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The deal to acquire 500 aircrafts was made with Airbus and Boeing which will allows the airline to fly to around 27 destinations in the continent.


In lines with Air India's recent deal with Boeing and Airbus, IndiGo Airlines has announced an expansion plan to extend its service to more European destinations, including Turkey. In an interview, IndiGo's international sales head Vinay Malhotra told news agency ANI that the airline has partnered with Turkish Airlines and also ordered 500 aircrafts in a bid to improve further expand to Turkey and other locations in Europe.

The deal to acquire 500 aircrafts was made with the renowned international manufacturer Airbus and Boeing which will allow the airline to fly to 27 destinations in the continent. These locations are situated in nations including the UK, France, Italy, Ireland, Austria, Switzerland along with others. In order to make this work, IndiGo made a codeshare partnership with Turkish Airlines as their flights ‘have multiple frequencies’ to these points.

“With our partnership with them as a codeshare we are able to carry passengers from India to Istanbul and from Istanbul to beyond,” Malhotra told ANI.

IndiGo's deal comes days after the Tata Group-owned Air India made a purchase of 470 passenger aircrafts from the same manufacturers along with 370 optional buys that would be procured over the next decade.

He said IndiGo currently operates around 1,800 flights daily with 10% of them on international routes. “The farthest we travel is to Turkey and Istanbul. We have been very keen to fly further and that's why a partnership with Turkish airlines,” he added.

Malhotra further announced that IndiGo will launch two new points – Nairobi and Jakarta – in near future.
 

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@Zapper et al.

Seems talks are ongoing with not just Embraer, but Sukhoi and ATR too:


I guess lets see what happens.
Investing or partnering with any Russian entity will not yield any results...they're just looking for investors who can keep their programs going and their companies afloat

We should do what China did during the collapse of Soviet Union...hire Russian engineers and pay money for full ToT including core tech/source codes
 

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Investing or partnering with any Russian entity will not yield any results...they're just looking for investors who can keep their programs going and their companies afloat

We should do what China did during the collapse of Soviet Union...hire Russian engineers and pay money for full ToT including core tech/source codes

Actually things are moving on the Sukhoi front w.r.t UAE:


We will obviously have to watch and see what materialises on that factory in the end @Philip the Arab

....but to me its clear they are not looking for just investors, given there is more movement on capital production front given geopolitics now for Russia.

China really didnt do much of what you describe w.r.t USSR collapse and then Russia. It did throw a lot of reverse-engineering teams at what it started to import from Russia in large way. Most Russian scientific RnD emigrants went to West by far and also Israel. China didn't have much money back then.... it just worked with what it had, what it could acquire and scaled it over time as its own economy and financial wherewithal grew. It wasn't really a Russian RnD ppl import country and Russia was also quite wary of it back then (though it couldn't say no to military exports in the financial state it was in).

Besides hiring any Russian RnD today (for India) in some ground up way (especially to price-point compete with other parts of world on it) is matter of are you going to get what you pay for relative to other sources. It is not really the case (esp given Russia doesnt enjoy much RnD edge in aerospace anyway now) given what India can do already and what it wants to do (and ends up being matter of finance and organisation for it).

India is best off looking at bringing actual hard capital investment and IP fineprint regarding that (and not shortcut too much here like China over-leveraged itself on and is facing blowback now on quite prematurely)....to build a coherent long term institutional trust with countries that are actually surplus on these (but will be deficit in labour this century) while taking on board the things China did well as well.

Any extra niche human resource needed will follow commensurate with that.
 

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KEY POINTS
  • Boeing’s February deal with Air India is the biggest in civil aviation history but also comes as India is seeking to bolster its profile as a defense manufacturer.
  • Last week, U.S. Secretary of Commerce Gina Raimondo traveled to India to strengthen ties with the Asian nation.
  • India’s dream of becoming the “new factory of the world” to rival U.S. geopolitical rival China won’t be without growing pains, as formidable bureaucracy, lagging infrastructure and labyrinthine red tape have all dogged foreign multinational efforts in the market historically.

The ties between American companies and India as a manufacturing and supply chain partner are getting deeper. Boeing’s recent deal with Air India is a prime example, a record-making agreement announced last month for the U.S. aerospace firm to supply India’s largest airline 220 aircraft valued at approximately $34 billion, the biggest purchase in the history of civil aviation.

The deal is Boeing’s third-largest sale of all time in dollar value, and its European rival is in on the deal as well. The monstrous 470-aircraft Air India order includes 250 Airbus passenger jets in additional to 190 737 Max aircraft, 20 of Boeing’s 787s, and 10 of its 777Xs.


It will be a test not only for the companies but for the south Asian economic giant that’s pulling out all the stops to attract foreign companies in a bid to become a global manufacturing hub as Western corporations look to unwind their dependence on China, the de facto factory of the world.

Last week, U.S. Secretary of Commerce Gina Raimondo traveled to India to strengthen ties with the Asian nation.

The Boeing deal is indicative of the wider trend among global manufacturers including Apple, Samsung and Nokia, to accelerate manufacturing in India. The deal could fortify Boeing’s plans for expanding its Indian supply chain and boost local manufacturing.

