1 The Renewables: Will the energy transition speed up?
Solar and wind energy will gather pace in 2023 as local supplies improve, helping India cut emissions. India will have to aim for at least 20-25 GW of renewable energy in 2023, and in the years ahead, to achieve the 500 GW target by 2030. The huge potential is driving interest in the sector with over Rs 2 lakh crore ($25 billion) investment expected in the EV ecosystem, manufacturing of solar equipment, energy storage tech, and production of green hydrogen. Though wind equipment is produced locally, solar is heavily import-dependent — up to 90%. The good news is that over `8,700 crore of domestic capacity is expected soon. Big corporate investments with global-scale economics look to be taking off. Adani Solar has begun manufacturing large-sized monocrystalline silicon ingots in India while RIL is readying to launch its battery packs in 2023. A Rs 19,500 crore PLI scheme will fire around 40GW capacity with bids expected in 2023. Bids for 4GW offshore wind projects and manufacturing of electrolysers will also roll out in the new year. Blending of ethanol with petrol will gather steam, bringing some relief to the import bill although green hydrogen may have to wait longer before making a debut.
2. In the Crypt: Can crypto survive its hunters?
The year 2022 was a wake-up call for cryptocurrency investors. The collapse of FTX and the two popular digital currencies and stablecoin TerraUSD earlier in the year, drove home the risks. Back home, RBI governor Shaktikanta Das has warned the next financial crisis will occur due to private cryptocurrencies. The new calendar is not likely to bring any cheer. Global risk aversion, regulatory uncertainty over cryptocurrencies, and better appreciation of risk are likely to weigh down the asset that many saw as a way to super wealth. The decentralised nature of Web 3.0 makes regulating these virtual digital assets difficult, which means they will continue to face curbs with many central banks and governments unwilling to allow a free run to a parallel currency. That money laundering, terror financing and illicit fund flows are part of the crypto discussion does not help. As per WazirX, crypto trade volumes in January-November 2022 were 76% lower at $10 billion, from $43 billion in the same period last year. The year 2023 could well be when the crypto winter sets in, dealing a blow to many hoping to ride the boom. Over 80% of Indian investment in crypto assets in 2022 came outside of metros, from places like Lucknow, Jaipur, Pune and Patna, among others.
3. ReStartup: Will the startup ecosystem come out of the funding winter leaner, meaner?
As 2022 draws to a close, what’s clear among top startup entrepreneurs, investors, and internet industry executives is that the new year may have more pain in store — at least initially — for new-age firms before any relief comes their way. Venture funding has slowed significantly for growth-oriented startups, with 2022 already a weak year. According to Venture Intelligence, startups saw nearly $24 billion in funding in 2022 as of December 28, down from a peak of $35.46 billion last year. Correction in interest rates in the US from record highs and an improvement in sentiment will be crucial for the needle to move again in favour of startups. With over 100 unicorns in India, startups are emerging as one of the largest job generators as well as wealth creators via esops, buybacks, and mergers and acquisitions. Almost all startups, across stages, are hunkering down to extend their runways and cut costs at every possible opportunity. New startup launches have also slowed in 2022. Easing liquidity and financing conditions will be needed for more startups to be birthed in the country, leading to potential disruptions in large industries. The first quarter or two might see more struggle among startups to survive, but a relatively better second half could lift up 2023 for India’s internet economy, making it better than the year gone by.
