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Chinese Tech Giants Export India-Made Electronics to Global Markets
Equities, Markets - February 3, 2025

Budget 2025: Aims to expand domestic production in electronics industry with help of tariffs relief

Budget 2025: Aims to expand domestic production in electronics industry with help of tariffs relief

Budget 2025 emphasizes on boosting the progress of the electronics industry in India at global level. The Indian Ministry of Electronics and Information Technology is given more than Rs. 26,000 crore of fund allocation which is about 48 percent of growth in fund allocations. It aims to expand production of electronics and semiconductors in India. The government of India announced relief in import duties on some of the important components used for producing smart LED TVs, mobile phones, and other electronic gadgets. To become an international manufacturing hub in the world, India sets up the goal of growth of 500 billion dollars in Indian electronics manufacturing over the year 2030.

Performance of Electronics Industry in India
The Economic Survey of India for the financial year 2024-2025 states that the Indian electronics market shares in the international market is only 4 percent. The Indian electronics market majorly concentrates on assembly. It has made only small developments in component manufacturing and designing.

Despite this, the electronics industry in India was able to make significant progress in reduction of imports, and expansion of exports and domestic production in the country. In the previous 10 years, it was able to increase domestic production to about Rs. 9.52 lakh crore in the financial year 2024 which is an upward trend from the earlier domestic production of Rs. 1.90 lakh crore in the financial year 2015. Apart from this, India has successfully limited its reliance on other countries for smartphones by achieving around 99 percent of production at domestic level.

The main reasons for this strong growth is availability of skilled workforce, cost of labour is low, and also existence of a big market at domestic level. Along with this, the number of incentives, Production linked incentive (PLI), easing of business activities, development of infrastructure, and projects like Digital India and Make in India have helped in encouraging foreign investment and spurring growth in manufacturing at domestic level.

Measures taken by Budget 2025
The budget 2025 pointed out reforms in tariffs for some important electronics materials and components. Its aim is to make India’s electronics industry cost structure effective and efficient in the market. It will result in encouraging domestic production, expansion in investment and more use of materials and components which are produced in the Indian markets only.

Measures taken to promote domestic manufacturing of mobile phones
To encourage manufacturing of mobile phones in India, the actions taken by government of India is to eliminate earlier basic customs duty (BCD) which accounts to 2.5 percent on components used for making mobile phones such as wired headsets, fingerprint reader and scanners, printed circuit board assembly (PCBA), USB cables, camera modules, microphones, and connectors. Now these components are duty-free. It will lead to lower prices of the mobile phones supported by measures taken by the government to increase disposable income of the people.

Apart from this, open cells which are crucial for the production of TV panels like LCD and LED are also made duty-free by the Budget 2025. It is anticipated to give advantage to both manufacturers and consumers in the market due to contraction in the cost of production.

Measures taken to boost electric vehicles segment
For the production of electric vehicles and mobile phones, lithium-ion batteries are one of the crucial elements. To make lithium-ion batteries, materials such as scrap of lithium-ion batteries, cobalt power, and some 12 important minerals are used. Finance ministry of India made a public statement of making these materials duty-free. In the list of no duty, the number of capital goods for production of batteries of mobile phones and electric vehicles are added 28 and 35 capital goods more, respectively. It aims to promote manufacturing of batteries at domestic level in order to achieve the goal for becoming a global hub in areas of manufacturing of electric vehicles and mobile phones as well.

Steps taken to address issue of inverted tariff structure
India faced the issue of high custom duties on importing of components used for production which is higher than duties on finished commodities. The Finance ministry took measures to raise custom duty on components such as interactive flat panel displays to around 20 percent, which was earlier 10 percent.

Measures taken to promote semiconductors
The fund allocation in the budget 2025 for promoting display and semiconductors production in India is about Rs. 7,000 crore in the upcoming financial year compared to previous financial years’ allocation of Rs. 3,816.47 crore. It has also increased the allocation of funds twice which accounts to Rs. 2,499.96 crore. The budget has also raised funds to establish facilities for creation of silicon photonics, compound semiconductors, sensor fab, and other equiment related to semiconductors and to estabilish units like OSAT and ATMP. For this purpose, fund allocation was expanded to about 56 percent which accounts to Rs. 3,900 crore in the upcoming financial year compared to Rs. 2,500 crore in the financial year 2025. It will provide support to the semiconductor projects going on in Dholera by TATA and in Sanand by Micron.

