Billion dollar boom: Jefferies identifies six sectors driving ‘India’s New Industrial Revolution’
Global investment bank Jefferies, in its latest report ‘India’s New Industrial Revolution’, has highlighted sectors that are poised for growth due to a combination of India’s large domestic market, greater participation from private companies and continued government policy support.Jefferies has identified several policy measures that it believes are helping these newer sectors expand, driving India’s next phase of industrial growth. These include allowing greater private-sector participation in space, providing tax holidays for data centres, offering incentives for semiconductors, electronics and solar, promoting localisation and government purchases of GPUs.
India’s next phase of industrial growth: Which sectors will drive it?
Jefferies has identified semiconductors, space, electronics, solar, aerospace and data centres as the top 6 themes. Let’s take a look:Electronics: According to Jefferies, India’s electronics industry is gradually shifting beyond basic assembly. There is now greater emphasis on domestic value addition and component manufacturing. Domestic value addition in mobile components is expected to increase from below 20% to around 50% over the next 6 years.“Electronics exports have grown sharply, while schemes such as ECMS (components scheme) and MPMS (Mobile 2.0) aim to deepen backward integration and reduce import dependence. We forecast ECMS to cover ~50% of Mobile component value (BoM) over the next 6-Y vs
PCB (both HDI + Multi-layer) is a focus area for Components, with $5bn TAM, 85-90% imports,” says Jefferies.Space: Jefferies has that India is one of the few countries with spacefaring capabilities that are competitive globally. The country’s space economy is expected to expand nearly fivefold to $40–45 billion by 2030. Private companies including Skyroot, Pixxel and Agnikul are also progressing towards commercial execution.“The government opened the sector for private participation in 2020, and is targeting ~5x expansion of space economy over 2023-30 to $40-45bn. Startups are advancing from early innovation to commercial execution with companies such as Skyroot (orbital launch in July), Pixxel (high-res observation satellites), Agnikul (3D-printed rocket engine) & Digantara (surveillance satellites),” the report said.Semiconductors: India’s semiconductor ambitions are now moving beyond policy announcements towards actual execution. Investment of around $20 billion is underway, with a chip fabrication plant under construction and several OSAT projects beginning production. Another incentive package of around $13 billion is expected to further strengthen the semiconductor ecosystem.“While supply chain depth, talent, and global competition remain challenges, we believe India is building the foundations of a credible semiconductor ecosystem,” Jefferies says.Aerospace: India is increasingly positioned to benefit from the mismatch between global aerospace demand and supply, helped by cost-competitive manufacturing and engineering talent.Boeing and Airbus currently source $1.4–1.6 billion annually from India, while Indian companies are also supplying global OEMs and Tier-1 companies.“Indian companies such as Aezad, BHFC, DYTC, RW, MOTHERSON & SANSERA have become suppliers to global OEMs and tier-1s, and are expanding in the segment,” it notes.Data Centres: India’s data centre capacity has increased fivefold over the past five years to around 2 GW. Jefferies expects this to rise to approximately 10 GW over the coming five years, translating into a $45 billion investment opportunity spanning power, cooling, construction and network infrastructure.Solar: India has become the world’s second-largest solar PV manufacturer. Around 35 GW of cell manufacturing capacity is currently operational, while another approximately 100 GW is under construction. Jefferies expects around 90% of the solar value chain to be localised by 2030.
