India is becoming a new power in global manufacturing.

According to Times of India:

India has the capacity to export goods worth $1 trillion by 2030 and is on the road to becoming a major global manufacturing hub. With 17% of the nation’s GDP and over 27.3 million workers, the manufacturing sector plays a significant role in the Indian economy. Through the implementation of different programmes and policies, the Indian government hopes to have 25% of the economy’s output come from manufacturing by 2025.

Factors influencing the expansion of India’s manufacturing industry:

China’s declining competitiveness

India is presently in a good position to benefit from China’s declining competitiveness as a result of its substandard product quality, trade disputes, and border problems. Moreover India is reorienting its trade policy to take advantage of the increasingly popular China-plus-one strategy. This is basically a strategy in which companies avoid investing only in China and diversify their businesses to alternative destinations.

Huge opportunities for Indian producers have been created by a ban on the importation of Chinese goods. By 2030, the Indian manufacturing sector might boost the world economy by more than $500 billion a year. India improved significantly from its ranking of 142 in 2014 to 63 in 2020 for ease of doing business.

Heavy dependence on the service sector

Also, the pandemic has highlighted the service industry’s flaws and made policymakers realise that depending too heavily on the service sector may not be a good idea for the economy .

This led to the government stepping up its efforts to promote the manufacturing industry by providing a variety of incentives and promotional programmes to business ventures, start-ups, and entrepreneurs.

More over manufacturing activity leads to the creation of large employment in several service sector areas too.

In addition, India’s abundant supply of raw materials makes it a particularly desirable destination for manufacturing companies. India’s low labour costs, which are between a third and a fifth of those found in developed countries, increase its appeal.

Market opportunities

India also has a huge capacity to participate in global markets because of factors like electricity expansion, long-term employment possibilities, young and educated population and skill paths for millions of people. Their potential is influenced by a number of things. First of all, India’s assets in terms of raw materials, industrial know-how, and entrepreneurship are well positioned to benefit from these value chains. Additionally, they can benefit from four market opportunities, including contract manufacturing, localising imports, increasing exports, and increasing internal demand.

Digital transformation

Technology has today encouraged creativity, with digital transformation being a critical element in gaining an advantage in this increasingly competitive industry. The Indian manufacturing sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity.

Government initiatives

The National Manufacturing Policy aims to raise manufacturing’s GDP share to 25% by 2025. The “Make in India” campaign (covering 25 economic sectors) and the Production-Linked Incentive Scheme (4 percent to 6 percent incentives on incremental sales), the latter of which was presented in the Global Economic Prospects Report of the World Bank released in the month of January earlier this year, are some of the noteworthy programmes under which new business ventures in the manufacturing sector can benefit in a variety of ways. It is clear why India’s manufacturing sector grew by 210 percent in FY ’22.

India has a very active and strong start-up ecosystem. In reality, the Ministry of Micro, Small & Medium Industries in India allows anyone to register a business for free online (MSME). The demands are straightforward. Numerous micro and small industries are thus emerging across the country.

Investments in the Manufacturing Sector in India

The following are a few examples of recent significant investments and developments in this industry as per IBEF statistics:

The Department for Promotion of Industry and Internal Trade (DPIIT) estimates that in FY 2021–2022, India received a total inflow of US$ 58.77 billion in foreign direct investment (FDI).
From April 2000 to March 2022, the automobile industry received US$32.84 billion in foreign direct investment.
(Excluding fertilisers) The chemical manufacturing sector saw FDI inflows of US$19.45 billion.
The manufacturing of drugs and pharmaceuticals saw FDI inflows of US$19.41 billion.
In June 2022, the production of coal, cement, power, refinery products, fertilisers, steel, and natural gas drove the total index of the eight core industries to a value of 143.4.
Production grew for coal by 31.1%, electricity by 15.5%, goods from refineries by 15.1%, fertilisers by 8.2%, cement by 19.4%, and natural gas by 1.2% in June 2022.
The Manufacturing Purchasing Managers’ Index (PMI) for India was 53.9 in June 2022.
The export of the top 10 major commodities from January to June 2022 totaled US$ 190.4 billion and included engineering goods, petroleum products, gems and jewellery, organic and inorganic chemicals, drugs and pharmaceuticals, electronic goods, RMG of all textiles, cotton yarn/fabric/madeups, rice, plastic, and linoleum.
81 lakh net customers were added by EPFO in May 2022, an increase of 1.45 lakh net subscribers from April 2022.
Some of the biggest companies in the world, including but not limited to General Electric, Siemens, HTC, Toshiba, and Boeing, are setting up manufacturing plants in India as a result of the “Make in India” policy. The rising purchasing power of Indians is another factor supporting this growth. Therefore, these enterprises hope to draw both individual Indian consumers and companies that sell goods created in India.


Each year, China exports commodities worth more than $2.5 trillion, of which $490 billion goes to the US alone. The US-China trade war has given Indian businesses access to a sizable market.

Currently, India is regarded as the second most popular country in the world for manufacturing. The development of industrial clusters, the automatic route’s allowance of FDI up to 100%, the accessibility of bank loans, and other factors are driving India’s manufacturing sector’s expansion. To expand at an exponential rate, Indian manufacturers must concentrate on creating cutting-edge products, seizing export prospects and focus on productivity & efficiency through technology implementation, target global volumes to obtain global cost competitiveness.

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