The role of India will further grow in a post COVID world when most of the international
manufacturers are looking forward to diversifying their supply chain by
adopting a China+1 strategy. As organizations are diversifying their supply chain, production
facilities, & sourcing destinations, India offers a suitable alternative. India’s
large domestic market, growing middle class, favorable industrial policy alongside an abundance of human
capital, and natural resources give it a natural advantage over its
Although a distant second to the service sector, India’s manufacturing is set to grow at a
vigorous pace. Currently, manufacturing constitutes around 18% of the
Indian GDP. However, GOI understands the role of manufacturing as a key economic growth driver and has
underlined a host of initiative in the form of simplified FDI participation,
systematic investments in developing the overall physical & social infrastructure, creating new land
banks, lowered tax rates, numerous concessions & discounts on investments, etc.
to boost the overall manufacturing sector in the country. The governing agencies are planning to take
the manufacturing’s overall contribution to 25% of the GDP.
India already has made a stronghold in numerous industries such as automobiles,
electronic appliances, pharmaceuticals (generics), steel, etc. The country
huge potential in the defense & aerospace, API, household items, processed foods, construction
India is home to the world’s 4th largest automobile industry. The automobile industry in India is
valued at USD 118 billion, out of which the automotive parts industry is
valued at USD 57 billion. The country has produced ~ 31 million automobile units in 2019, which
includes passenger vehicles, commercial vehicles, tractors, 2 & 3 wheelers,
The country is also home to a thriving auto-part industry including body parts & chassis, engine &
transmission, equipment, suspension system, etc.
India’s pharmaceutical industry, which is pegged at ~ USD 40 billion has the potential to grow
multifold. Nearly half of the pharma produce from India is exported to
international markets. The country, which already plays a dominant role in the global generic drugs
market is now aggressively moving up the curve to deepen its foothold in
injectables, bio-similar, etc.
India’s pursuit of becoming a global leader in smartphone and mobile manufacturing remains
undeterred. Presently, it is the 2nd largest handset manufacturing market in the
world. Global giants such as Samsung & Apple are scaling up their production facilities in the
country and it is estimated that in the next 5 years, India will produce
worth USD 143 billion. Out of this, around 60% will be exported. Aggressive growth on the back of a
huge domestic market is also expected in other consumer electronics such
TV sets, ACs, refrigerators, and audio devices, etc.
India is home to a thriving food processing industry backed by a growing middle-class population,
changes in consumer preferences, and a surge in disposable income.
food comprises of around 32% of the overall food basket. The country, where total food & agriculture
exports amounted to USD 38 billion in 2019 has the potential to become
key node in the global food supply chain. The country is the largest producer of dairy and
livestock. It is also the second-largest producer of cereals, fruits &
and marine livestock.
India has become the 2nd largest steel producer in the world after China, surpassing Japan & USA. In
2019, the total steel production amounted to over 111 million tons. As
the national steel policy, India is aiming to reach 300 million tons of annual production in 2030.
The rise in exports, growing domestic demand, and the availability of
of iron ores will continue to drive the industry in a positive direction. The per capita steel
consumption has risen to 74 KGs from 57 in the last 5 years. The country is
witnessing a steep rise in exports as the existing global supply chain has disrupted.
GOI understands how the positive impact of robust manufacturing industry can reverberate
throughout the economy. Hence the governing agencies have formulated an
exhaustive industrial policy underpinned on strategic acumen and principal handed approach. Mentioned
below are the key steps taken by the government
In 2014, India announced the comprehensive Make in India Plan to transform India into a global
manufacturing hub. The plan is aimed at increasing the share of manufacturing
Indian GDP to 25% through the help of policy impetus, simplified FDI investments framework,
conducive private sector participation alongside skill enhancement, higher value
addition in manufacturing, and technological enhancement.
In the wake of the current COVID crisis, India has notified the Aatm Nirbhar Bharat (Self Reliant
India) plan aimed at lowering India’s dependence on import and promote
manufacturing. Already a massive stimulus package of USD 290 billion has been announced.
42 Mega food parks have been announced with each food park having around 30-35 food processing
units. Alongside this, the government is also working on 297 cold chain
to facilitate the cohesive transfer of perishable food items.
The government has announced a USD 6.6 billion stimulus package for international & domestic
smartphone manufacturers. The stimulus will be disbursed in the form of
linked incentive scheme, where manufacturers can earn up to 6% incentives.
India has apprised a USD 1.3 billion package for the Indian pharma sector aimed at improving
domestic manufacturing and lowering reliance on the import of APIs, DIs, and
medical devices. The package includes production linked incentives and financial aid to developing
drug production parks and medical device parks in the country.
Dedicated corridors have been set up in the province of Uttar Pradesh & Tamil Nadu to give a
facelift to the defense hardware and aerospace industry in the country. To
lure FDI, a host of policy incentives have been formalized including capital subsidies, concession
in land prices, and interest subsidies, etc.
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