Development Watch – Week #2 December ’23
Development News
Rural India’s role in global prosperity
India has an ambitious pursuit to become a developed nation by 2047. According to the Global Institute, India will become an increasingly vital player on the global stage. India’s vibrant young workforce offers it a strong advantage, demographic dividend being India’s ultimate advantage. China will lose 200 million workers to ageing by 2050. But India will gain 220 million workers from farm migration. Hence, there would be a massive shift in the labour pool to the global south. For this to happen, people would need to shift to cities, and productivity would have to increase. Currently, India’s productivity is 1/8th of Japan, and 2.5 times less than China.
India’s urbanization rate of 29% is also less than half of China’s 65%. Among existing issues, excess domestication and rural concentration need to be overcome, along with investment in research and development. India’s R&D to GDP ratio at 0.6% is also lower than OECD average of 2.7%. India is trying to transition into a developed country in a very different world, with concerns around green energy, restriction on capital, and access to free knowledge and the rise of AI.
170 GW Renewable Energy capacity by 2025
India is expected to add 38 gigawatts (GW) of renewable energy capacity by March 2025. In 2023, India has an installed capacity of 130 GW. According to a report by ICRA, this would help India reach a total capacity of 170 GW. This forecast is supported by policy backing, and a decline in solar module prices. The capacity addition is likely to be aided by an increase in tendering activity, with over 16 GW of projects bid out so far. Another 17 GW bids are underway by central nodal agencies. The rise in renewable energy capacity over the next six years is estimated to increase the share of RE plus large hydro in all the all-India electricity generation from 23% in FY23 to around 40% in FY30.
Electrification and EV Charging to see further growth
US Special Envoy on Climate Change, John Kerry, has called electrification drive in India’s transportation sector as one of the most significant opportunities. He was speaking at an event at the Indian Pavilion during the global climate talks at COP28. Electrification is one of the biggest opportunities that we have. The faster that India can do this, the more it cuts greenhouse gas emissions and it cuts pollution. It can also increase India’s security. As far as the electric vehicles charging sector is concerned, big investors are spurring consolidation. Many smaller charging companies are being gobbled up by big energy companies such as Shell, Statkraft, EDF, BP, Total and Engie. Hardware companies such as ABB and Schneider Electric, and other charging companies like Blink, Chargepoint and Charge Enterprises are leading the consolidation. According to an analysis by Reuters, big companies in Europe, North America and Asia are investing in the fast-moving global EV charging industry.
NBCC working on warehouses and agri-infra projects
NBCC has bagged orders worth Rs. 1,500 Crores for a project management consultancy contract for construction of 1,469 warehouses and other infrastructure related to the agriculture sector. These units shall be constructed using innovative building technologies. In a regulatory filing, NBCC states it has bagged work orders from National Cooperative Development Corporation (NCDC) and Primary Agriculture Cooperative Society (PACS) in various states. NCDC has associated NBCC to render project management consultancy services on EPC Model. NBCC has signed a framework Memorandum of Understanding (MoU) with National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD) for construction of the world’s largest grain storage plan in the cooperative sector.
Ship-building and repair clusters for coastal cities
Shipbuilding and repair clusters will be set up in Mumbai, Kochi, Chennai, Gujarat, Goa, Vishakhapatnam, Andaman and Nicobar Islands, and Odisha. Speaking at the Deloitte India Government Summit 2023, Union Ports and Shipping Minister asid that India Middle East Europe Economic Corridor (IMEEC) plan will encompass building next generation mega ports in India. He listed the Vadhavan and Tuna Tekra development as key projects to support IMEEC. The IMEEC was announced during G-20 summit in New Delhi. He also added that autonomous vessel technology is a growing field in India. There is a 76,000 Crores plan for developing the Vadhavan port in Dahanu, Maharashtra. The project has prospects of achieving throughput of 308 million tonnes per annum (MTPA) in 2040. The Tuna Tekra development is a Rs. 4,200 Crores container terminal building being set up in Kandla, Gujarat.
Expansion plan of 3,300 Acres in GIFT City
The Gujarat International Finance Tec-City (GIFT) is set to expand to over 3,300 acres. It will incorporate social infrastructure from 886 acres. The second phase development plan, which includes town planning schemes. It is expected to be unveiled after the state government’s review and public feedback. The plan aims to make GIFT City a global financial activity hub. At a Fintech event jointly organized by International Financial Services Centres Authority (IFSCA) and GIFT City, the Prime Minister also highlighted the city’s vision to be the nerve centre of a new age of global finance. The expansion of GIFT City limits, the riverfront development, and the upcoming metro connectivity are pivotal steps in the journey towards an integrated and thriving metropolis.
Tour companies request PMO to campaign for Brand India
The Indian Association of Tour Operators (IATO) has written to the Prime Minister Narendra Modi, seeking his intervention for the revival of the in-bound tourism industry. While the number of Indians travelling overseas is experiencing robust growth, attracting a similar volume of inbound tourism remains a major challenge. The main concern is the lack of marketing and promotions by India in overseas markets, according to the president of Travel Agents Association of India. The letter to the PMO mentions multiple reasons for decline in numbers, such as withdrawal of incentives to the inbound tour operators on their foreign exchange earnings, which were being used for overseas marketing and promotions. Another factor is the lack of trained tourism manpower in Indian embassies, who are not able to do regular follow-ups with foreign tour operators.
Office market in India to account for over 50% of APAC demand
India is poised to become the driving force of demand for office space in Asia Pacific market in 2024. The top 8 cities include Bengaluru, Mumbai and Delhi NCR are expected to contribute to more than half the region’s total demand. Other cities include Ahmedabad, Chennai, Hyderabad, Kolkata and Pune. The combined forecast for the 8 cities is 52% of regional demand, according to Cushman & Wakefield, a global real estate services company. The demand is owing to faster-than-expected rise in GDP growth, controlled inflation, vast tech talent pool, and recent trends of global corporations entering India. Among other cities in SE Asia, Kuala Lumpur, Manila and Singapore are likely to have topline demand.
Local Feedback
LocalFeedback.org aims to track and document actionable parameters that help improve urban and rural infrastructure. The founder, Susmita, has juggled diverse roles in real estate, project budgeting, valuation and execution on construction sites. Having traveled to more than 20 countries, she has worked across 4 regions in India. Her areas of interest include sustainable buildings, electric mobility and urban development. She visited top-ranking cities on livability indices and has presented published papers at international conferences.