“As a company with over seven decades of presence in India, Boeing continues to support the development of indigenous aerospace and defense capabilities in the country,” Dave Schulte, commercial airplanes managing regional director of marketing for Boeing’s Asia Pacific and India region, wrote in an email. “India has many opportunities to offer, and our growth along with an increase in supplier partnerships demonstrates our efforts to progress towards an Aatmanirbhar Bharat [Self Reliant India].”

The growth of the Indian aviation industry will create further opportunities for local sourcing, skilling, and service support, he added.

India has been aggressively pitching itself as Asian alternative to Chinese manufacturing. As far back as 2014 it launched the “Make in India” campaign to raise the profile of India as a global manufacturing hub and encourage multinational companies to produce in India. However, boosting manufacturing to 25% of GDP, a key objective of the initiative, has proven elusive.

More recently, the Atmanirbhar Bharat campaign that Boeing’s Schulte referenced was launched in 2020.

“Being a global manufacturing hub is a stated policy objective of government of India,” says Amitendu Palit, an economist specializing in international trade and investment at the National University of Singapore. “Global developments that have created a shift away from China in some major markets, such as smartphone and semiconductors, are clearly areas where India expects to benefit by bringing in major segments of supply chains.”

Hurdles to becoming new factory of the world​

India’s dream of becoming the new factory of the world will have to overcome longstanding hurdles. A formidable bureaucracy, lagging infrastructure and labyrinthine red tape have forced many foreign businesses to either shun India or shutter their local operations. A lack of skilled labor and innovation, poor production quality, and a reluctance to adopt rapidly evolving technology are also seen as hindrances.

Invest India representatives declined to comment.

In a recent interview with local Indian media, Brendan Nelson, president of Boeing International, said India was a key part of aircraft maker’s supply chain ecosystem and that the company planned to significantly expand its Indian footprint.

Boeing currently has 5,000 employees and 300 suppliers in its supply chain in India. These numbers could rise meaningfully as its supplier base in India broadens, providing additional support for Boeing’s international supply chain.

“These suppliers are an integral part of our global supply base and are manufacturing and exporting systems and components for some of Boeing’s most advanced products from India to the world,” wrote Schulte.

At the recently concluded Aero India 2023, Boeing announced investments in setting up the Global Support Center and Logistics Center in India, which will also help support Boeing’s customers locally more quickly and efficiently.

Boeing has had a long standing partnership with Air India and the Tata Group. The two operate a joint venture in India called Tata Boeing Aerospace Limited (TBAL), which is closely aligned with India’s push for self reliance, co-developing integrated systems in aerospace and defense for India and other nations.

The company’s Hyderabad-based manufacturing facility recently rolled out the first batch of complex vertical fin structures for the 737 family of airplanes. The vertical fins have been made by Xi’an Aircraft Industry in China.

Boeing, Air India issues​

The partners have their internal issues to work through. Boeing, from the 737 Max to the Dreamliner, has run into inventory issues and production delays, which resulted in a surprise loss in its most recent quarter. Debt-laden Air India is in the middle of an ambitious turnaround plan under its new owner, TATA Group, the Indian conglomerate that regained ownership of the government-owned national carrier in 2021.

That’s on top of the hurdles foreign companies can expect to face in India’s accleration as a manufacturing and supply chain partner.

Apple may be on the way to 25% of iPhones made in India, from about 5%-7% Apple products currently, though not without growing pains. A recent FT report claimed Apple is running into issues with its first foray into India-based manufacturing with poor quality of products.

“Aligning domestic standards with global quality benchmarks is an ongoing process,” said Palit, who argues that the process will improve as more multinational organizations bring in their global vendors to India, “similar to the way they did for automobiles.”

“India will take two to three years to learn the ropes in these advanced fields, but they will get there,” says Vivek Wadhwa, a Silicon Valley-based entrepreneur and academic, who recently returned from a trip to India where he met with Prime Minister Narendra Modi and Ratan Tata, CEO of Tata Group.

The advantages that China has built over the years in scale and speed of production will be difficult for India to reproduce any time soon. China also benefits from regional support that India can’t recreate. “A neighborhood” of industrially complementary and capable countries including Taiwan, Hong Kong, Japan, Korea and Southeast Asia, is a notable advantage, Palit said. For India, “its neighboring South Asian region remains industrially underdeveloped, except for some sectors such as garments,” he said.

India GDP to surpass China​

Regional industrial growth could be critical for realizing India’s aspirations to grow into a global manufacturing hub, and India’s potential is undeniable. The International Monetary Fund’s forecast for India’s GDP growth stands at 6.1%, far outpacing China’s 4.4% rise, in 2023. Further, India is projected to leapfrog Germany and Japan to become the world’s third-largest economy over the next decade, and become a $10 trillion economy by 2035, per a Centre for Economics and Business Research report.

But to be able to effectively tap the local consumer market, foreign businesses need strong relationships in place through local manufacturing to ultimately benefit on the consumer side.

“An essential condition for foreign businesses to succeed in India, particularly manufacturing, is to have capable local partners,” Palit said. “Licensing arrangements can be successfully upgraded to joint ventures with the eventual objective of building in India.”