4. Telecom Call: Will 5G change everything?
Blistering 5G speeds of up to 10 Gbps promise to transform the lives of millions of mobile users hooked to data, as 2023 rolls in. Thrills of superfast gaming, enhanced virtual reality and highresolution videos, to name a few, will be here soon as Reliance Jio and Bharti Airtel roll out countrywide 5G coverage. The 5G networks are set to disrupt processes, businesses and social interactions while creating opportunities. The networks will loop in smartphones, cars, homes, machines, robots and household gadgets, lighting up a true Internet of Things (IoT) ecosystem. A host of enterprise apps across industry verticals will emerge to ride this disruption, creating startups, wizards and billionaires. For the telcos, enterprise services, including captive private networks to power smart factories, will bring in untapped revenues going beyond voice and data. Ericsson sees 5G business services as a $17 billion revenue opportunity by 2030 for telcos in India. The paucity of mass-level 5G devices, which still straddle the premium range, means 4G services won’t go away anytime soon. 5G device penetration may improve in 12-18 months. Meanwhile, telcos may slice networks to reserve a chunk of 5G bandwidth for premium 5G enterprise services. Yes, data and network security will be more urgent as 5G permeates and the maze of connected devices becomes vulnerable.
5. Auto-matic: Will EVs gear up and gather pace?
After a breakthrough 2022, EV sales are set to gather pace in the new year with Tata Motors, Mahindra and MG Motor India rolling out half a dozen models in the mainstream segments. Over 100,000 EVs are expected to be sold next year, double the 50,000 in 2022. High fuel prices, increased offerings, and government incentives amid growing consumer awareness will speed up the shift to electric in the two-wheeler and three-wheeler segments. The charging infra is catching up, too, addressing the key concerns of buyers, while environmental concerns are providing the nudge. In the three-wheeler segment, where nearly half the vehicles sold are electric currently, the proportion is expected to increase further, driven by demand from the ecommerce sector, say industry executives. Electric two-wheeler makers say they can sell 2.5 million units next year, up from 624,189 in 2022 and about 233,000 in 2021, provided their incentive bills are cleared. Incentives of `1,100 crore under FAME II are pending because of an inquiry into the localised content as reported by some electric twowheeler makers. All niggles aside, 2023 could be a year when EVs go mainstream.
6. Flyover: Will Indians’ revenge travel and tourism continue?
Two years of pent-up travel demand has led to steep room rates, choc-abloc hotels, and airport congestion. The holiday season has never been better for the Indian hospitality industry. In late November, India’s domestic carriers flew over 400,000 passengers for two straight days, jumping to pre-Covid levels. Such has been the demand and the rush to travel domestically that most key travel operators and hospitality firms have seen business outperforming prepandemic levels by a sizeable margin. Recent data released by Airbnb shows overall nights booked in India grew by almost half, while domestic nights booked grew by 80% in the third quarter of 2022 compared with the third quarter of 2019. The Covid-19 outbreak in China and some other countries threatens to upend the recovery in the global travel and tourism industry. But the local industry is unfazed. Sector insiders do not see domestic revenge travel cooling off in 2023 if there is no sizable uptick in cases and curbs are not imposed. The party is set to continue in the new year.
7. Date with Data: Will the Digital India Bill finally give us privacy?
India, one of the largest data markets in the world, astonishingly does not have a contemporary legislation for governing the internet. The 22-year-old IT Act does not even mention the internet. The proposed Digital India Bill gives citizens hope that their non-personal data would be safe while the Digital Personal Data Protection Bill in 2023 would protect their personal privacy. The twin bills will change the way the internet is governed. Tech-savvy Indians will be regulated with legislation much more in tune with global standards. Social media platforms, ecommerce sites and fact-checking portals can also heave a sigh of relief as they are likely to be classified into different categories, with specific regulations for each. With emerging arenas such as blockchain and metaverse under the purview of the proposed law, entities operating in these spaces will get legal backing. The recently amended IT Rules allow for appellate panels to hear grievances against decisions of social media firms on hosting contentious content. The new amendments impose a legal obligation on companies to prevent barred content and misinformation. It may all come together in 2023.
