India Macro Indicators share price target

Marginal Decline in Retail Inflation

Industrial output as measured by the index of industrial production in May'22 grew by a strong 19.6% from a year earlier

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Industrial output in April'22 grew 7.1% from a year ago, the fastest rate of growth in eight months.

Nominal GDP grew 19.1% in CY21, while real GDP was reported to have grown only 8.3% (still the fastest in the G20, the fourth year India was the world’s fastest-growing large economy in the past 7 and 75 years)

Inflation on the run; spurt in industrial output

With a total incentive outlay of ~USD 35 bn during the life of all 15 announced PLI schemes, we estimate total incremental sales to be in the range of USD 470-500 bn, attracting a total investment of ~USD 62 bn and directly generating ~3.1 mn jobs. While India's nominal GDP increase of ~49% in the last five years is an encouraging development, it is worth highlighting that this growth has come at the expense of growing reliance on Chinese imports. India's imports from China have grown from USD 61bn in FY17 to USD 93bn in FY22, accounting for 16% of overall imports on average over this period. Currently, the key goods imported from China are mainly electronic goods, mechanical appliances, and chemicals. In the wake of pandemic-led global supply chain disruptions, India has realised the importance of reducing its dependence on China and creating a self-sustaining manufacturing ecosystem. The Production Linked Incentive (PLI) is the government's flagship fiscal response to the country's rising import dependence, which aims to boost the country's manufacturing sector from 15-17% of the total GDP at present to a target of 25%.