Development Watch – Week #2 Oct ’24
Development News
Real wage growth in India
Real wage growth in rural parts of India is expected to improve in the remainder of FY25. It is driven by a favorable base effect, moderating inflation, and progress in agricultural activity due to an above-normal monsoon, according to an analysis by India Ratings and Research (Ind-Ra). The average real wage growth was steady at 0.7% YoY during Q1 as per data from Periodic Labour Force Survey (PLFS). The growth in real wages of casual labourers was highest at 2.4% in Q1 of financial year. Urban areas recorded a higher real wage growth of 0.7% y-o-y, compared to a 0.9% decline in rural areas in the first quarter of 2024-25. However, the wage gap between urban and rural areas has narrowed.
Clean energy capacity to rise by 2030
India’s clean energy capacity is expected to surge by 2030, driven by strategic government initiatives like the Production-Linked Incentive (PLI) scheme. Projections show significant growth in solar PV modules, wind nacelles, battery cells, and electrolyzers, though challenges remain in technological innovation and raw material acquisition. This is according to an S&P Global Commodity Insights. India is positioning itself as a leader in clean energy manufacturing. India has a commitment to reduce carbon emisisons and drive economic growth.
Government tender for 10 GW battery storage projects
The Indian government will soon invite bids for 10 Gigawatts of battery energy storage projects. The move will strengthen India’s position in the energy storage segment, which is a developing stage. India aims to boost indigenous manufacturing and reduce EV import reliance. The Ministry of Heavy Industries’ RFP targets grid-scale systems, supporting the ACC-PLI scheme’s 50 GW-hour goal and broader industry growth. The Ministry will soon come out with a 10 gigawatt RFP (request for proposal) for those who are working on the energy storage part of it for grid-scale energy storage systems. The aim is to develop indigenous capability for manufacturing of battery energy storage system compatible with advanced chemistry cells. Mittal further said that the government has allocated over 40 gigawatt-hours out of 50 gigawatts to various original equipment manufacturers (OEMs) for indigenous manufacturing of advanced chemistry cell under ACC-PLI scheme.
India to join International Energy Efficiency Hub
The Union Cabinet led by the PM approved signing of LoI, enabling India to join ‘Energy Efficiency Hub’. India will join the International Energy Efficiency Hub, a global platform dedicated to fostering collaboration and promoting energy efficiency worldwide. Established in 2020, the Hub brings together governments, international organizations and private sector entities to share knowledge, best practices and innovative solutions. By joining the Hub, India will gain access to a vast network of experts and resources, enabling it to enhance its domestic energy efficiency initiatives. As of July, 2024, sixteen countries (Argentina, Australia, Brazil, Canada, China, Denmark, the European Commission, France, Germany, Japan, Korea, Luxembourg, Russia, Saudi Arabia, the United States, and the United Kingdom) have joined the Hub.
State Govts told to meet green energy obligations
The Ministry of Power has directed States that are not following renewable purchase obligations to strictly follow their renewable consumption trajectory and meet their targets. The directive was given after it was observed that some states fell short of their targets in FY-23 and FY-24. The letter to 25 States includes Andhra Pradesh, Delhi and Gujarat. They have been urged to adhere to their renewable purchase obligations, highlighting the necessity to meet RE consumption targets. Non-compliance would invite stricter enforcement to achieve anticipated RPO targets by FY-25 and FY-30.
L&T to seek role in NASA’s success to ISS
After powering ISRO’s space missions for more than 5 decades, India’s largest engineering firm L&T has set its eyes on the International Space Station. L&T was in talks with Jeff Bezos’ Blue Origin for supplying orbital launch capabilities and space habitat solutions, but negotiations ran into some difficulties. The L&T Precision Engineering and Systems vertical hopes that when the US requires its next space station Indian firms will have a role to play in supply chain. firm was also interested in building space ports, space parks and manufacturing clusters, areas which are expected to get a boost considering the government’s opening up of the space sector for private participation in 2020.
Chennai Metro Phase 2 to have 128 stations
The Union cabinet has approved Phase 2 of the Chennai Metro Rail Project. It will consist of 3 corridors featuring a total of 128 stations along 118.9 km of new lines. The project comes with a total project completion cost of Rs 63,246 crore and is set to be completed by 2027. Once operational, Chennai will have a 173 km metro rail network. The 3 corridors in Phase 2 are Madhavram to SIPCOT, Lighthouse to Poonamallee Bypass, and Madhavram to Sholinganallur. The project will improve connectivity across major regions of Chennai, linking key areas like Madhavaram, Perambur, Sholinganallur, and the IT hub in the south. This expansion will cater to the transportation needs of the growing workforce in industrial, commercial, and IT clusters.
Humsafar Policy for facilities on National Highways
Union Minister of MoRTH launched the Humsafar Policy, aimed at enhancing essential facilities along India’s national highways. These facilities include clean toilets, baby care rooms, provisions for wheelchairs, EV charging stations, parking spaces, and dormitory services at fuel stations. The policy will also offer a convenient, safe, and enjoyable experience for highway users, while empowering entrepreneurs, generating jobs, and enhancing livelihoods for service providers. Humsafar brand will become synonymous with utmost safety and comfort for travellers and drivers along the nation’s world-class highway network.
India has potential to be a green shipbuilding hub
India has significant potential to become a hub for green shipbuilding. The government is focusing on alternative fuels and renewable energy. Investments and technology transfer from Japanese and Korean shipyards are encouraged. The aim is to upgrade shipyards and port infrastructure. India aims to be among top shipbuilding nations by 2030, and top 5 by 2047. Modernisation and upgradation of Indian shipyards is in progress, while older dockyards are being assessed for reopening and adding more capacities for green shipbuilding given a strong pickup in global demand.
Sustainable aviation fuel potential of 10 million tonnes
India could produce 8-10 million tonnes of Sustainable aviation fuel (SAF) by 2040. Investments worth $70-85 billion will be required to achieve the projected production. SAF will give impetus to aviation sector’s decarbonization efforts, reducing carbon emissions to 20-25 million tonnes annually. An 8–10 million tonnes production would surpass India’s estimated domestic demand of 4.5 million tonnes for a 15% blending mandate in 2040 across all flights. The projected capital investment of Rs 6–7 lakh crore will result in a substantial socio-economic impact, creating between 1.1 and 1.4 million jobs across the value chain and reducing crude oil import bills by $5–7 billion annually. Further, SAF production can boost farmers’ income by 10–15% by using agricultural residue as feedstock, providing a sustainable alternative to the current practice of burning.
Logistics market to expand to Rs 13 Trillion by FY-28
The National Logistics Policy, unveiled in September 2022, has set goals to optimize India’s logistics landscape. It has focused on increasing the share of railways in the freight movement (currently at 18 per cent) through the development of dedicated freight corridors (DFCs), improving road infrastructure, and expanding inland waterways. The Indian logistics market, valued at Rs. 9 trillion in FY-23, is projected to grow significantly with a CAGR of 8-9%. This growth is being fuelled by structural shifts, technological advancements, and government initiatives aimed at reducing logistics costs and improving infrastructure. The commissioning of DFCs, which are 96 per cent complete as of April 2024, is set to boost the capacity and efficiency of rail freight, increasing its share in the overall modal mix.
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.