That’s exactly the strategy Apple and Boeing, among many others, have adopted in India. By setting up manufacturing plants and producing for global markets, these companies have been able to achieve a sweet spot: cheaper manufacturing and an abundance of middle class, upwardly mobile consumer to sell their products and services to.

“It is only a matter of time before tensions with China rise to the point that companies will be forced to move manufacturing out,” Wadhwa said. “India is the best alternative.”

This effort is as crucial to Boeing as any firm, which hopes to capture India’s burgeoning but underserved aviation market. As a revitalized Air India guns for the top spot in regional aviation and goes toe-to-toe with its Middle Eastern rivals to win back flyers on international long-haul routes, India may increasingly become a critical component of Boeing’s global manufacturing map and its path to profitability.

“India will become the world’s third largest commercial aviation market over the next 10 years, and will receive more than 90% of all airplanes delivered to South Asia in the next 20 years,” Schulte said. “The Air India order can enable a ripple effect throughout the economy, supporting job creation and improved economic growth.”
 

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NEW DELHI: Apple Inc is seeking changes in India’s labor laws as part of its effort to expand local production, and regional governments are yielding to its request as they are eager to snatch iPhone assembly from China.

Tamil Nadu state, where Apple’s top supplier Foxconn Technology Group operates the nation’s largest iPhone plant, is considering passing new rules that will make factory shifts more flexible, people familiar with the matter said.

Executives from Apple and the Indian Cellular and Electronics Association lobby group — which represents the US company as well its suppliers such as Foxconn, Pegatron Corp and Wistron Corp — met with state government officials over six months to push for the reforms, the people said, asking not to be named as the discussions were private. The planned changes would bring local working hours on par with the iPhone factories in China, they said.

The moves are part of Apple’s effort to shift more production away from China to countries including India. Prime Minister Narendra Modi’s local manufacturing push, financial incentives and India’s relatively cheaper labor have led Foxconn, Pegatron and Wistron to ramp up in the South Asian nation.

Representatives for Apple, Foxconn and the Tamil Nadu government didn’t immediately respond to requests for comment. Pegatron and Wistron representatives declined to comment.

“India wants to have global brands like Apple make the country a home for manufacturing and research and development,” India’s deputy technology minister Rajeev Chandrasekhar told Bloomberg News. “The federal government is liaising closely with states to develop competitive policies such as the labor, logistics and infrastructure, which will help accelerate the shift of electronics supply chain to India.”
Labor law reforms in India are rare, and the country’s willingness to now accommodate Apple underscores how badly it wants to become an electronics manufacturing hub. The suggested changes include allowing more overtime and permitting factories to operate two shifts of 12 hours each, instead of the previous three shifts that each went on for eight hours.

The envisioned changes could also encourage more women to work in factories. By having more flexible shifts, women could avoid commuting on night buses — often seen as an unsafe option. Apple and its suppliers are also in talks to build large working women’s hostels in and around factory complexes, which would reduce travel time, two of the people said.

Foxconn, Pegatron and Wistron together employ nearly 60,000 workers in India. A significant part of that number are women, aged between 19 and 24.

“In electronics manufacturing, thanks to the hygienic environment and the roles in the units, women are a natural fit,” ICEA said in the 36-page recommendation document it submitted to the Tamil Nadu government, which was seen by Bloomberg News. “Women have superior manual dexterity, which is necessary for high-precision electronics assembly.”

The state of Karnataka, which houses Wistron’s iPhone plant and where Foxconn is set to build a new $700 million facility, passed legislation in recent weeks to allow for labor rule changes. Financial Times earlier reported about Apple’s lobbying in the state.

Other Indian states such as Andhra Pradesh, Gujarat and Uttar Pradesh, home to Samsung Electronics Co’s smartphone factory, will also possibly follow Karnataka and Tamil Nadu, two of the people told Bloomberg News.
 

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Hyderabad, 29 March 2023 – Airbus has awarded a contract to Tata Advanced Systems Ltd. (TASL) to manufacture cargo and bulk cargo doors of the A320neo aircraft family. The contract is a significant step towards increasing Airbus' competitiveness in the single-aisle aircraft market and supporting the ramp-up of the A320 programme.

TASL will produce these doors at a new facility in Hyderabad using cutting-edge robotics and automation technology. Each shipset will include two cargo doors and one bulk cargo door. The contract was signed by Olivier Cauquil, SVP Aerostructure Procurement, Airbus, and Masood Hussainy, VP & HO Aerostructure & Aero-Engines, Tata Advanced Systems Ltd., at Hyderabad on March 29, 2023.

"When it comes to supporting the development of India’s industrial capacities, Airbus is walking the talk. The latest contract underlines our continued commitment to ‘Make-in-India’ for an AatmaNirbhar Bharat (self-reliant India),” said Rémi Maillard, President and Managing Director, Airbus India and South Asia.

“In TASL, we have a most trusted and able partner that will support the ramp-up of our A320neo family aircraft that has been the poster child of democratisation and transformation of India's aviation sector. We will continue to grow our industrial footprint and the aviation and aerospace ecosystem at a fast pace in India.”

