India's Manufacturing Sector: Insights from HDFC AMC's Rakesh Sethia on Growth Opportunities
The next phase of India manufacturing: HDFC AMC’s Rakesh Sethia breaks down real winners in EMS, aerospace & auto
Image: The Economic Times
Rakesh Sethia, Fund Manager at HDFC AMC, discusses the evolving landscape of India's manufacturing sector, highlighting the shift towards deep tech localization and the impact of domestic demand and policy support. Key sectors include Electronics Manufacturing Services (EMS), aerospace, and auto ancillaries, with a focus on quality business selection amidst rising valuations.
- 01India's large domestic market is a significant advantage, allowing companies to scale and localize vendors.
- 02The Production Linked Incentive (PLI) scheme and infrastructure spending are crucial for sustaining the manufacturing cycle.
- 03Electronics Manufacturing Services (EMS) is moving from assembly to components, with PCB manufacturing in India currently under 1% of the global market.
- 04Auto ancillaries are focusing on premiumization and higher content per vehicle, while avoiding a binary approach to electric vehicles (EVs).
- 05The aerospace sector is growing rapidly, but public market opportunities are limited, with many players in private hands.
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India's manufacturing sector is undergoing a significant transformation, moving from basic assembly to advanced localization and technology integration. Rakesh Sethia, Fund Manager at HDFC Asset Management Company (HDFC AMC), emphasizes the importance of the domestic market, which is one of the largest demand pools outside China. Key drivers of this shift include the Production Linked Incentive (PLI) scheme, infrastructure investments, and a focus on integrating into global supply chains. Sethia identifies Electronics Manufacturing Services (EMS), aerospace, and auto ancillaries as sectors with promising growth potential. EMS is evolving from assembly to include components, with current PCB manufacturing in India representing less than 1% of the global market. In the auto sector, companies are focusing on premiumization and export opportunities, while the aerospace industry is poised for growth as local manufacturing capabilities develop. However, Sethia cautions that valuations in some areas have become expensive, necessitating careful stock selection.
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The shift in India's manufacturing sector is expected to create job opportunities and enhance local supply chains, benefiting various industries.
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