Indian manufacturing market has potential to reach US$ 1 trillion by 2025-26: Colliers
15 December 2023: Manufacturing sector in India has been witnessing a proliferating growth in investment, depicting crucial phase in country’s economic arena. As per published dossiers by Department for Promotion of Industry and Internal Trade (DPIIT), manufacturing sector engrossed substantial Foreign Direct Investment (FDI), with FDI equity inflows tallying around USD 17.51 billion in the FY 2020-21 itself.
‘Make in India’ initiative, a government-led campaign aimed at encouraging domestic manufacturing, has played a pivotal role in accelerating investments. Policy reforms and incentives, comprising of the Production Linked Incentive (PLI) scheme, the government has pro – actively incentivized various manufacturing industries, such as automobiles, electronics and textiles, nurturing an environment conducive to augmented investment.
Propelled by progression in significant sectors and urged by favorable megatrends, India’s manufacturing sector has started itself into new geographies and sub sector/segments. Emphasis on the competitive advantage of a skilled workforce and lower cost of labor, the manufacturing sector is also beholding an amplified inflow of capital investment and M&A activity, leading to a surge in manufacturing output and consequential increased contribution to exports.
Manufacturing sector contributes around 17% to the GDP supported by robust physical and digital infrastructure which is expected to grow to 21% in the next 6-7 years. India is well-positioned to enhance its manufacturing sector, making considerable advances in global supply chains.
The automotive sector, a keystone of India’s manufacturing prowess, has seen prominent interest from global players like Tesla and Ford, depicting intents for establishing or expanding their manufacturing footprints within the country. Electronics manufacturing experienced a rise in investments, particularly in smartphone production domain.
Major players like Apple’s contract manufacturers established assembly units in India, implying a shift to local production strategies. Additionally, the textiles and garment manufacturing sectors have witnessed upsurge in investment activities, with several global brands reconsidering their sourcing strategies and investing in Indian textile units, take advantage of on India’s competitive advantages in the said domain.
Government is committed to fostering comprehensive national development by emphasizing the development of industrial corridors and smart cities. These corridors are intended to encourage the adoption of advanced manufacturing practices as well as to facilitate integration, monitoring, and the creation of a favorable environment for industrial growth with employment for more than around 27 million workers.
With all the policy incentives and various initiatives, the Indian manufacturing market has the potential to reach US$ 1 trillion by 2025-26.
Maharashtra government has signed 21 memorandums of understanding (MoUs) of INR88,420 crore at World Economic Form in 2023. MoU have employment potential of over 55,000 jobs. The MoU conversion rate in Maharashtra is 30- 40%. Andhra Pradesh signed MoUs in Global submit 2023 with 352 firms in with proposed investment of 13.5 crore. These projects of launched successfully will create 6,00,000 jobs within the state. In addition to this, Gujarat has signed 3 MoUs in Oct 2023 worth INR 3,000 crores for textile, industrial park, engineering, including auto sector; 9,000 new employment opportunities followed by Tamilnadu state, which has signed total 79 MoUs in year 2022-23 with the total sum of 165,748 cr.
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