KPMG in India report titled “Pivoting to Leadership" launched at ENRich 2023

Whether the world and India needs an energy transition is no longer in question. Rather, the question is how to achieve it, and how soon. The answer to both of those questions could depend on how we (India) get the manufacturing and supply chain story right, as it will be not just India that benefits, but the world stands to gain as well.

In light of the above background, KPMG in India presents to you a report titled – “Pivoting to Leadership – Re-imagining supply chains for India’s emergence as a credible alternative for global clean energy manufacturing”.

The report was launched by Hon’ble Minister, Shri Hardeep Singh Puri, Minister, Petroleum & Natural Gas and Housing & Urban Affairs, Government of India at ENRich 2023, KPMG in India’s marquee energy and resources conclave.

• The need for high speed and large-scale energy transition offers a massive investment opportunity
  • Rapid growth and climate change have created an urgent demand for energy transition which will involve a global annual investment of USD 4.5 trillion in energy until 2050
  • An ever-growing demand for energy from India’s expanding population and infrastructure development initiatives is creating a need for it to fast-track energy transition. To address its clean energy ambitions, India will need an average of USD 350 – 400 billion annually by 2047.
• Successful energy transition will require supply chains to be reimagined
  • The centralisation of supply chains and the resulting lack of price control due to overreliance on a single country is a key risk for global renewable energy capacity deployment. Hence a global attempt to diversity renewable energy supply chains by adopting approaches such as the China + 1 strategy could be imperative
  • Clean technology manufacturing in India presents a USD 300-400 billion opportunity cumulatively by the end of this decade. High captive demand, strong manufacturing clusters and processing capabilities, government support, regulatory enablers and unique domestic capabilities including skillsets make India a strong contender in this space.
• India is in a sweet spot, between Europe and China, to support the global energy transition
  • India has the ingredients needed to be a clean technology manufacturing hub. For this the industry must strengthen its manufacturing and sourcing strategy and focus on value engineering, effective expansion management and other levers
  • With a 28.4 per cent share in global manufacturing output, China is firmly placed at the top of cost-effective destinations due to government policies and suitable demography. On the other hand, Europe is known for its innovations, superior products, albeit with high labour costs and strict regulations. The global economy is seeking a reliable source that can provide high-quality products at a competitive price
  • India will need to play to its strengths and address its weaknesses: An evaluation of India’s manufacturing sector positions it favourably in terms of supplier ecosystem and collaborations and partnerships. While R&D and innovation and financing have emerged as key areas of concern, areas such as government support and availability of skills demonstrate scope for improvement
    

“A transition to clean energy is a huge economic opportunity for a country like India. The growing economy needs more energy than ever and energy needs resources, materials and manufactured products and systems. Beyond energy projects development where India has excelled, the full value chain needs addressing. Geopolitical upheavals have brought to the fore the broader challenges on energy security and the risk that it poses for many countries especially India. As a very large energy importer India needs to find alternatives that make the country less vulnerable. For this it is extremely important -That India gets its manufacturing and supply chain story right, as it would serve not only the nation but also de-risk the world” said Anish De, Global Head - Energy, Natural Resources & Chemicals (ENRC), KPMG International.

Sharing her views, Anvesha Thakker, Partner and Industry Lead-Clean energy, Energy Transition Co-Lead: Global Decarbonisation Hub, KPMG in India said “India as a country has the ingredients to emerge as a credible alternate frontier for clean technology manufacturing, but the industry must strengthen its manufacturing and sourcing strategy and focus on value engineering, effective expansion management, digital technologies and other levers to grow. If both domestic consumption and exports are factored, it has a USD300-400 billion cumulative market opportunity in clean energy manufacturing that it can harness within this decade. Additionally, as per KPMG in India estimates, energy transition could create the need for ~ 5-6 million jobs by 2030 and ~ 9-10 million by 2047, of which approximately 30% is expected in manufacturing, when we consider not only the local requirements but global demand of talent and requirements of global capability centers of energy majors in India. This would require a comprehensive skilling strategy to address the demand for deep skills while also ensuring rapid talent development, at scale.

If we get our strategy right, we can really convert these areas of opportunities though policies, robust supply chain strategies, creating an ecosystem that focusses on innovation, debottlenecking financing by innovative commercial frameworks and instruments and other measures” added Anvesha.

S Sathish, Partner and Lead - Customer & Operations Transformation, KPMG in India said, “India is poised to capitalize from the Energy transition opportunity owing to its strengths in manufacturing across core sectors, presence of a strong supplier ecosystem and thanks to the China Plus One strategy adopted by global firms. The Indian manufacturers, however, have to embrace cost competitiveness in all aspects of the value chain by adopting best practices right from choice of manufacturing location, efficient Capex procurement, Early Equipment management for Projects, Strategic Sourcing for all key categories, digitally enabled World Class Manufacturing and Resilient Supply Chain management. Right Talent attraction & Retention and Result focused Skill development will be the other two strong enablers for success.”