Outlook of Electronics Industry in India
In present times, India is considered as the second biggest producer of mobile phones in the world. Companies like Samsung and Apple share in the mobile phones market in India is about 22 percent and 23 percent, respectively.

The programs like national manufacturing mission, contraction in various tariffs on crucial components used for electric vehicles and other electronics goods will lead to expansion in foreign investment, reasonable prices for consumers segment and expansion in domestic productivity of the country.

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Interest Payment Burden to reduce in FY26
Equities, Markets - February 1, 2025

Interest Payment Burden to reduce in FY26

Interest Payment Burden to reduce in FY26

Overview
The fact that the central government’s market borrowings result in unproductive interest payments accounting for a significant portion of its revenue has long been a source of criticism. In addition to high interest rates, previous fiscal mismanagement has plagued the exchequer and kept the central government’s interest outflow high.

Interest Payment over the years
In the last ten years, interest payments have made up 25% of all expenses. From 23% in FY20 to 24% in FY25, this load grew gradually. In FY25, interest payments are projected to account for 31% of revenue expenditures, a significant increase from FY20’s 27%.

Despite a dramatic decline in borrowing costs due to the steep decline in bond yields, the interest burden increased during the pandemic years. The primary cause is the increase in the government’s overall borrowing. Reducing gross borrowing has been difficult since it doubled in FY21, the year of the pandemic. Even though the fiscal deficit may decrease, most analysts predict that the total market borrowing for FY25 would stay around Rs 15.51 trillion.

This is due to the fact that market borrowings account for the majority of the government’s deficit funding, with the remainder coming from its different savings plans. Its primary source of funding to close the fiscal shortfall is the bond market. The magnitude of the government’s borrowing may keep interest payments high even though bond yields are predicted to be stable and even decline over the course of the upcoming fiscal year. Additionally, previous borrowings were more expensive, which raises the overall interest expense. Any benefit from FY26’s lower borrowing costs may be slight and primarily available in subsequent fiscal years rather than right away. Keep in mind that long-term bonds are how the government borrows money.

Solutions to managing interest payments
For interest payments to be less than 20%, gradual reduction in market borrowing, which would require the government to strengthen its alternative funding sources would be necessary. The plan would specifically need to improve its small savings schedules. Of course, it may also reduce its expenditures by increasing its efficiency.

Last Financial Year Scenario
According to a senior government source, the federal government’s interest payout is anticipated to increase by 11–12% in the upcoming fiscal year compared to the current fiscal 2024. An estimated Rs 10.80 lakh crore, or roughly 24% of the financial year’s budgeted expenses, was paid out in interest in FY24. Interest payments totaling Rs 6.12 lakh crore made up 22.8% of all expenses in the pre-Covid FY20 period.

Reasons for higher interest payment
The official told ET that although interest payments are expected to increase by 11–12% in the upcoming fiscal year, they are still manageable. A rise in borrowing is indicated by higher interest payments. The official claimed that because COVID shock boosted expenditure pressure, the government’s total debt had swelled.

Additionally, the conflict between Russia and Ukraine and the subsequent surge in global commodity prices caused the Center’s subsidy bill to rise in FY23, avoiding a more severe fiscal correction. The Center estimates that its fiscal deficit will be 5.9% in FY24 and aims to reduce it to 4.5% in FY26. International organizations have called attention to India’s high debt load. The IMF predicted that by FY28, the total debt of India’s states and the central government will reach 100% of GDP in the worst-case scenario and fall to less than 70% in the best-case scenario.

Net Tax Revenue increased
The administration emphasized that the debt was primarily in domestic currency and allayed concerns about the sustainability of the loan. The Center’s net tax revenue is expected to increase by 63.5% over the previous two years, from Rs 14.26 lakh crore in FY20 to Rs 23.31 lakh crore in FY24. According to estimates, its expenses increased by 67.6% from Rs 26.86 lakh crore in FY20 to Rs 45.03 lakh crore in FY24.

Former National Statistical Commission chairman Pronab Sen stated that while the high interest outgo is a problem, it is not yet reason for undue alarm. More crucially, the government needs to drastically increase its Tax-to-GDP ratio. This will deal with the interest load problem. He added that it will also be beneficial if the government reduces its fiscal deficit to the desired 4.5% of GDP by FY26.