Commenting on winning this contract, Sukaran Singh, Managing Director and Chief Executive Officer, Tata Advanced Systems Ltd. said, “We have an ongoing relationship with Airbus based on trust and operational excellence, and this new contract win will further bolster our partnership in aerospace manufacturing in India.”

Airbus presently procures components and services worth $735 million every year from more than 100 Indian suppliers. Today, every Airbus commercial aircraft and every Airbus helicopter has critical technologies and systems designed, manufactured and maintained in India.

In addition, Airbus will build the C295 military aircraft Final Assembly Line (FAL) with TASL in Gujarat, the first concrete, large-scale Make-in-India manufacturing aerospace programme in the private sector. The programme will unlock the potential for cutting-edge design, component manufacturing, aircraft assembly and services capabilities across the value chain, fully addressing the Government of India’s stated ambition of an ‘AatmaNirbhar Bharat’ (self-reliant India) in defence manufacturing.

Together with our supply chain, Airbus supports nearly 10,000 jobs in India today. By 2025, this number should rise to about 15,000. On top of this, the C295 military aircraft programme will lead to the creation of 25,000 direct and indirect jobs over 10 years.
 

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Synopsis

Apple is exploring ways to reduce its reliance on China as tensions between Washington and Beijing continue to escalate. Its longtime partners, who make most of the world’s iPhones from sprawling factories in China, have added assembly lines at a rapid pace over the past year. The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology Group to Pegatron Corp

Apple may soon fix this iPhone 14 Pro display issue affecting some users


Apple Inc. assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena after accelerating a move beyond China.

The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology Group to Pegatron Corp., people familiar with the matter said. That’s a significant leap for India, which accounted for an estimated 1% of the world’s iPhones in 2021.

Apple is exploring ways to reduce its reliance on China as tensions between Washington and Beijing continue to escalate. Its longtime partners, who make most of the world’s iPhones from sprawling factories in China, have added assembly lines at a rapid pace over the past year, the people said, declining to be named as the information isn’t public.

The world’s most valuable company struggled last year with chaos at Foxconn’s main “iPhone City” complex in Zhengzhou, which drove home vulnerabilities in Apple’s supply chain and forced it to cut output estimates. At the same time, Indian Prime Minister Narendra Modi has dished out a spate of incentives to boost local manufacturing.

Of the total production, Apple exported $5 billion of iPhones in the year ended March 2023, nearly four times as much as the previous period, the people said. Apple will likely try to manufacture the next iPhones in India at the same time as in China, sometime in the fall of 2023. If so, that will be the first time that iPhone assembly begins concurrently in the two countries. And if the aggressive expansion of its suppliers continues, Apple could assemble a quarter of all its iPhones in India by 2025. Representatives for the US company declined to comment.

(More at link)
 

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The Indian mining conglomerate Vedanta, led by Anil Agarwal, which is keen to enter the semiconductor space, has finally put the jigsaw puzzle together. The Vedanta-Foxconn joint venture for semiconductor manufacturing has finally closed on a technology partner and has access to manufacturing-grade high-volume technology, the senior officials of Vedanta semiconductor business told Business Today.

The government of India has announced a financial incentive of Rs 76,000 crore for setting up semiconductor and display manufacturing in the country. One of the prerequisites for the project approval and qualifying for the semiconductor incentive was to have a license-grade semiconductor technology manufacturer with sufficient experience in chip manufacturing.

According to the information accessible to Business Today, India Semiconductor Mission had asked Vedanta-Foxconn JV to furnish more details about the technology partner, which just recently the company had adhered to. In the Vedanta-Foxconn JV, the latter is responsible for delivering the technology partner.

“The JV has locked in the technology transfer. And once we execute it, and post the approval, we'll definitely be happy to reveal it. India Semiconductor Mission has the document,” said Akarsh Hebbar, global MD of Vedanta’s semiconductor and display business.

Semiconductor veteran David Reed, who recently joined as the CEO of Vedanta-Foxconn Semiconductors Limited, said, “We do have now access to a manufacturable grade, high volume technology. We have access to all the documentation and design IP, and it can support industrial and especially automotive. We can't go into details - who it is. But we've already started the transfer process.”

Recently, Reed was in Taiwan for two weeks to review the details personally. “It's bonafide high volume, 40-nanometer production-grade technology," he told BT.

Acknowledging the government as the biggest stakeholder, Hebbar says the government is making sure they are doing the due diligence by asking the right questions, expecting those answers and then working on it.

Understanding the delay in the approval process, Hebbar added: “Timeline-wise, this is not a fire project. It's 10 to 15 years project. China has been working on it for 30 years and is still trying to figure out the semiconductor space. So, when we take the lead, which we will, we must hit the ground running. That's why we're working on all fronts. We're not just waiting for the approval, and we're just trying to make sure that we're working on all fronts and hitting the ground running. The approval will showcase to the world that this subsidy is needed, and the first company is doing this, and then other companies can follow suit.”

As India Semiconductor Mission evaluates the document, Vedanta officials hope to receive a response on the application in the next couple of months. Even though the India Semiconductor Mission is yet to approve the application, Vedanta has already shortlisted Prime Minister Narendra Modi’s home state, Gujrat, for setting up its semiconductor and display fab and progressing with its plan.
 