8. Naturally AI: Will artificial intelligence tools move into the mainstream?
ChatGPT, a new chatbot that can almost appear human, has taken the artificial intelligence (AI) scene by storm. AI was a buzzword in 2022 even as the wider tech sector took a plunge. It’s stealthily permeating everything from business to finance to daily life, and the potential is limitless. India may not be at the cutting edge of AI development, but the country’s enormous tech sector is helping adoption worldwide. Experts say AI will soon go beyond customer support to facilitating end-to-end transactions — be it bill payments, submitting documentation for a loan, or even booking a flight. Industry leaders believe there are massive possibilities for AI to provide ‘India first’ solutions in sectors like agriculture, education, and health. For farmers, it could predict soil quality or weather, while predictive healthcare applications could warn of risks of certain diseases. In education, AI could take the load of teaching fundamental concepts, allowing teachers to focus on complex concepts. However, India Inc needs to catch up with policymakers. AI seems to be higher on the agenda of the government than business, perhaps deterred by the geopolitical complexities over data, the core of AI. Policymakers will need to use huge datasets to the country’s advantage, while companies will have to invest more in 2023 to harness AI’s potential.
9. Building Value: Will we witness a real estate boom after the pandemic bust?
After years of sluggishness and being laid low by Covid, 2022 was good for the real estate sector. But a confluence of risks — rising rates, global slowdown, inflation and the lingering pandemic — looms over the sector that’s among the biggest employers. The industry is hopeful the 2022 uptrend will sustain in 2023 and various segments — housing, offices, warehousing and data centres — will continue to shine. Interest rates have risen but not as sharply as feared and, with inflation moderating, they may not go higher. The residential market may be able to take this in its stride. The consolidation in the favour of large and established developers will continue. Commercial real estate, which was hit drastically by the pandemic, has made a steady comeback in 2022 and the office segment is expected to witness significant growth in 2023 with at least 40% higher absorption. The global slowdown will be a dampener, while the pandemic is not seen as a major drag. The big consumer market and India’s tech strengths will provide steady demand for data centres and warehousing. A favourable regulatory backdrop and the government’s emphasis on infra spending will provide a favourable environment for the industry.
10. Market-Savvy: Will more Indians take to the markets to beat inflation and risk higher returns?
Investors are likely to ride the bullish momentum in Indian equities as prospects of steady economic and earnings growth outweigh the current multiple threats — rising US interest rates, pandemic fears, geopolitics and worries about a global recession. The continued outperformance vis-à-vis overseas peers is likely to keep most investors firmly rooted in equities even as rising interest rates tempt some into fixed-income instruments amid immediate jitters. “Equities will continue to see investor interest because that is one asset class that has the potential to give double-digit returns into 2023 and beyond,” said Pankaj Pandey, head of research, ICICI Direct. Despite steep drops in December, the Sensex and Nifty have given 2-3% positive returns against deep cuts in most major equity markets worldwide after many central banks began raising interest rates to beat down decade-high inflation levels. Since the start of 2013, the Nifty has risen 200%, data showed, despite the 2013 taper tantrum and the pandemic knock. “Investors should continue with their long-term equity investments instead of timing the market for quick returns. Equity is one such asset class that can consistently offer inflation-beating returns,” said Deepak Jasani, head, retail research, HDFC Securities.
11. Prosperity Prospects
Will systematic increase in prosperity (SIP) kick in with the Sensex seen inching towards 70,000?
Over the last three years, the Covid crash and the strong bouts of optimism when the pandemic abated saw the Sensex swing between 25,000 and 63,000. India’s millions of systematic investment plan (SIP) subscribers who hung on through this gut-wrenching ride were rewarded with once-in-a-decade returns as they averaged their purchases down and markets recovered. Having seen the much-advertised benefits of SIP, it is likely most of these investors will continue to set aside monthly sums as the Sensex journeys towards the next milestone of 70,000 and the Nifty marches to 20,000. A pickup in credit, slower but still strong economic growth and the start of a new capex cycle are likely to keep the markets buoyant and investors interested. SIP inflows into mutual funds hit a record `13,307 crore in November. This has provided support to Indian markets despite global turbulence, reinforcing belief in the product where a fixed amount is invested every month. While financial planners point out the benefit of rupee cost averaging, the proponents of behavioural finance say the product allows mature investing, steering clear of spur-of-themoment decisions based on the tape.