For the last ten years, the gross tax-to-GDP ratio has stayed between 9.8% and 11.4%. Global agencies’ worries over India’s debt sustainability, according to Sen, may have been overblown, especially considering that the nation’s external debt only accounts for a small percentage of its total obligations.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy
Equities, Markets - February 1, 2025

Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy

Gold prices registered a high value as investors considers gold as safe investment in midst of uncertainty in tariff policy

On 30th January, 2025, the price of gold registered a lifetime high. Even today, the high gold prices indicate a spike up in gold prices for five weeks in a row. The reason for this is growing worries about the uncertainties of the tariff policies under Trump’s regime. This has led to many investors opting for purchasing gold as it is considered as the safe investment in the midst of increasing uncertainty in the economy. Also, investors are anticipating the release of the US inflation report.

Performance of gold
Currently, the price of gold was $2,795.92 and it surged by about 0.1 percent. In a period of one week, the gold prices have surged to about 1 percent. In the previous trading activity, the price of gold was recorded as all-time high and it accounts for $2,799.71.

Reasons for high gold prices
Trump announced that the US would enforce tariffs of about 25 percent on import goods coming from Canda and Mexico. In the current scenario of growing economic uncertainty and geopolitical tension, investment in gold is considered as the safest option for investors. Also, the performance of gold is quite good in conditions of low interest rates in the economy.

In case of low inflation levels in the US inflation report will lead to higher possibility of reduction in interest rate by the Federal Reserve. This contraction in interest rate will certainly help in making gold attractive for investors.

The report of the US personal consumption expenditures is yet to be released. The data of this report will help to find any possible changes in the interest rate in the upcoming terms. The head of Federal Reserve, Jerome Powell states that change in interest rate will depend on reports of employment and inflation level in the economy. At this point of time, the interest will remain the same.

Following November, 2024, around 12.9 million troy ounces of gold was transferred to commodity exchange storage facilities. It led to a surge in the amount of gold in the storage facility to about 73.5 percent which accounts for 30.4 million ounces. It is the largest amount after the month of July 2022. In case of implementation of suggested tariffs then the prices of gold will continue to rise and lead to a new of about 2,800 dollars.

The Central Bank of Europe reduced the lending cost by around 25 basis points. It also indicates future interest rate cuts in the upcoming terms.

Performance of other commodities
The current price of one ounce of silver and palladium is around $31.54 and $987.10, respectively. The price of silver rose by about 0.4 percent. In contrast to this, there was a contraction of the price of palladium by around 0.2 percent. The price of platinum expands to $967.80 per ounce which accounts to rise by 0.1 percent. The prices of commodities such as platinum and silver are anticipated to surge in the weekly gains. Contrary to this, the price of palladium is anticipated to decline.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Autos, Equities, Markets, Research, Result Updates - January 30, 2025

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Company Name: Maruti Suzuki India Ltd | NSE Code: MARUTI | BSE Code: 532500 | 52 Week high/low: 13,680 / 10,204 | CMP: INR 12,000 | Mcap: INR 3,77,433 Cr | P/E- 25

About the stock
➡️Maruti Suzuki India Ltd. is the largest passenger vehicle manufacturer in India, holding a dominant market share of over 40%. The company, a subsidiary of Suzuki Motor Corporation (Japan), offers a diverse portfolio ranging from entry-level hatchbacks to premium SUVs.

➡️It has a strong distribution network with over 4,000 touchpoints across the country. Maruti is also expanding into green mobility, with a growing focus on EVs, hybrids, and CNG models. The company has a significant export presence, catering to markets in Africa, Latin America, and the Middle East.

Strong Revenue Growth Led by Record Exports
➡️Maruti Suzuki delivered an in-line performance for Q3FY25, reporting net sales of ₹35,535 crore, up 15.7% YoY, driven by higher volumes (+13% YoY) and better realisation (+2.4% YoY). The company achieved its highest-ever exports in a quarter, with volumes rising 38% YoY, primarily supported by strong demand in Africa, Latin America, and the Middle East.

➡️Domestic sales increased by 9% YoY, aided by festive demand and growing preference for premium models. Despite these positives, realisation declined sequentially, reflecting a higher mix of entry-level models and discounting measures.

EBITDA Margin Under Pressure Due to Higher Costs
➡️Despite strong revenue growth, EBITDA declined to ₹3,890 crore, with the EBITDA margin contracting by 15 bps YoY to 11.3%, impacted by higher raw material and staff costs. However, raw material costs eased sequentially by 33 bps, offering some margin support.

