India’s manufacturing sector has the highest potential to propel economic development and employment creation. India has a huge capacity to participate in global markets because of elements like electricity expansion, long-term employment possibilities, 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 resources, industrial know-how, and entrepreneurship are ideally positioned to benefit these value chains. Additionally, they may benefit from four market possibilities, including contract manufacturing, localizing imports, increasing exports, and increasing internal demand.
Trends in Manufacturing Sector in India
Technology has now encouraged innovation, with digitalization being a critical element in gaining an advantage in this increasingly competitive business. The Indian manufacturing sector is steadily moving towards more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity. India is making slow but steady progress toward Industry 4.0 thanks to government projects like the National Manufacturing Policy, which intends to boost manufacturing’s GDP share to 25% by 2025, and the PLI scheme for Production, which was introduced in 2022 and aims to bring India’s core manufacturing sector up to par with international manufacturing standards.
Several firms are gradually shifting towards higher innovation and fabricating more components locally as they build up production in India, across categories ranging from vehicles to electronics, as opposed to primarily relying on assembling goods using imported parts in the past. Companies have learned since the pandemic that relying on a single site for production is not advantageous for them. Therefore, individuals seeking for a second destination will be relieved to learn about India.
India becoming a global hub for manufacturing
Although China has established itself as the only player in the industrial sector, attitudes have changed recently. Along with the country’s fast digitalization and the positives like India’s huge, young labor and the prevalence of English as a language make the nation an appealing location for manufacturing.
According to preliminary estimates of the GDP for the first quarter of 2021–2022, India’s GDP for the first quarter of FY22 was Rs. 51.23 lakh crore (US$ 694.93 billion) at current exchange rates. In the third quarter of FY22, the manufacturing GVA at current exchange rates was expected to be US$ 77.47 billion, and during the previous 10 years, it has provided around 16.3% of the actual GVA. By 2030, India may contribute more than US$ 500 billion yearly to the global economy and become a major center for manufacturing.
According to economic survey data, manufacturing jobs in India were predicted to have been 5.7 crore in 2017–18, 6.12 crore in 2018–19, and 6.24 crore in 2019–20. The market for display panels in India is predicted to increase from $7 billion in 2021 to $15 billion in 2025. The second quarter of FY22 saw asset utilization in India’s manufacturing industry rise to 72.0%, according to a poll done by the Federation of Indian Chambers of Commerce and Industry (FICCI), showing a considerable rebound in the market.
State regulations barriers can occasionally hold down new industrial facilities in India, and reliable electricity and waste disposal systems need to be enhanced even further. Thanks to support and subsidies from the state government and advantageous regulations from the federal government, the climate for manufacturing is strengthening.
India is a desirable location for international industrial ventures. Numerous companies, including those from the luxury, car, and mobile phone industries, have either established or are planning to do so in the nation. India’s manufacturing industry has the potential to generate $1 trillion in revenue by 2025. With a GDP of US$2.5 trillion and a population of 1.32 billion, India will become a single market when the Goods and Services Tax (GST) is implemented, which would be very attractive to investors. According to the Indian Cellular and Electronics Association (ICEA), by regulatory changes, India may increase its total capacity for producing laptops and tablets to US$ 100 billion by 2025.
By 2030, India may contribute more than US$ 500 billion yearly to the global economy and become a major centre for manufacturing. Hence, the manufacturing industry in India is on the rise at a rapid and transformational pace, giving a new outlook to the sector.