12. Smartsizing: Between layoff sprees and big-money hiring, will the balance be found?
India’s job market has been a curious mix of the Great Resignation wave followed by widespread layoffs, and robust hiring in some sectors in recent months. The talent landscape also continues to be competitive. Amid mounting global recession fears, the Class of 2023 across seven of the older IITs got more than 130 offers with pay packages of `1 crore and above. Will India’s talent market find a balance between layoffs and big-money hiring in 2023? Experts say simultaneous layoffs and big-ticket hiring can co-exist, and are signs of a maturing job market. The bigger challenge for companies is likely to be twofold — dealing with a competitive talent environment, and the pressure to reduce costs. The job market is likely to stay steady despite global turbulence. India Inc’s hiring plans seem robust and the job market is off to a sound start in 2023, according to the Teamlease Employment outlook report for January-March 2023. Hiring experts predict moderate hiring in IT. Sectors such as hospitality and tourism, FMCG, healthcare, auto (especially EVs), and infra are likely to drive hiring in the next few quarters.
13. Dream Stream: Will entertainment & sport move bulk content over to digital from DTH/cable?
Video streaming is the business of the future, but the industry is not writing off linear TV yet. DTH and cable TV service providers have lost lakhs of subscribers to OTT platforms and DD Free Dish. Yet, given India’s population and diversity in income profiles, there is possibly room for all mediums to flourish. India has 300 million households, of which only 210 million have TV, as per BARC. More TVs will be purchased. An Ormax study shows there are 119 million active, paid OTT subscriptions — an average of 2.4 subscriptions per paying member, an indication of the potential. Media companies will continue to follow dual strategies for linear TV and OTT. While linear TV content attracts family viewers, OTT consumption is at an individual level. Both businesses are at different stages of evolution though. While TV has an established revenue model, OTT is still trying to find its monetisation mix. Digital video content spending is expected to match TV content spending by 2027.
14. Manufacturing in R&D: Make-in-India semiconductor, a chip off the new block?
Thirteen months after a `76,000-crore incentive splash, the Centre may finally roll out approvals for at least two applicants this month to make semiconductors, display fabs, assembly and test facilities. India’s semiconductor dreams look close to fruition. Industry is understandably fidgety, having waited years for the country to get its ecosystem and incentives aligned. Three investors have together promised over $26 billion to set up three semiconductor factories. They are Mumbai-based ISMC Analog, backed by Israeli tech company Tower that Intel is buying; a Vedanta-Foxconn JV; and Singapore’s IGSS Ventures. Fabs are capital-intensive, energy- and water-guzzling investment megaliths. Geopolitical developments have imparted greater urgency with countries looking to cut dependence on China for anything critical to national security. The US is clamping down on American firms looking at China for advanced semiconductors. From an important cog in electronics supply, semiconductors are now strategic necessities. Stakeholders are keeping their eyes peeled for incentive approvals that will get the wheels rolling for India’s semiconductor dreams.
15. Big Bank Theory: Will savers throng banks?
For bankers, an enduring social media image of 2022 could be the Canara Bank executive campaigning for deposits in a Mumbai marketplace with microphone in hand. That must be music for savers who have been deprived of reasonable returns for years by RBI efforts to keep borrowing costs low for companies. After chasing risky assets such as equity and even cryptos, savers seeking reasonable returns can probably have a remunerative 2023, with FDs yielding at least 7%. That may get higher, at least in the first half of the new year. Two factors point to high returns from deposits. One, rising loans growth at 17% while deposit growth lags. The second is the impending merger of HDFC and HDFC Bank that would require the bank to chase deposits to replace maturing bonds of the mortgage lender. “Deposit growth may continue to lag GDP for 12 months,’’ said Prakhar Sharma, analyst at Jefferies. “This would mean banks will chase deposits with higher rates for medium term.’’ Banks have sought tax sops for deposits up to `5 lakh. The FM will have to decide on letting banks and other asset managers fight for the savings pie. An equity selloff would be a blessing for banks.