➡️The average discount per car increased to ₹30,999, compared to ₹29,300 in the previous quarter, highlighting the need for promotional efforts to sustain sales momentum in the entry-level segment.

Demand Outlook: Strength in Premium Segment, Weakness in Entry-Level Cars
➡️The demand outlook remains favorable, particularly in rural markets where demand growth is outpacing urban regions. However, the entry-level segment continues to face softness, which may limit domestic volume expansion and necessitate higher sales promotions and discounts. The premium segment, particularly utility vehicles (UVs) and mid-size models, saw strong traction, contributing 20% and 17.6% to total domestic sales, respectively. This aligns with broader industry trends, where SUVs and high-end vehicles are gaining share.

Expanding EV & Green Vehicle Portfolio
➡️Maruti Suzuki has officially entered the EV market with the launch of E-Vitara, which will be manufactured exclusively by the company and exported to over 100 countries. Alongside its EV push, the company remains bullish on CNG vehicles, which now contribute one out of every three vehicles sold, reflecting a clear shift towards green mobility solutions.

Valuation and key metrics
➡️Maruti Suzuki is currently trading at 25x FY26 earnings, which is at a premium to Hyundai (22.2x) but justified by its market leadership, strong export growth, and expanding premium portfolio. The company’s return profile remains healthy, with a Return on Equity (ROE) of 13.8% and a Return on Capital Employed (ROCE) of 17.2% for the trailing twelve months (TTM). Additionally, its interest coverage ratio stands at 87.5x, indicating a strong balance sheet with minimal leverage concerns.

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RBI concerns over Small Finance Banks
Banking, Equities, Markets - January 30, 2025

RBI concerns over Small Finance Banks

RBI concerns over Small Finance Banks

Overview
It has been reported that the Reserve Bank of India (RBI) has become uneasy about a few small financing banks (SFBs) because of increased asset quality stress and excessive concentration risks.

According to three executives monitoring the industry, the banking regulator has also instructed these banks to look into mergers in order to increase their size and reduce the risks of concentration. According to one of the individuals, the RBI has “close supervision” over small finance institutions. Additionally, one solution that has been considered at the regulatory level to alleviate the issues is bank consolidation.

According to another executive, the regulator met with these lenders’ management a few months ago. The supervisory stakeholders were also concerned about gaps in succession planning and corporate governance at several of these SFBs.

NPAs on the rise
Due to the continuous strain in the microfinance industry, which saw the average gross non-performing assets (NPA) increase to an 18-month high of 11.6% at the end of September 2024, small financing institutions with a larger percentage of microloans are in the most difficult position.

Collectively, non-performing assets (NPAs) accounted for 15.3% of these lenders’ total microlending portfolio. Although industry-level data until the end of December is not yet available, quarterly results indicated that the overall sectoral asset quality is probably going to deteriorate.

Concentration Issues remain persistent
Concentration issues affect small financing banks in two ways. First, a lot of people are heavily exposed to the microfinance industry, which has been experiencing a lot of stress. Second, a small number of these banks are highly exposed to areas of greater stress.

According to the CEOs of major firms, these problems might be resolved by combining these banks or by merging with larger organizations that have substantial financial resources. Further, as per a prominent microfinance practitioner, it might make sense for banks that operate in different regions to merge since it would mitigate the concentration risk.

A Standing External Advisory Committee (SEAC) was previously established by the RBI to review applications for Small Finance Banks (SFBs) and Universal Banks. The Reserve Bank of India’s Department of Regulation would provide the committee with secretarial support, the RBI had stated in a release.

Category Risks
Coming to category risks, for example, ESAF Small Finance Bank’s native state of Kerala and its neighboring state of Tamil Nadu account for 57% of its gross advances, with unsecured loans accounting for 56% of the total. In a similar vein, Utkarsh Small Finance Bank has 916 banking locations spread over five states: Uttar Pradesh, Bihar, Jharkhand, Odisha, and Maharashtra. Of these, two-thirds of total loans fall into the category of unsecured microfinance.

That area is the primary focus of the Northeast Small Finance Bank, which combined with the fintech startup Slice, based in Bengaluru.

The majority of SFBs reported yearly increase in deposit mobilization that was higher than the average for the banking sector. Despite starting from a low foundation of Rs 6,484 crore a year ago, Suryoday leads the field with a 49.7% year-over-year rise to Rs 9,708 crore at the end of December.