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Might be double posting, my reply from the Turkish Economy & Updates thread:


The JV doesn‘t look promising. Vedanta is a mining & metal company, Foxconn an electronics contract manufacturer: both without chip fab expertise. They tried to get European STMicro with licensed 40 nm tech on board … sceptical if this might be a scheme to grab Indian gov subsidies.

And Terry Gou, the batshit crazy Foxconn CEO is a rabid Korea- and Samsung-hater, hahaha. Once he bought ailing Japanese Sharp to beat Samsung in the display market. National Chinese right-wing extremist in bed with mainland CCP.

David Reed might be an experienced semicon veteran, but he can‘t do the heavy lifting alone. Got to hire hundreds of high profile, top earning chip facility process experts. Any country trying to jump on the semicon bullet train needs billions of $$$.
 

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Might be double posting, my reply from the Turkish Economy & Updates thread:


The JV doesn‘t look promising. Vedanta is a mining & metal company, Foxconn an electronics contract manufacturer: both without chip fab expertise. They tried to get European STMicro with licensed 40 nm tech on board … sceptical if this might be a scheme to grab Indian gov subsidies.

And Terry Gou, the batshit crazy Foxconn CEO is a rabid Korea- and Samsung-hater, hahaha. Once he bought ailing Japanese Sharp to beat Samsung in the display market. National Chinese right-wing extremist in bed with mainland CCP.

David Reed might be an experienced semicon veteran, but he can‘t do the heavy lifting alone. Got to hire hundreds of high profile, top earning chip facility process experts. Any country trying to jump on the semicon bullet train needs billions of $$$.

It will come with time, you dont hire all those guys this early in the process and have them sit around.

I don't think "billions of dollars" is really an issue compared to Turkiye.

India has a market cap total of 3.2 trillion USD.

Its venture capital is active....unicorn formation and all the rest commensurate to this.

It is approaching international patent grant of around 10k per year (augmenting by around 1000 a year iirc).

Its forex level is around 600 billion USD

It doesn't run an inflation rate somewhere close to 100%....but rather well within 10% range in today's world.

There is also the strategic impetus from the US-India semiconductor strategy going forward.

The ratio math can be scaled for other countries to show the challenges for them in this sector, if its a challenge for India is what my earlier point was.

Anyway right now the contours are being set, the important thing of relevance is they got someone like David Reed to bring experience at the top level (a development I seemed to have missed as I lost track of this stuff from last year), which shows there is credible importance being attached compared to earlier:


The Vedanta-Foxconn joint venture for manufacturing semiconductors has shared details of the technology partners it has onboarded so far with the government, a senior Vedanta executive told ET.

Of the two partners, Foxconn is responsible for bringing in technology partners, and the JV will enable more licences as needed, said Akarsh Hebbar, managing director of the company’s global display and semiconductor business.

“There will be a bunch of technology. Most of it is in Foxconn and we will start enabling more licenses as needed. We do not believe we need a third equity partner as much as we need parts. Whatever help we need from others, we will add to that,” Hebbar said.

Vedanta will be taking the lead on the construction of the factory in Gujarat. The company intends to start generating revenue from the semiconductor unit by 2027, he said.

With Foxconn taking the lead on bringing in technology partners, the JV has full access to a “world-class manufacturable, high-volume, automotive-grade technology”, Vedanta Foxconn Semiconductors chief executive David Reed said.

“The intent is to reduce the risk with this technology from Foxconn. The other part of reducing the risk is Foxconn has experience with these large mega projects … building an ecosystem, not only the infrastructure, the supplier but also the social side,” Reed said.


The plan is to start manufacturing chips of 40 nm (nanometres) on a factory line with a capacity of 40,000 wafers per month. The pilot for the project will start with 5,000 wafers per month, which will then be grown slowly to the maximum capacity of 40,000 wafers, Reed said, adding that the Vedanta-Foxconn combine would then start manufacturing the 28 nm chips.


The Vedanta-Foxconn consortium is one of the five applicants seeking government incentives under a $10-billion package announced in December 2021 to promote domestic semiconductor manufacturing. The government is committed to footing 50% of the project cost, along with providing other incentives.

Vedanta, which has tied up with iPhone’s contract manufacturer Foxconn to set up the semiconductor manufacturing unit at Dholera in Gujarat, has announced plans to invest up to Rs 66,000 crore in the facility. Overall, the Vedanta-Foxconn JV had announced it will invest Rs 1.54 lakh crore, in a 63:37 ratio, to set up display and semiconductor fabrication units.


 

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Top U.S Memory Chipmaker Micron Likely To Secure Approval To Set Up A $1-billion ATMP-focussed Semiconductor Unit In India​

bySwarajya Staff-Apr 25, 2023 12:52 PM +05:30 IST

image_gallery_high_res_singapore.jpg

Leading U.S. memory chip maker Micron Technology is in advanced stage of closing a deal to invest $1 billion for setting up an assembly, testing, marking and packaging (ATMP) facility in India, Business Standard reported.

