Exciting Times for Industrial Manufacturing Sector in India in Next 12 Months



On the back of large scale infrastructure reform, India is set to become a major node in global manufacturing. In a post COVID world, as normalcy is restoring & organizations are devising new business continuity plans, India is set to become an alternative destination. Its large domestic market, progressive tax reforms, & growth in infrastructures are drawing the attention of global manufacturers.

Post opening the economy in the 1990s, India's service sector grew aggressively; becoming one of the key factors behind's its economic progression. Meanwhile, industrial manufacturing sector in India grew relatively at a slower pace. One of the bottlenecks has been the poor quality of infrastructure that adversely affected the industrial manufacturing sector in India.

However, in the last 5-6 years, the trends are reversing. India has received a sizable amount of investments in industrial manufacturing, which was not just limited to labor-intensive industries such as textile, leather, consumer electronics etc. International investors targeted other high-end manufacturing verticals as well such as biotechnology, healthcare, R&D centers, digital technologies etc.

The Indian government has shown its commitment towards developing world-class infrastructure in the form of extensive roadways network & further strengthen it with the help of bridges and high speed and high capacity railway corridors. It is taking interest in developing Greenfield Ports as well as building better capabilities in the existing ones. India is also making new SEZs, business parks, & larger industrial corridors to uplift its manufacturing capabilities.

In the previous budget as well as India announced to invest USD 1.4 trillion over the next 5 years to develop world-class infrastructure. Currently, it is building 30-40 KMs of highway each day. Its 1st industrial corridor, the Delhi Mumbai corridor is under implementation. It is developing 6 dedicated high speed and high capacity freight corridors out of which work is under progress for 2 of them.

India realizes the significance of its attractive geographic position that places it in proximity to numerous emerging and developed markets in Africa, Middle East, South East Asia, and East Asia. Apart from developing new ports and improvising on existing ones, the country is also working towards 14 Coastal Economic clusters that will be cohesively linked through roadways and railways to facilitate faster trade.

These economic clusters in the coastal region will be named as Coastal Economic Zones (CEZ) and will house numerous Coastal Economic Units (CEU) specific to industries. These CEUs will have multiple industrial clusters & manufacturing units. Apart from industries such as petrochemical, power, & refineries, CEZ will foster growth in numerous other labor-intensive industries such as electronics, apparel, leather, food processing, & much more.

India's infrastructure development programs alongside business reforms are helping it to consolidate its position as a global manufacturing destination. This was further underscored by its progress made in the Ease of Doing Business parameter. In the latest installation of Ease of Doing Business, India is ranked 63.

It has made notable progress across multiple crucial metrics such as starting a business, obtaining electricity connection, trading across borders, & access to credit.

On the back of large scale infrastructure reform, India is set to become a major node in global manufacturing. In a post COVID world, as normalcy is restoring & organizations are devising new business continuity plans, India is set to become an alternative destination. Its large domestic market, progressive tax reforms, & growth in infrastructures are drawing the attention of global manufacturers.

India has also made tax reforms that will be a crucial pull factor for numerous manufacturing units looking to grow and flourish in the country. At present, the corporate tax for starting a new production unit in India is pegged at 17%. This is much cheaper when compared to other emerging manufacturing destinations in the South East Asian region such as Malaysia, Thailand, Indonesia, & Vietnam.

Support for Industrial Manufacturing Sector in India

In a post COVID world, as major organizations in the world are relooking their supply chain & rethinking their sourcing strategy, India offers a suitable alternate destination for business continuity. The government of India in close coordination with the state government & other trade promotion agency is not keeping any stone unturned in developing India as a manufacturing powerhouse.

In addition to boosting the infrastructure and overhauling the policy framework, the government has also taken a host of other initiatives to bolster industrial manufacturing sector in India. It has formed a high level empowered group to help international manufacturers come and set up their production units in India. The state (province) governments are also offering numerous incentives in the form of single window clearance & assistance in land acquisition to help international organizations come and grow.

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