In the third quarter, the bank’s gross non-performing assets (NPAs) increased to 5.5% of its total advances of Rs 9,563 crore. While lending increased 16% to Rs 19,057 crore, Utkarsh recorded a 33.5% year-over-year increase in deposits to Rs 20,172 crore.

The SFB ecosystem was established by the RBI to improve loan availability to micro and small businesses as well as the agricultural industry.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Waaree Energies Surges Over 11% on FTSE Index Inclusion Buzz
Equities, Markets - January 30, 2025

India's Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability

India’s Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability

The companies in the infrastructure sector in India are demanding for reforms in areas such as tax relief for clean technologies, expansion in fund spending on infrastructures such as ports, roads, and railways, reforms in GST regulations, and encouraging skill development projects in order to enhance skills of employees in the construction and infrastructure sector. It also aims for promoting public-private partnerships in infrastructure projects.

Expectations of participants in infrastructure sector
The various market participants in the infrastructure sector from segments such as real estate, urban development, construction, and transportation strongly believe that the government of India needs to make changes in its fiscal and other policies in order to reduce pressure on infrastructural plans.

Managing Director of Interach Building Products, Arvind Nanda emphasized on the need for reduction in tax rates, especially for various projects using pre-engineered buildings (PEBs). Further he states that to reduce the cost incurred on projects, the government should increase input tax credit (ITC) benefits for PEBs. It will also help in adoption of environment friendly methods like PEBs and in turn will lead to development in the sector. He states that the government of India must increase investment in skill development schemes under its mission of Skill India to enhance the efficient workforce in the country’s construction sector.

These various reforms such as promotion of green energy, skill development and tax relief will encourage participation of the private sector. It will also help India to achieve its target of sustainability as promotion of green energy will encourage investment and private companies to adopt this technology.

The efficient and fair use of capex in the infrastructure sector in different states of India will help to encourage stable growth in the country. Partner at Grant Thornton Bharat, Vivek Iyer states that the government of India can distribute its funds according to the specific needs of the particular states. It will ensure implementation of financial regulations and policies in line with promoting long-term development in the infrastructure sector of India.

The capex scheme for states with an interest free loan for the duration of 50 years will help to encourage stable growth in different states in the country and in turn will lead to progress of India.

Partner at JSA Advocates and Solicitors, Ashish Suman expects expansion of capital financing in infrastructure such as ports, roads, and highways for development of the transportation sector in India. In order to encourage investment by the private sector and to develop infrastructure in India, there must be expansion in capital spending on the road segment to about 10 percent and also promote undertaking of Build-Operate-Transfer (BOT) projects.

To encourage investment in small cities (Tier 2 and 3), it is important to strengthen public-private partnerships (PPPs) projects. Suman further states that investment challenges in PPP are observed in the development of urban infrastructure. To address these issues, the government can focus on efficient use of the fund provided by the Urban Infrastructure Development Fund. It should focus on building a strong municipal bonds market which will help in resolving the issues of urban local governments who require money for financing in infrastructure projects.

Leader for India & Subcon at LWT IMEA, Priya Rustogi stated that India is anticipated to record a growth in GDP by 6.5 percent. Along with urbanisation, India can emphasize on building affordable housing and development of infrastructure of the country. This will result in expansion in demand for new, eco-friendly and good-quality bathroom related goods. She further added that the government of India should do reforms in GST implemented on sanitaryware. It should also focus on encouraging eco-friendly construction methods in order to achieve milestones of conserving the environment.

In case of progress in decorative and industrial paints, the Director of Shalimar Paints, Kuldip Raina stated that reforms in regulations are needed to have efficient supply of raw materials, incentives for advancement in technologies and tax relief to boost Research and Development in the sector. It will help in lowering energy and production costs, and also encourage more players to come in the industry.

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Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs
Automobile News, Autos, Equities, Markets - January 30, 2025

Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs

Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs

Overview
On 28th January 2025, Hyundai published its third quarter reports of the financial year 2025 recording a contraction of 19 percent of consolidated net profit on a year-on-year basis. The PAT for the third quarter was about Rs.1,161 crore lower than the Rs. 1,425 crore for the previous financial year in the third quarter only. The reason for this is the fall in exports and sales at domestic level.

Performance of the company
In the third quarter of the financial year 2025, the company recorded a fall in total income to about Rs. 16,892 compared to its total income of about Rs. 17,244 crore in the same quarter of the previous financial year.