“Yes, we are close to approving the proposal,” Business Standard quoted a top government official as saying.

In response to earlier media reports on setting up ATMP facility in India, a spokesperson for Micron said: “Micron continues to evaluate opportunities for potential future assembly and test project options needed to meet long-term memory demand. We have not made any decisions regarding the timing or scope of any expansion plans.”

Micron currently has global manufacturing footprint and R&D network that spans 13 countries. It operates manufacturing facilities in U.S., Taiwan, Japan and Singapore, and it operates chip packing facilities in China and Malaysia.

Taiwan serves as the production hub for Micron as the memory chip supplier at present operates A1 and A2 plants with a back-end packaging and testing site in Taoyuan City.

Micron Technology is among handful of semiconductor manufacturers with the capability to produce DRAM (Dynamic random access memory, a specific type of RAM chips). It holds 23% global market share. Samsung is dominant player with 41.7% share and is followed by SK Hynix Inc. (30%).

2017_nvdimm.jpg

Micron Technology also holds around 12% market share in NAND flash memory technologies.

Both DRAM and flash memory chips are essential to smartphones, data centers, computers, cars and myriad other items.

Memory and storage forms significant portion of the global semiconductor industry, and represents approximately 30% of the $460 billion semiconductor industry

$150 Billion Investment Plan To Build New Fabs

In October 2021, Micron announced that it plans to invest more than $150 billion globally over the next decade in cutting-edge memory chip manufacturing and research and development (R&D), including fab expansion plans in U.S.

"Memory is at the leading edge of semiconductor manufacturing and fuels everything from feature-rich 5G smartphones to the AI-enabled cloud," Micron President and CEO Sanjay Mehrotra said while unveiling the company's capex plans.

Micron has however has faced headwinds recently with fall in average selling prices for memories. Micron has curtailed its output and is looking to lay off 10 percent of its staff during 2023

India's Semiconductor Ambitions

Under the India Semiconductor Mission, the government has announced it will extend a fiscal support of 50% of the capital expenditure on pari-passu basis for setting up of compound semiconductors / Silicon Photonics (SiPh) / sensors (including MEMS) fab, discrete semiconductor fabs and semiconductor ATMP / OSAT (Outsourced Semiconductor Assembly) facilities in India.

In its quest to achieve a certain degree of self-sufficiency in semiconductor manufacturing, India is hoping to establish both commercial chip fabrication industries (fabs) as well as chip packaging industries (OSAT/ATMP).

Even though of relatively lesser value add compared to fabs, OSAT/ATMP units requires lower investment and can be operationalised quickly.

Unlike a full-fledged fab, which requires a design company to give them orders, ATMP players, which make their own wafers, can sell directly to customers.

 

Nilgiri

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The United Nations estimates that India has now surpassed China as the world’s most populous country — or, as we colloquially say, the world’s “largest” country.



Obviously, crossing this threshold doesn’t mean much in practical terms. Being a tiny bit bigger than China doesn’t really change anything, and India has just about as many people as it did a year ago. But the flurry of news stories accompanying the event is a wake-up call for the world: India has arrived on the world stage, in a big way.

What does that mean? Well, a whole lot of stuff. More stuff than I can summarize or even mention in a single blog post. There was a quote attributed to Napoleon two centuries ago: “Let China sleep, for when she wakes, she will shake the world.” Well, China did wake up, and the world has been shaken. The whole economic landscape of the planet, the geopolitical balance of power, and even the Earth’s environment have been irrevocably changed in the last three decades by the addition of 1.4 billion human beings to the ranks of the (more or less) developed world. Now India brings another 1.4 billion, eager to join those ranks. Get used to seeing a lot more graphs with this basic format:



India’s population is also much younger. As The Economist recently reported, China’s population is concentrated in the 30-60 age range, while India’s people are mostly between 0 and 40:



Source: UN via The Economist
This is world-shaking not just because of the sheer numbers of people involved, but because of the prospects that those 1.4 billion will become key contributors to the global economy and key actors on the stage of global politics, as China’s have.

India has always been there. The difference is that the world can no longer choose to ignore it.

India’s growth has been truly spectacular

India’s economic rise tends to get overshadowed by China’s. There are a number of reasons for this, but the simplest one is that India started its period of rapid growth about 10 years later, and has grown at around 7% rather than the 10% that China mustered for decades. But that 7% growth adds up, and in terms of living standards, India as of 2019 was about where China was 12 years earlier, on the eve of the global financial crisis:



(The same is true when you look at GDP per capita at market exchange rates instead of at purchasing power parity.)

In 2007 it was already clear that China was a big deal, and in 2023 it should already be clear that India is a big deal.

The first and most important consequence of this spectacular economic growth is that India, a country once famed for its desperate poverty, has made enormous strides in lifting up its poorest people. The most optimistic estimates, from the World Poverty Clock, predicted in 2018 that India would almost totally eliminate extreme poverty by 2022. More realistic recent estimates from the World Bank — taking Covid into account, and using better data — still conclude that poverty reduction has been spectacular. Here’s a graph through 2019:



Nor is it pure unfettered capitalism that has produced this result — even the libertarian Cato Institute admits that government transfers have played a key role in spreading India’s burgeoning wealth to the least fortunate.

