PM Modi's 'Make for World' push a step towards $5 trillion economy; sectors and stocks that will benefit

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After Prime Minister Narendra Modi emphasised in his Independence Day speech that India should make for the world, media reports have emerged that the government can bring incentive schemes on white goods, auto ancillary, and capital goods in order to give a big push to 'Make for World'.

While addressing the nation from Delhi's historic Red Fort on its 74th Independence Day on August 15, the PM had said that the country should not only ‘Make in India’ but also ‘Make for the World’.

“I believe in the capabilities of our fellow Indians. I believe in the abilities of our youth. I am confident that we can achieve this goal of Atmanirbhar Bharat with the help of the approach and thought process of our citizens,” PM Modi said.

A gamechanger for the economy

On September 20, 2019, the government announced a corporate tax rate cut, reducing the base corporate tax rate to 22 percent from 30 percent, and to 15 percent from 25 percent for new manufacturing companies.

However, the corporate tax rate cut failed to fetch the desired results of bringing FDIs and start manufacturing in India.

The government seems to have felt that it needs to bring more measures to attract FDI. Besides, many companies are looking at other manufacturing places other than China. So, it appears to be a suitable time for India to give a strong push to manufacturing even as challenges such as COVID-19 remains.

Experts are of the view that the PM's push for manufacturing is going to be a gamechanger for the country in the coming years and it is expected to attract more global companies setting the country on the path of becoming an economic superpower.

Neeraj Chadawar, Head - Quantitative Equity Research of Axis Securities is of the view that it will be a welcome move for the economy and ‘Atmanirbhar Bharat’ and ‘Make for World’ are a step towards the goal of a $5 trillion economy.

"Auto components and Capital goods are significant contributors to the Indian economy with the capability to generate huge employment opportunities. These two sectors are laggard and underperformers in the last couple of years due to sector-specific challenges. Any incentive to these sectors will provide a threshold to come out of specific challenges," Chadawar said.

"Any pick up in manufacturing activities (new capacity implementation) in India will benefit the capital goods sector and benefits companies who are in industrial automation and industrial electrification, etc.," Chadawar said.

Sectors & stocks that may gain the most

Vinod Nair, Head of Research at Geojit Financial Services, is of the view that white goods, auto ancillaries and capital goods companies will gain if the government brings out further measures to boost 'Make in India'

Chadawar of Axis Securities said ‘Make for World’ is a great push for the auto industry to achieve growth and to make it second-largest in the world.

As per the government estimates, the auto industry is expected to grow five-fold to $200 billion with export of $70 billion.

Chadawar highlighted that in 2018-19, the industry did an auto component import of $17.7 billion, in which 61 percent of goods imported from Asia of which 25 percent itself from China.

For the last few years, the auto industry has been struggling with the transition of BS-IV to BS-VI and other technology and demand-related challenges.

"Any incentive by the government on manufacturing will be a welcome move for the industry which will lead to bringing down import dependence on Asia especially China," Chadawar said.

There are select stocks from these sectors that may gain the most among their peers.

Arjun Mahajan, Head- Institutional Business at Reliance Securities, said ABB, Havells, Cummins, Thermax, Amber Enterprises, Dixon Tech, Siemens, Honeywell Auto and Bharat Forge are among the companies that will be benefitted significantly due to the government's move.

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