The company is popular for manufacturing hatchback models such as i20, Grand i10. It is also known for manufacturing Creta, which is a SUV model. In the third quarter of the financial year 2023-2024, the revenue of Hyundai was about Rs. 16,875. In the third quarter of the current financial year, it declined to about 1.3 percent which accounts to about Rs.16,648 crore of revenue.

After its earnings report was released, the stock price of Hyundai Motor declined.

Further, the company recorded a contraction in net profit by about 16 percent consecutively. Its net profit was about Rs. 1,375 crore in the second quarter of the financial year 2025. Also, its topline was about Rs. 17,260 crore in the second quarter which declined to about 3.5 percent in the third quarter of the current financial year.

While, its EBITDA margin was around 11.27 percent in the third quarter lower than 12.88 percent in the previous year of the same quarter. The reason for contraction in margins is due to slowdown in demand as well as rising geopolitical concerns.
Sales performance of the company
In terms of volume, Hyundai Motors was successful in selling about 1,86,408 units of passenger vehicles in the third quarter. From this total volume sales of passenger vehicles, volume sales in the domestic market was about 1,46,022 units. It is mainly driven by demand for SUV vehicles.

The company was also able to register its highest sales of CNG-based vehicles in terms of volume which accounts to growth of about 15 percent in the third quarter compared to 12 percent in the past financial year of the same period.

In terms of sales volume in rural areas, it surged to about 21.2 percent in the third quarter, higher than 19.7 percent recorded in the same quarter of the previous financial year. Also, the exports level of the company was recorded to about 40,386 units of sales volumes in the third quarter.

Future Perspective of the company
Hyundai Motors firmly believes that it will be able to expand its future growth by using its full potential and also search for new opportunities to expand profitability and sales volume of the company.

The company is optimistic about the development of the Electric vehicle segment in India. It is taking steps towards making electric vehicles with a broader view.

The company also states that the recent launch of Creta Electric model will promote growth and also acts as a breakthrough in the Electric vehicle sector.

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India’s export in auto industry reach 19 percent

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BluPine Energy Secures ₹2,416 Cr to Build Hybrid Clean Power Project in Karnataka
Equities, Markets - January 30, 2025

Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

Overview
The renewable energy sector anticipates that Finance Minister Nirmala Sitharaman would announce more steps to encourage the production of local equipment, policies to encourage the adoption of green technologies, increased funding for renewables, and a duty differential to assist domestic companies.

Over the past two years, the fiscal support for the renewable energy sector has more than doubled. Compared to the revised budget estimate of ₹7,848 crore for FY 2023-24, the Ministry of New and Renewable Energy’s (MNRE) total allocation for FY 2024-25 climbed to ₹19,100 crore.

As India strives to reach 500 GW of green energy capacity by 2030, the Union Budget 2025–26, which will be unveiled on February 1, is anticipated to include a number of incentives for the renewable energy industry. The renewable energy sector in India is optimistic that the next Union Budget will provide a path for the fossil fuel-dependent economy to increase its green energy capacity in multiple ways, given recent geopolitical developments such as China’s export restrictions and the United States’ tougher sanctions on Russian oil.

Large budget allocation through PLI Schemes
Green energy stakeholders want a stronger domestic push, whether it is for output, storage capacity, new production-linked incentive (PLI) schemes with larger budget allocations for areas like battery infrastructure, or research and development promotion. This is especially important at a time when India may find it difficult to meet its 2030 target of 500 GW from non-fossil fuel sources.

According to Subburathinam P, Chief Operating Officer of TeamLease Services, many businesses in these industries are still in the pre-production or incubation stage. It is crucial that they enter the production stage in order to benefit from PLIs in the renewable energy industry. The industry anticipates a drive toward battery storage, which is essential for integrating renewable energy and guaranteeing a steady power supply.

Industry participants look for ways to solve implementation issues and encourage domestic production in new and developing renewable technology areas. To reduce reliance on imports, primarily from China, the government may propose support measures for the domestic battery manufacturing and supply chain.

PSUs in action
In order to meet the 2030 target and become Net Zero by 2070, more steps are anticipated to increase the involvement of corporate and public sector undertakings (PSUs) in the green energy transition. Given that these technologies have large capital expenditures and a ten to fifteen-year time horizon, a significant rise in resource allocation is anticipated for the adoption of renewable energy, the integration of green technologies, and waste reduction.