Now, it’s an open question as to whether this rapid growth can continue. Unlike China, India has grown to its current level without industrializing — that is, without increasing manufacturing’s share of the economy. In a (long) recent post, I wrote about the prospects for India to turn this situation around and become another “workshop of the world”:

Can India industrialize?

NOAH SMITH
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FEB 6
Can India industrialize?


And so my series of posts on developing-country industrialization comes to an end. There will be one more post linking to all the others (update: here it is), but the last country I’m going to look at is India. And I saved it for last because it’s the most important one.

Read full story

I won’t rehash that post here, but basically, I think India has most of the raw ingredients necessary to industrialize. In particular, it has built an impressive amount of infrastructure in recent years, and is building much more, shoring up a key longstanding weakness:



Source: Center for Monitoring Indian Economy, via The Economist
In addition to a huge number of new highways, India also has a bunch of nice new trains. Here’s what an Indian train looks like now:



"Vizag-Secunderabad Vande Bharat Express" by Sameer2905, CC BY-SA 4.0

And high-speed rail is being built, using the same trains as Japan’s shinkansen. The India of unreliable slow trains and dirt roads is rapidly vanishing into history.

Access to tap water has also improved rapidly.

If India has one remaining weakness, it’s education. I believe that eventually the government will prioritize education the same way it has prioritized building roads and trains.

Not everyone shares my optimism. A spokesperson for the Chinese foreign ministry, reacting to the news that India had the world’s largest population, recently sniffed that “Population dividend does not depend on quantity but also quality” — not the most diplomatic of statements, to say the least. In the West, those on the political Left have a curious tendency to downplay India’s growth and pooh-pooh its future chances. It is up to India’s leaders to prove these naysayers wrong.

But I am reasonably confident that they will, and the reason for my confidence has nothing to do with willful optimism or a mystical faith in the effectiveness of India’s people and India’s government. The reason is called “agglomeration effects”.


India as production platform and a market opportunity

Agglomeration effects are pretty simple to understand. Companies want to be located close to their customers, workers, and suppliers. People — who are both workers and customers — want to be located close to their employers and to the companies that sell them stuff. And financial capital wants to send money to where companies are locating their factories and offices. Taken all together, these effects are a powerful reason that cities exist, and that economic activity clusters in certain countries. When you add in clustering effects — the tendency of companies in the same industry to locate nearby to each other — the effect on the concentration becomes even more powerful.

Agglomeration in a particular region tends to have a “break point”, where a rapid snowballing of economic growth suddenly comes into effect. This explains why Asia’s growth in general has looked unstoppable in recent decades — the region has become the workshop of the world. And India is part of that region.



Source: Ken Myers

With production costs no longer low in China and geopolitical risk rising, multinational companies are going to be looking for alternative places to put their factories and offices. And those alternatives are likely to be in other parts of Asia, rather than in Latin America or Africa or elsewhere, in order to be close to existing supply chains and manufacturing expertise and sources of capital. And India is really the only other part of Asia whose sheer scale has any hope of matching that of China.

Multinational companies are already starting to realize that. There’s a psychological barrier to break through — executives and managers are very used to putting factories in China, and very unused to the idea that they could put factories in India. But that barrier is now being broken, thanks to the world’s top global electronics company. Apple is starting to bet big on India, shifting production of a variety of products. In 2021, only 1% of iPhones were made in India; two years later, it’s approaching 7%, with a planned increase to 40-45%. Other companies are likely to follow in Apple’s footsteps; after all, if Tim Cook thinks India is a good place to make electronics, who are you to disagree?

But Apple has more reasons to invest in India than cheap costs and geopolitical stability. It’s being drawn in by the increasingly vast opportunity of India’s domestic market. IPhones have a very small market share in India right now, but it’s rising rapidly; it’s no accident that even as Apple opens factories in India, it’s also opening new stores. Having the country as a production base will make it much easier to sell to a billion new customers.

A billion new customers. Fifteen years ago, those were the words that made Western managers and executives drool over the opportunity to invest in China, and it’s a big part of the reason why companies stay there. Now India represents an equally big opportunity.

Equally big, or maybe even bigger. Unlike China, India doesn’t mount a massive government campaign to copy (or steal) the technology of multinational companies that invest there, then transfer that technology to state-supported domestic champions. And although India has plenty of regulation, it doesn’t have China-like arbitrary state control that reaches into every economic sector in ways that are difficult for multinational companies to anticipate.

This is the essence of agglomeration, and it’s why the effect often seems like an unstoppable snowball. Companies get both workers and customers when they invest in a country. And the more workers they (collectively) employ there, the more local incomes rise, so the more tempting the local market becomes.

Of course, agglomeration can always use a bit of a push getting started. The Indian government is now making a big push to facilitate manufacturing FDI. Those incentives themselves might end up being the ones that work, or they might not, but they show that the government is thinking along the right lines .

Anyway, I don’t know if this sort of agglomeration can ultimately take India as far as it has taken China. But it’s the main reason why I’m optimistic that the Indian economy has a lot more room to run. Nor am I the only one who’s thinking along these lines — see this recent rundown by Kai Schultz and Vrishti Beniwal.

