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Good morning. The very few airlines that exist in India are looking to expand, and as they do, there will be a larger requirement for maintenance and repair of aircraft. While much of India’s aeroplanes and their parts are repaired abroad, Air India has already started to set up maintenance, repair, and overhaul (MRO) centres in the country. Only, there’s a slight problem: aviation engineers don’t want to stay in the country. 

In other news, India improved its ranking on the Asia Power Index. Meanwhile, there has reportedly been a Central government intervention in the protests at South Korean electronics giant Samsung’s Tamil Nadu factory.

DECODE THE NEWS

India’s Aviation Industry Has A Problem: Its Top Engineers Are Moving Abroad

India’s MRO industry has long been struggling with a list of challenges from securing investments, inadequate infrastructure, sky-high taxes among others. But one trend that's raising eyebrows is the brain drain of engineers trained in India, only to jet off and build their careers overseas.

“There is a significant talent gap in India’s MRO sector. While India is the largest supplier of aviation talent to the Middle East and APAC regions, domestic MRO operators struggle to retain skilled professionals. The government needs to intervene and enforce regulations to protect and promote this industry,” said Pulak Sen, founder of the MRO Association of India, speaking to The Core.

It’s no open secret that around 30% of Indian students who graduate from domestic aviation programmes end up working with international airlines. Sure, India’s making strides in skill development, but let's face it—the paychecks abroad are hard to beat.

“This disparity drives many to seek opportunities in the Gulf countries. After five to six years of gaining experience abroad, these professionals often return to India, where their enhanced skills allow them to secure high-paying senior positions,” noted Subhajit Maity, accountable manager at Thakur Institute of Aviation Technology, in conversation with The Core.

Due to rising demand, players like Air India and IndiGo are on a fleet expansion spree. The big question is: are we doing enough to keep our talent grounded here?

PODCAST

On Episode 397 of The Core Report, financial journalist Govindraj Ethiraj talks to Devendra Kumar Pant, Chief Economist of India Ratings & Research.

• Markets hit highs for 5th consecutive session, more mutual funds switch to cash.

• Global stocks are not enthused by China’s bold stimulus moves.

• India needs FDI in manufacturing, says ADB.

• India is finishing up with a strong monsoon, how good was it, economically? The 100 hour concept.

• Hyundai’s Rs 24,000 crore IPO is revving up. What will it do to the market?

• An Italian bank raids a German bank and hell breaks loose.

CO:RELATION

Private Zerodha Moves Markets

When Zerodha's Nithin Kamath speaks, markets listen. A privately owned company in the securities business talks numbers, and there is a reaction in the market. Shares of listed companies like Edelweiss, Motilal Oswal and JM Financials fell on Wednesday. Kamath of Zerodha warned in his post that the best for the Indian broking industry may well be behind us. He said competitive pressures were fierce, and there was always a threat of share prices falling from the peaks. Zerodha will expand into margin trading funding and other activities that most full-service stockbrokers do. At the same time, the company will strive to reduce the contribution from the F&O segment. 

Kamath also took notes from the SEBI observations in the survey on F&O traders, highlighting losses for 9 out of 10 traders. The regulatory environment is gearing up to reduce speculative trading, which could be bad news for stockbrokers. They make their commission based on transactions.

CORE NUMBER

3rd

This is India’s rank on the Asia Power Index, overtaking Japan’s position, according to the Ministry of Information and Broadcasting. This achievement marks a shift in the Asia-Pacific geopolitical landscape, driven by India’s dynamic growth, youthful population and expanding economy. The Asia Power Index, created by the Lowy Institute in 2018, evaluates 27 countries based on their ability to navigate geopolitical challenges using eight core measures. India's 2024 rise reflects its post-pandemic recovery, highlighted by a 4.2-point boost in Economic Capability and an 8.2-point increase in Future Resources, thanks to its youthful demographic.

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FROM THE PERIPHERY

—💸 It’s IPO season, and Swiggy has joined the race! The food and grocery delivery giant has scored the green light from regulator the Securities and Exchange Board of India for its much-hyped initial public offering (IPO). The Bengaluru-based platform is targeting Rs 3,750 crore through fresh equity and Rs 6,664 crore via an Offer-for-Sale, with plans to raise Rs 750 crore from anchor investors in a pre-IPO round. According to The Indian Express, Swiggy, valued at nearly US $13 billion as of April 2023, generated US $1.09 billion in annual revenue.

—👚 It is good news for the apparel retail sector as a Crisil Ratings analysis found that the organised apparel retail sector in India is set for an 8-10% revenue boost this festive and wedding season. This is thanks to higher demand, a good monsoon, easing inflation, and our love for fast fashion. Premium clothing is set to shine, and fast fashion continues dominating, accounting for 60% of sales. A 2022 survey showed 58% of urban Indians planned Diwali shopping, driving those numbers higher. Meanwhile, the Retailers Association of India reported a modest 2% growth in apparel sales for August 2024, down from last year’s 6% during the festive season.

—🪧 As protests by Samsung workers in Tamil Nadu enter the third week, the Centre has reportedly asked Tamil Nadu Chief Minister MK Stalin to find a resolution, Reuters reported government sources as saying. The protests by over 1,000 workers at the plant located near Chennai have disrupted manufacturing. While the workers demand better pay and work conditions, the South Korean electronics major has said they are paid better than those in nearby plants. The protest began at Samsung’s home appliance manufacturing plant on September 9. 

—✈️ While the Indian aviation sector seems to be dominated by IndiGo and Air India, there is another player still in the picture that we cannot forget. Budget carrier SpiceJet may not have had the best of times recently, but is still in the reckoning and looking to expand. CEO Ajay Singh told ET Now that the airline is planning to expand with 75 aircraft over the next two years through its recently concluded Rs 3,000 crore QIP. “We think that this amount is sufficient to fund SpiceJet's expansion plan, which is to go from the current level of 25, 27, 28 aircraft to in excess of 100 aircraft in two years," Singh said. 

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