Solar Cells to be supported by incentives
Observers of the green energy sector believe that more incentives to support domestic production of solar cells and green hydrogen would be included in the Union Budget 2025. In order to increase research and development (R&D) activities in the industry and draw in foreign money, supporting measures can be proposed.

As the nation seeks to diversify its renewable energy portfolio, larger solar and offshore wind projects are probably going to receive larger budgetary allocations. In a similar vein, increased funding is anticipated for carbon markets, green hydrogen production, and future technologies.

Support for minerals
The government may focus on critical minerals such as lithium, copper, cobalt, and rare earth materials, which are vital for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.

In the last budget, the government fully exempted customs duties on 25 critical minerals and reduced basic customs duties (BCD) on two of them to boost the processing and refining of such minerals. Any further friendly measures in this direction will ensure the easy availability of such critical minerals for renewable energy players.

Boosting the Green Sector
In order to encourage the public to embrace green energy, the government introduced legislative initiatives like the PM Surya Ghar Muft Bijli Yojana in the most recent Budget. In order to provide free electricity to one crore families, up to 300 units per month, the Yojana was started to install rooftop solar plants.

Last year, the increase of energy capacity in the renewable energy industry significantly improved. In the calendar year 2024, 27 GW of renewable energy capacity was added. In November 2024, the total installed non-fossil fuel capacity was 214 GW, a 14% increase over the 187.05 GW recorded during the same period the previous year. Of this, 47.96 GW came from wind energy and 94.17 GW from solar energy.

Ahead of the Union Budget 2025, pressure has continued to mount on leading renewable energy equities. Compared to their closing price on the NSE on January 1, the shares of major industry companies, including Waaree Energies, KPI Green Energy, NTPC Green, and Adani Green Energy, have dropped by as much as 60% since the start of the month.

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India’s export in auto industry reach 19 percent

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Contraction in Banking Stocks to around 6 percent due to RBI's repo rate cut
Equities, Markets - January 30, 2025

US Fed signals no rate cuts

US Fed signals no rate cuts

Overview
Jerome Powell, the chair of the Federal Reserve, stated that there would be no rush to lower interest rates again until inflation and employment data warranted it. The U.S. central bank left interest rates constant on Wednesday.

Rate Cuts on hold
Powell stated that it makes sense for the Fed to proceed cautiously after reducing interest rates by 100 basis points. He does, however, believe that the Fed’s current policy rate—which ranges from 4.25 to 4.25%—remains significantly higher than the neutral rate. This indicates that the policy is restrictive, which hinders growth and lowers inflation.

Trump’s Policy Changes uncertainty
With a sound set of macroeconomic fundamentals that haven’t changed much in recent months and impending Trump administration decisions on immigration, tariffs, taxes, and other topics that could prove disruptive, the decision and Powell’s remarks put Fed policy in a holding pattern at a time when the U.S. economy appears to be both stable and extremely uncertain.

Powell said Fed officials are waiting to see what policies are implemented before assessing the effects on inflation, employment, and overall economic activity. Powell made this statement after their first policy meeting during President Donald Trump’s second term in office. Until data indicates either a renewed decline in inflation or rising risks to the jobs market, there is no reason to further adjust rates.

Inflation is still elevated
Inflation has mostly moved sideways in recent months after the Fed cut rates three times in the latter part of last year, but it is still high, the central bank’s policy-setting Federal Open Market Committee said in a statement following a unanimous decision to maintain the benchmark overnight interest rate in the current range of 4.25% to 4.50%. Compared to the 40-year highs seen in the wake of the epidemic, recent key inflation measures are still at least half a percentage point above the Fed’s objective.

Although they have put rates on hold while they wait for data to support their belief, Fed officials say they mainly think the process in reducing inflation will resume this year. The economy has been growing steadily ever since. According to the Fed’s statement, labor market conditions are still strong and the unemployment rate has been stable at a low level in recent months. It further stated that the Committee will carefully evaluate incoming data, the changing outlook, and the balance of risks when determining the scope and timing of further adjustments to the federal funds rate target range.

Investors anticipate the central bank will postpone rate cuts until June, according to short-term interest rate futures. U.S. bond yields barely changed, and U.S. stocks ended the day down but still above their lows. In comparison to a basket of currencies, the dollar (.DXY) remained stable.

Market experts stated Fed’s position to be Midly Hawkish
After cutting the benchmark rate by a whole percentage point in 2024, the Fed’s rate decision on Wednesday was highly anticipated. The central bank is debating how much more rate reductions could be necessary, with officials expecting to drop rates by maybe two quarter percentage points this year.