16. United States of India: Will there be broad agreements across states on reforms such as labour codes?
The year 2023 will be crucial for the labour codes ahead of the general election in 2024. In a significant reform, 29 labour laws, some as old as half a century, have been amalgamated into four codes. But these reforms have not been rolled out as the follow-up rules are yet to be finalised. Since labour is a concurrent subject, both the Centre and states must be on board. The Centre and relevant stakeholders, including the states, employers and trade unions, have held extensive parleys to arrive at a consensus on some of the controversial provisions. Any delay beyond 2023 could put the codes on the back burner because of a fear of trade unions’ backlash ahead of elections. Experts have said that as states firm up rules, the Centre must lay out a road map for the implementation with an April 1, 2023, deadline — either in one go or in a staggered manner. This will help industry prepare for procedural changes and manage cost implications. India should not miss the opportunity for attracting investments when the world is eyeing the promising market, say industry experts. Nor can India afford to deprive 90% of its workforce and gig and platform workers of any social security envisaged in the codes.
17. Capex Predator: Will private capital expenditure kick off?
The latest ‘State of the Economy’ review included in RBI’s monthly bulletin for December points to indicators “heralding the beginning of an upturn in the capex cycle in India which will contribute to a speeding up of growth momentum in the Indian economy”. For many years, this private capital investment boom has been a mirage for India. High growth has not unleashed private investment, as capacity utilisation has remained low, even as the insolvency law has freed up locked-up factories. Things may be finally turning. Capacity utilisation has crossed trend levels in a number of industries. Credit offtake was up 17.5% yearon-year for the fortnight ended December 2 on the back of fresh capex demand, among other factors. Both corporate and banking balance sheets are stronger than ever and India Inc is bullish on new opportunities as global supply chains readjust to geopolitics. Will India Inc hit big or will caution prevail amid economic uncertainty arising from the pandemic, the Russia-Ukraine war and the global economic slowdown triggered by the tightening monetary conditions?
18. Maidens Over: Will women’s IPL become the Next New IPL?
It was a landmark year for women’s cricket. Having remained on the margins of professional cricket for many years, women’s cricket stepped up big time. India lost the recent T20 series to Australia 4-1, but it was much closer than the scoreline suggests. Spectators flocked to grounds with attendance crossing 46,000 in second match. In a show of confidence, the ICC separated the media rights for men’s and women’s cricket. Disney Star and its pre-bid partner Zee walked away with consolidated ICC media rights for India, marking the start of the commercialisation of women’s cricket. Closer home, the BCCI announced a pay equity policy to bring the match fee of female cricketers on a par with male counterparts. The BCCI also launched a five-team Women’s Indian Premier League (WIPL). The biggest challenge for the BCCI is the lack of bench strength that is needed to sustain a multi-team event. But the event could actually be the solution to the problem.
19. Box-Out Office: Will Indians binge on Netflix and Prime at home, deserting theatres?
After a string of box-office duds, including by the biggest names in Indian cinema, there is concern that over-the-top (OTT) platforms may be killing cinemas. While the impact of OTT platforms on the cinema exhibition business cannot be wished away, industry experts say the Indian market is an “and” market and not an “or” market. OTT and theatres offer a different experience and hence will coexist, they say. While OTT content viewing is individualistic in nature, the big screen offers a community viewing experience. There has been a growing trend globally among studios to follow the traditional movie release model by going first to theatres, followed by OTT and linear TV. Even Netflix has experimented with exclusive theatrical releases for a couple of its movies in the US. However, the future growth of the cinema exhibition business is tied to the quality of movies produced. The content preferences of Indians have evolved due to exposure to global content, and Bollywood’s earlier templates may not work anymore. Good movies will see theatre footfall, as evident in the success of some regional and small-budget films.
