Nov 7: The Indian Auto Pivot, India's Chip Ambitions

Forget policy and economy for a moment, we have the most important question of the day answered. The triumphant Indian Women’s Cricket team met PM Modi, and amidst the discussions of historic wins and national pride, top-order batter Harleen Deol delivered the most unexpected off-spin to the PM: "What is your skincare routine because your skin glows" to which he replied “the love of a nation”. Control Modiji, control.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 6 mins.

The Indian stock market finished lower on Thursday, marking a second straight day of declines after October's rally. Losses in financial and metal stocks weighed on the Sensex and Nifty, with midcap and small-cap shares seeing steeper selling.

Japanese automakers are making a decisive shift in their global production strategies, increasingly turning to India as a key manufacturing and export base. Companies like Toyota, Honda and Suzuki are collectively investing billions of dollars to expand operations in India, signalling a gradual but clear pivot away from China.

Why The Shift Away From China? Over the past few years, Japanese automakers have faced rising challenges in China, from intense competition in electric vehicles to shrinking margins and slower sales growth. According to industry estimates, Japanese investment in China’s transport sector has dropped sharply, declining over 80% between 2021 and 2024. Additionally, the geopolitical climate and China’s dominance in the EV supply chain have prompted companies to diversify their production bases. India has emerged as the most viable alternative, offering scale, skills, and cost advantages.

India’s Growing Appeal: India’s strengthening position is backed by a combination of government incentives, an expanding base of auto suppliers, and improving production quality. The country’s rapidly growing domestic market further adds to its attractiveness.

Policy Tailwinds: India’s automotive strategy which encourages local manufacturing and restricts direct investment from China indirectly benefits Japanese carmakers. This protection shields them from aggressive price competition seen in markets like Southeast Asia and China, allowing them to secure margins while scaling.

What This Means Going Forward: If this manufacturing shift continues at its current pace, India could become one of the central nodes in the global automotive supply chain, particularly for compact cars and hybrids. For Japan’s automakers, India provides both a vast consumer market and a cost-efficient export platform. For India, the move promises more jobs, deeper industrial capabilities, and greater relevance in global manufacturing.

The global semiconductor race is intensifying, and India wants to build a chip manufacturing ecosystem of its own. The push follows years of dependence on imports and the recent global supply chain disruptions that showed how critical chips are to everything from smartphones to defence systems.

A Strong Starting Base In Design Talent: India today accounts for nearly 20% of the world’s chip design engineers. Large semiconductor companies, including Intel, AMD, Qualcomm and NVIDIA, already run sizeable R&D and design operations in the country. This provides India with a skilled talent base, a foundation that many new entrants did not have when they began their semiconductor journeys. Domestic demand is rising too. India’s semiconductor consumption is expected to cross $120 billion by 2030, driven by smartphones, EVs, consumer electronics and defense technologies. That demand itself becomes the economic justification for building local manufacturing capacity.

The Challenges Ahead: Building a chip ecosystem is capital-intensive, technologically complex and time-consuming. A modern leading-edge chip fab can cost upwards of $10 billion. Beyond the factories themselves, India will need: a deep vendor and component supply chain, reliable high-quality power and water infrastructure, long-term R&D investments and skilled manufacturing talent at scale. These are gaps that will require years of sustained work.

Reliance Trying To Re-Sell Middle Eastern Crude: Reliance is offering to sell a cargo of Middle Eastern crude that it had initially bought for its own refining needs, a move traders say is unusual for the company. The offer hints at shifting refinery economics or changing demand patterns in its operations.

Bankers Value Jio At Up To $170 Billion: Investment banks working with Reliance are signaling a valuation range of roughly $150–$170 billion for Jio ahead of potential listing plans. The view reflects expectations of continued growth in mobile users, data services, and digital platforms under Jio’s ecosystem.

AWS Brings Marketplace To India: Amazon Web Services has launched its AWS Marketplace in India, allowing domestic businesses to buy and deploy third-party software directly via its cloud platform. The move is expected to streamline procurement for enterprises and startups, reducing integration hurdles.

India’s Seafood Exports To US Decline: India saw a 6% drop in seafood exports to the US, with stakeholders attributing the fall to higher tariffs and shifting market preferences. Exporters are pushing for diversification toward Europe, East Asia, and the Middle East to reduce dependence on one market. Rising compliance and sustainability requirements also pose challenges. Industry bodies are urging policy support to rebuild competitiveness.

Ola Electric Narrows Loss; Revenue Drops: Ola Electric reduced its net loss in Q2 to ₹418 crore, helped by cost controls and operating adjustments. However, revenue declined sharply by 43% as EV sales slowed and demand conditions weakened. The company continues preparing for its IPO, making financial performance closely watched. The numbers highlight the current volatility in India’s EV demand cycle.