Basically, if you’re an executive or manager at a company in the U.S. or Germany or France, you need to be thinking about India now, because you know that lots of other people are thinking about India. Before, an “India strategy” was purely optional; someday soon, it may be mandatory.

It’s India’s internet now

India’s economic rise will give it greater military power and geopolitical clout on the world stage. It’s not yet one of the “poles” of the emerging multipolar world order, but if it can keep economic growth humming for another decade or two, it will be. A huge amount has been written about that, so I won’t recap it here. Instead I’ll point out another way that India will become more important to global life: culture and the internet.

India is going to be much more important than China in this regard. China should have taken over the global internet when it brought over a billion people online, but it didn’t; the country’s Great Firewall cuts off most of its population from daily discourse with the outside world. As a result, China has, to a large degree, been a silent superpower. Even as it became more important to businesses, regular people outside the country never really had a sense of what went on there, or what regular Chinese people were like.

India is very, very different. Despite a few instances of internet censorship, it has nothing like the Great Firewall. There’s also much less of a language barrier with the U.S., given how many Indian people speak English. And in just the last few years, an absolutely staggering percent of the country has gotten internet access. Here’s data from 2020:



In fact, even that data is out of date; as of 2023 there are probably over 750 million Indians online — almost three times the number in the U.S. The ever-excellent “Science is Strategic” Twitter account has a great thread with a number of other statistics illustrating the awesome size and speed of this shift.

For anyone on Twitter or in the blogosphere, the change has been very noticeable, and I would bet that something similar is happening on Reddit and elsewhere. Suddenly, a lot more of the audience is Indian, and that’s only going to be more true over time.

That means that Americans are going to understand — and are going to have to understand — a lot more about Indian political and social and cultural attitudes than we currently do. I actually think we’re very well-positioned to do this. Unlike folks in Britain and the Anglosphere, Americans have no history of colonizing India, so we won’t be able to fall back on old prejudices and stereotypes and outdated tropes. Most Americans’ only contact with Indians comes via the recent immigrants who run our big companies, do our brain surgery, make our software, and so on. If Americans have a stereotype of Indians, it’s one of economic success.

But even so, we have our work cut out for us. Indian politics, for example, is very confusing for Americans. For example, in my experience most Americans don’t know quite what to make of the country’s prime minister, Narendra Modi. Modi is extremely beloved in India — he’s currently by far the most popular democratically elected leader in Morning Consult’s global tracking polls:



Source: Morning Consult

But why? Is it because of all that infrastructure he’s building? Is it because he gave out all those subsidies to the poor during Covid, or improved sanitation? Or is it because of culture war issues? Do most Indians support “Hindutva”? What the heck is “Hindutva” anyway? Is Modi a bigot and/or an autocrat, as some writers and publications allege? Or is he a cosmopolitan modernizer, seeking to erase old caste boundaries, as some of my acquaintances in the tech world assert? Do I need to have a position on Aurangzeb?

Here is the world’s tallest statue, the Statue of Unity in Gujarat, four times as tall as the Statue of Liberty:



By Pradeep717 - Own work, CC BY-SA 4.0,

How many Americans know who Vallabhbhai Patel even was?

Americans have never been very good at knowing things like this; we are basically completely ignorant of the politics of Asian countries, and we pretend we understand European politics by applying a standard left/right lens that often proves wholly inadequate to the task. In a sense we’ve never had to be very good at understanding other countries’ politics, because we were bigger by far than any of the other countries in the community of rich democratic nations, and certainly in the English-speaking world. China might have forced us to understand it, but instead they put up a wall around their society. India has no such wall, and for the first time, Americans will not demographically dominate the internet.

Overall I think this will be a healthy thing for us. We Americans have persisted too long in thinking that America was the world. India will force us out of our provincial ignorance a bit, and remind us that we’re actually just a medium-sized country on a big big planet.

And of course America will change India too. The more money Indian people get, the more they’ll be able to spend on American cultural products — Hollywood movies, American pop music, Netflix, and so on. China is now pushing those products out of its market, but India, with its more open society, is unlikely to do so. And the Indian people talking to Americans on the internet will learn a lot about the U.S. as well.

Between economic linkages and cultural exchanges, I see the possible emergence of “Indiamerica” — a more deep and comprehensive societal integration than “Chimerica” ever was. The chances of that will be boosted, of course, if the U.S. keeps taking in Indian immigrants on a large scale. Nor do I think those influences will be limited to the U.S.; India might form similar bilateral relationships with other countries like Japan, Indonesia, Vietnam, and lots of other countries. When a country has 1.4 billion people, a booming economy, and an open society, there’s really very little limit to its potential influence.

I admit that I don’t yet know what all the results of India’s rise will be. But I feel that it has to be something to celebrate — not just because it means hundreds of millions of human beings released from desperate poverty, but because it means a richer world. Economically richer, yes, but also culturally richer, politically more multipolar. It will be a world where power and wealth and global mindshare is no longer monopolized by the powers that carved out empires in the 19th century. If the human race is to flourish on this planet, India’s rise had to happen. So let’s simply welcome it.
 

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