20. Aggressive Agri: Will Indian farming be more S&T-driven and expand from its still limited pool?
Hydroponic spinach to basil and lettuce are all available on popular grocery delivery apps. Hydroponic farming — soil-less, water-based agriculture possible even in tiny spaces — is here and growing by leaps. Instead of employing soil for plant nourishment, crops are supplied with nutrient-rich water, which eliminates much of the baggage associated with soil-based approaches. Smart farming with soil testing-based decisions and automation using AI focused on precise application inputs in agriculture is here. Sensors and drones will be used for precision, quality and environmentally cost-effective farming. Traditional farmers will not be left behind as technology pervades farming. Dependence on chemicals and fertilisers will drop as technology facilitates more efficient application and data permits more scientific usage based on soil type, including the use of organic products. And, like elsewhere, drones will change the whole process of cultivation and harvesting. Industry estimates suggest that the use of drones could increase crop yields by 15-20%. The government has already flagged off 100 Kisan Drones in different cities to spray pesticides on farms across the country.
21. Trade Winds: Will free trade agreements struck in 2022 come home to roost?
The year 2023 could be a defining one for India’s push for bilateral trade agreements amid faltering multilateral arrangements under the WTO. The government is expected to engage in intense negotiations with the UK, Canada, the EU and the Gulf Cooperation Council in 2023 to ink bilateral free trade agreements (FTAs). India is seeking to secure certainty in market access and national treatment across maximum services sectors through these pacts as it aims to raise the share of its exports in global trade to 3% by 2027 and 10% by 2047 from the current 2.1%. Slowing global trade, slowdown, new geopolitical imperatives following the Russia-Ukraine conflict and non-tariff barriers amid rising protectionism could prove to be hurdles. As per officials, negotiations for the IndiaBangladesh Comprehensive Economic Partnership Agreement are expected to start soon as the two sides are keen to conclude the talks before Bangladesh sheds its least-developed country status. While the India-UAE pact took effect from May 1, the India-Australia agreement came into force on December 29, and talks for a broader FTA with Australia could start in January.
22. Consumer Counting: Will Made-in-India electronics become the go-to for buyers at home and away?
From assembling to manufacturing — for the local market and the world — India has embarked on a massive plan to get factories humming again. Right from TVs to ACs, laptops and smartphones, the China-plus-one strategy adopted by Apple, LG, Samsung, Haier, Midea, Lenovo and Bosch has put the spotlight on Indian manufacturing. The year saw a subtle shift towards India as companies scrambled to keep production going, even as frequent lockdowns in China due to its ‘zero-Covid’ policy disrupted supplies. Apple started assembling its latest iPhone model in India within a month of its global launch — a record. Already, Apple suppliers are making a beeline for India as the phonemaker explores production beyond iPhones. Others are not far behind. Samsung and LG are expanding their exports from India and going into manufacturing high-value components. Lenovo plans to locally source half the components for its computers by March and then start exports. Oppo, Vivo and Xiaomi, too, are shifting some production from China to India. Even Indian companies such as Voltas and Blue Star are investing in component manufacturing. The year 2023 could well be a pivotal year for establishing the consumer electronics industry value chain in India.
23. Taking The Global Centre Stage: Will India Offer Hope to the World?
India will find itself at the centre stage of global geopolitics in 2023. It will host the G20 summit at a time the world is coping with several shocks — the economic fallout of RussiaUkraine war, the looming threat of Covid, and supply chain worries caused by an aggressive China. With working channels of communication open to key powers, India is positioned uniquely to provide an effective conversation bridge. However, it will remain constrained by its own negative security dynamic with China. To compete and cooperate at the same time will prove to be a challenge. The year will also see India play host to the SCO summit. That means, if all goes as per plan, the leaders of China, Russia and Pakistan will visit India at least once in 2023. It would be an achievement if India is able to host Joe Biden, Xi Jinping, Vladimir Putin and heads of some 35 countries. The new year is also likely to see the Quad — India, US, Australia and Japan — deepen their agenda of cooperation. Equally significant will be India’s outreach to the Islamic world. Challenges will continue from Pakistan as it enters UNSC as a non-permanent member.