Sectors to focus on in next 5 years under Modi 3.0

Post the 2024 elections, the National Democratic Alliance (NDA) led by Narendra Modi is set to continue its government for a third consecutive term. It is expected that there will be favourable conditions in certain sectors if the government continues. In this article, we delve into the sectors that need to be focused on in the next 5 years under Modi 3.0.

How does repeated government tenure help industries?

If the government renews its term, it is expected that the regulatory framework, tax policies and other business-related decisions made by the government will remain intact. Moreover, it can be said that the benefits provided by the government in the form of subsidies, tax incentives and other forms of assistance that will help in the development of the industry will also remain intact.

Ahead of the 2024 elections, the NDA had come up with an interim budget, which set out budgets and targets to be achieved across industries. Since the NDA government will retain this position for another term, we can conclude that industries that have been highlighted in previous budgets are more likely to be prioritized.

Let us now look at some of the sectors that the NDA government has prioritized and have the potential to grow in the next five years

Sectors to focus on in next 5 years under Modi 3.0

Defense sector

The Indian Armed Forces are considered to be one of the most powerful armed forces in the world. In this sector, the three largest market segments include fixed-wing military aircraft, warships and water fightersand missiles and missile defense systems.

According to the Global Power Index, India’s defense sector ranks fourth in firepower with a score of 0.0979 (0.0 is perfect). The Indian government has set a defense production target of $25 billion by 2025 (including $5 billion in exports by 2025).

The country ranks among the top armed forces and is also one of the largest spenders in the defence segment. During the last interim budget, the government proposed a total fiscal outlay of Rs 6.21 lakh crore, which is 13.04% of the total budget and an increase of 4.72% over the previous budget.

Below is a list of some defense stocks:

Railway sector

The Indian railway system is an important part of the Indian economy. Indian railways cover the entire country, stretching for thousands of kilometers, making it the fourth largest in the world after the US, China and Russia.

As of FY24, Indian Railways loaded 1,434.03 tonnes of cargo during April-February, increasing their revenues by Rs. 6,468 crore from revenues of Rs 1,60,158 crore recorded in FY23.

In 2022-23, Indian Railways earned 69% of its revenue from freight and 24% from passenger traffic. The remaining 7% came from several sources, including parcel deliveries, coaching revenues and platform ticketing.

In the recent budget announcement, the government revealed plans to implement three major rail economic corridor programs. These are (i) energy, mineral and cement corridors, (ii) port connectivity corridors and (iii) high traffic corridors. Additionally, forty thousand regular rail bogies will be upgraded to Vande Bharat standards to enhance passenger safety and comfort.

While passing the interim budget in February 2024, the government had proposed an allocation of Rs 2.55 crores to the Ministry of Railways.

Below is a list of some stocks from the rail sector:

Road Transport and Motorways Sector

India, as a developing country, considers roads to be a key element of its development. The country boasts the second largest road network in the world, stretching 6.7 million kilometers. This extensive road network transports 64.5% of all goods and is used by 90% of India’s total passenger traffic. commuting.

Road transport has grown steadily in recent years, improving connectivity between cities, towns and villages in the country. The construction of national highways in India grew at a CAGR of 5.3% between FY14 and FY23. In FY23, the Ministry of Road Transport and Highways constructed 10,331 kilometres of national highways.

As of November FY24, India has constructed a total of 5,248 km of National Highways. Besides, a total of 202 National Highway projects worth Rs. 79,789 crore are under implementation in the country and they cover a length of 6,270 km.

Under the interim budget 2024, the Government of India has allocated Rs. 2.78 lakh crores for the Ministry of Road Transport and Highways.

Below is a list of some stocks in the road transport and highways sector:

Chemicals and Fertilizers Sector

The Indian chemical industry is extremely diversified, with over 80,000 commercial products. The sector can be broadly divided into bulk chemicals, specialty chemicals, agrochemicals, polymers, petrochemicals, and fertilizers.

India is currently the third largest chemical producer in Asia and sixth in the world. The sector accounts for 7% of India’s GDP and is valued at $220 billion in 2022. It is expected to grow to $300 billion by 2025 and a staggering $1 trillion by 2040.

By 2025, demand for chemicals is expected to grow by 9% annually. By 2030, the chemical industry is expected to contribute $383 billion to India’s GDP.

In the interim budget 2024, the Government of India has allocated ₹1.68 lakh crores to the Ministry of Power.

Below is a list of some stocks in the Chemicals & Fertilizers sector:

Green energy sector

As India continues to move towards becoming a developed country, its energy demand is expected to grow more than any other country in the world. That is why it is so important to focus on this sector during Modi 3.0.

According to REN21 Renewables 2023, India ranks 4th in the world in terms of installed renewable energy capacity (including large hydro), 4th in wind capacity and 5th in installed solar capacity.

In the 2024-2025 mid-term budget, the government introduced new measures to promote sustainable energy and electric mobility, aligning with its green energy commitments and its target to achieve net zero emissions by 2070.

The two main announcements include plans to solarize 10 million households with rooftop solar installations and provide feasibility gap financing (VGF) for offshore wind projects with a total capacity of 1,000 MW. In addition, new schemes for the bioenergy segment were presented.

In the interim budget for 2024, the Government of India has allocated an amount of Rs 20,502 crore to the Ministry of Power.

Below is a list of some stocks in the green energy sector:

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Application

The article concludes with a discussion on the sectors to focus on in the next 5 years under Modi 3.0. The government has laid a solid foundation for India’s economic development and progress by ensuring policy continuity and commitment to promoting these key sectors. However, it should be noted that market sentiment has significantly influenced recent months. Therefore, it is crucial to focus on both company and sector valuations before making any investment decisions.

Written by Aaron Vas

Using Trade Brains’ stock screener, stock heat map, portfolio backtesting and stock comparison tool, investors gain access to comprehensive tools that allow them to identify top stocks, stay up-to-date and well-informed. investments.

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