more trains

A few years ago, Indian railways celebrated that nobody was killed in accidents for two successive years. The government has widely publicised its investments into Indian Railways. However, it is being argued that safety has been ignored. Last week, India’s storied Coromandel Express plowed in to a stationary freight train late on Friday night last week. This set off a 3-train pileup that cost 300 people their lives. Although, in the past decades, a lot of work has been put into upgrading, signaling, shutting down level crossings, and other ways to make Indian railroads safer. This year itself, the union government made a record 2.4 trillion rupee ($30 billion) capital outlay for the railways. A 50% increase over the previous fiscal year, to upgrade tracks, ease congestion and add new trains. Indian Railways runs the 4th largest train network in the world. It transports 13 million people everyday. The railways also moves 1.5 blillion tonnes of freight in 2022. The safety record has been improving over the years but there is more work to do. Human error and poor track maintenance are usually to blame in such crashes. Due to high workload of maintenance, workers are not adequately trained. The east coast route is one of the busiest and also carries much of India’s coal and oil freight.

Q4 GDP makes India fastest growing major economy

India’s economy in FY 23 grew by 7.2%. This is stronger than previously predicted, due to the growth of 6.1% YoY in last quarter. Compared to preceding two quarters where GDP grew only by 4.5% and 4.8% respectively. Despite concerns of private consumption being sluggish, rising at only 2.9%, there was an increase in government capital spending. This boosted the gross fixed capital formation by 8.9%. Private consumption also grew by 7.5% in the last financial year.

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