I thought this is the time, we should have an overview and round up about Indian Industry and different sectors. As on 2020, despite American and European countries going to experience negative growth rate, India is projecting a close to 1.7% economic growth in 2020. Only major Asian economies are showing this symptom of optimistic economic growth during 2020 in the world. Having said this, different sectors in India are exhibiting different characteristics. IT sector is zoomed with growing demand for IT applications, mobile apps, mobile payments, virtual networking, digital and automation services; Pharma sector not only grown domestically also exporting and this specific sector after 5 years downturn, gained double digit growth rate w.r.to more than 50 pharma stocks headed northward direction; because of the lockdowns, work from home, and reduced mobility in working community, domestic essential goods consumption levels zoomed up during this time, resulting into FMCG sector growth as well. And the ever-growing Agriculture, the backbone of the Indian economy, proved that it is the growth sector and could save the economy during the tough times with growing demand and priority for essential goods. Overall sectors which has given optimism to Indian economy during 2020 include Pharma, Healthcare, Wellness, Agriculture, IT, and FMCG. Some of the stocks even experienced double digit growth rate in these sectors since January 2020. This industry insight describes an overview of different sectors in Indian industry; and also explains if any challenges these sectors have faced.
Infrastructure: In infrastructure sector, as on August 2020, L & T has pre-booked orders worth Rs 3,00,000 crores for the future projects showing optimism in India infrastructure sector. L &T has already diversified its businesses in to L & T Infotech, L & T Financial Services, Manufacturing, Construction, and L & T Defense (which is also a growth sector in 2020).
Mining Sector: In coal mining sector, the world’s largest coal producer COAL India prove to be profitable in 2020, with 82% contribution to India’s coal mining production. 80% of COAL India produce goes to power generation sector, again power generation and transmission a profitable business (proved by POWER Grid Corporation; power grid could make 25% profit margin out of their income). India is 3rd largest coal consumer in the world.
Chemical Intermediaries: this specific sector contributed to pharma products extensively during the pandemic. For example, Deepak Nitrate, a chemical intermediary company, which was shut their plant during lockdown, could turnaround and hit 110% capacity utilization levels during the tough time contributing to Pharma, Textile, Paper and Housing sectors. They could make profits in June 2020 quarter. They could over come the challenges in transporting required raw material surpassing different state boarders in India during this time.
E-Commerce: by August 2020, e-commerce sector in India could reach to 90% to 100% business levels to compare with earlier situation of the business. One more important point is during this pandemic, e-commerce players added 5% more customers to their customer based. Products in sectors like sanitation, safety, pharma, food, and healthcare could experience more hit rate to compare with other product categories. After sometimes, even books from players like Amazon and Flipkart also zoomed up to cater to increasing needs of readers during work from home.
Internet Services: During this pandemic, Internet services were wide spread. As on 2020, India has 1.2 billion mobile users. By 2023, India is going to see the double the number of smartphone users and 40% more Internet users. The demand for services such as high definition video, audio streaming, video calling, audio calling, and virtual learning platforms has zoomed up across the country. Being in difficult terrains, workers from north eastern part of India also became part of virtual working and some employees were even going to nearby villages/towns to update the business status to their headquarters every day; when they encounter Internet difficulties in their own villages.
Mobile Apps: HDFC Bank launched a mobile app called “e-Kisaan Dhan” catering to farmers with knowledge, weather forecasting, information on seed varieties in addition to regular mobile banking services. ICICI Bank in association with SWIGGY launched “SWIGGY Money”, a mobile wallet facility for SWIGGY customers using which customers will have single click checkout experience. YES bank launched its digital wallet solution “Yuva Pay” for its customers to provide contact less payment services to its customers; using this digital wallet services, YES bank customers will be able to pay bills, make insurance renewals, EMI payments, retail outlet payments, etc using this digital wallet. Airtel Payments Bank launched a customized product for MSME sector, using which employers in MSME sector can pay salaries to their employees using this product online.
The World Bank and Asian Development Bank: While the Indian industry scenario is like this, The World bank could announce the funding of $750 million to Indian MSME (Micro, Small and Medium Enterprises) sector making its cumulative funding announcements to reach $2.75 billion during this pandemic. Asian Development Bank (ADB) announced a loan of $750 million to India to help the effected households during this pandemic; making the cumulative loan to India to reach $3 billion. From Industry side, Google (Parent Company: Alphabet, Inc.), in 2020, announced an investment of $10 billion in India towards Google for India Digitization Fund. Using this fund, Google is going to invest in Indian local languages and Indian context-based products and services, digital transformation, and leveraging technology and artificial intelligence in key areas such as health, education and agriculture.
Interesting Findings: During economic downturn, some sectors experienced drastic growth rate despite handling pandemic related safety and regulatory aspects. One more interesting finding is during Q2 2020, only DIIs (Domestic Institutional Investors) pulled out some funds from Indian equity markets because of their liquidity issues; where as FIIs (Foreign Institutional Investors) were not at all pulling out their market investments; they remained invested in Indian equity markets. BSE Sensex which as has experienced 40% downwards from its peak index value 41,000+ of January 2020; by August 2020, could recover and reach close to 8% less than the highest score hit in January 2020.
Meanwhile to handle the situation, Ministry of MSME, Govt. of India in association with Muthoot Finance launched a portal www.restartindia.in to help the MSME/small entrepreneurs sector to mentor, restart, and build confidence in this sector in line with Aatmanirbhar Bharat.
Despite challenges different sectors have zoomed up and these sectors also shared the growth in a round robin fashion handing challenges.
Hope you enjoyed it………
Dr.Goparaju Purna Sudhakar
(References: 1. Current Affairs.com, August-September 2020.
- Dalal Street Investment Journal, Aug 17-30, 2020.)