According to Brian Jacobsen, chief economist at Annex Wealth Management, the Fed appears to believe that the economy is trapped with a low unemployment rate and high inflation. He went on to say that the comment might be interpreted as being somewhat hawkish, implying that the economy could be shaken out of this equilibrium by a slight change in interest rates.

Market Action
Ahead of Powell’s news conference and the Fed policy statement, the S&P 500 lost momentum and then stagnated in Wednesday’s stock market activity. Fed policy came second; Alibaba (BABA), the most recent Chinese corporation to unveil an unexpectedly competitive AI model, caused Nvidia (NVDA) to plummet. According to a Bloomberg News story, the Trump administration may propose strengthening chip limits.

Markets are presently pricing in only 18% odds of a rate drop at the March 19 meeting, down from 31% on Tuesday, following the Fed meeting. The likelihood of a rate cut at the Fed meeting on May 7 dropped from 51% to 42%.

Markets predict a 73% chance of a rate decrease on June 18, which is not much different from Tuesday’s 75% possibility. That implies that the outlook hasn’t really changed. With a stable 39% chance of one rate cut or fewer, markets are still pointing toward 50 basis points in rate decreases for the year. Wednesday’s stock market action saw the S&P 500 drop 0.5%, closing about where it was before the Fed’s policy announcement at 2:00 p.m.

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Equities, Markets - January 30, 2025

IOC Reduces Russian Oil Imports Amid US Sanctions

IOC Reduces Russian Oil Imports Amid US Sanctions

Overview
In the current financial year, India’s largest oil company Indian Oil Corporation (IOC) recorded a fall in the oil imports from Russia. The reason for this is the sanctions imposed on 10th January, 2025 by the US on producers, tankers, and insurers of Russia in order to contract the oil revenue of Moscow. The aim to control the revenue of Moscow was to block the use of this money for the Ukraine war.

The former Biden regime enforced sanctions on about 180 oil shipping tankers of Russia. It also imposed sanctions on oil producers such as Surgutneftegaz and Gazprom Neft. The purpose of imposing sanctions was also to control the group of tankers which secretly export oil without following the sanctions.

Impact on Indian Oil
When Russia started a war with Ukraine, many European countries blocked trade and enforced sanctions on Russia. During this time, India became the major importer of oil from Russia through sea route. Before the start of the war with Ukraine, the oil imports in India from Russia was only around 0.2 percent. However, it surged to about 40 percent in the years 2023 and 2024. In present times, it is around 30 percent.

In the current month, the imports of Russian have reduced. The company is projecting more reduction of oil imports from Russia. In the initial nine months of the financial year 2025, the amount of oil import was registered to around a quarter of the total crude imports of the company. It is lower compared to 30 percent of oil import in the previous financial year.

IOC’s approach
Following the implementation of sanctions on 10th January, 2025, the company has not yet signed any fresh spot contracts with Russian oil companies. Many Russian oil companies are suffering from sanctions imposed on them. This will not only affect the import levels of oil in China and India but also affect import levels of oil for different countries in the world. It could lead to possible contraction in Russia’s total exports level. This will result in a slight impact on India as well.

Currently, the company is finding out Russian oil which has not been imposed by sanctions. It is trying to find a complete supply chain which consists of tankers, suppliers, and insurers, free from sanctions. The firm is trying to search for the purpose of immediate delivery.

The Indian Oil company has decided to bridge the oil gap by importing from its other supply networks and markets. Also, it will import oil from Russia in case of fair discounts offered. In the month of December, the discount given on Russian oil was about 3 dollars per barrel but now it is about 2 dollars per barrel.

The company has taken the approach of diversifying its oil import sources. In current times, the company imports oil from about 39 countries which is higher than the 29 countries in the past. This approach is to protect from the adverse impact of sanctions on Russian imports. The company is not yet sure about the extent of adverse effects but it strongly believes that it will only slightly affect the supply of energy and oil availability of India.

The Trump’s regime made a public statement of increasing oil production in the US. The company is positive about increasing imports from the US. However, it will give importance to pricing points. The government of India also hinted at importing energy from the USA but at reasonable value.

For the upcoming six months to around one year, the company believes that the prices of oil will continue to be in between $75 to $80 per barrel. The reason for this is expansion in supply of oil in the international market.

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