India Emerging as the Next Manufacturing Powerhouse

75 years post-independence, India is ushering in a golden era, surpassing the United Kingdom to become the world's fifth-largest economy, with projections to reach a GDP exceeding $15 trillion and become the third-largest economy by 2047. The nation stands out as a beacon of growth in a challenging global economic landscape, with expectations to be the fastest-growing major economy in the coming decades.

India's economic ascent has been marked by an atypical growth pattern. In the last two decades, the services sector has seen rapid expansion without the precursor of a manufacturing boom, a path not commonly observed in other economies where manufacturing typically leads. The contribution of the services sector to the GDP has increased from 45 percent to 55 percent, while the manufacturing sector has seen a modest increase from 15 percent in 2017 to 17 percent in 2022.

Certainly! India has been gaining prominence as a manufacturing hub, and there are several compelling reasons why it could be the next go-to destination for manufacturers. Let’s explore some key points:

1. Demographic Advantage:

• India boasts a large and growing working-age population. With approximately 800 million working-age individuals, it is expected to add around 200 million more over the next three decades1.

• This demographic dividend provides a substantial labor force for manufacturing industries.

1. Cost-Competitiveness:

• India offers competitive labor costs compared to many other countries. The availability of skilled and semi-skilled workers at reasonable wages makes it an attractive destination for labor-intensive manufacturing.

• Operational costs, including land and utilities, are also relatively lower in India.

1. Government Initiatives:

• The Indian government has launched several initiatives to promote manufacturing, such as “Make in India” and “Atmanirbhar Bharat” (Self-Reliant India).

• These initiatives aim to enhance infrastructure, ease regulatory processes, and encourage foreign investment in the manufacturing sector.

1. Growing Domestic Market:

• India’s domestic market is vast and continues to expand. Rising income levels, urbanization, and a growing middle class drive demand for consumer goods, automobiles, electronics, and more.

• Manufacturers can tap into this large consumer base.

1. Strategic Geographical Location:

• India’s location provides easy access to markets in Asia, the Middle East, and Africa. It serves as a gateway for global trade.

• Ports, airports, and well-connected road networks facilitate efficient logistics and supply chain management.

1. Emerging Sectors:

• India is witnessing growth in sectors like pharmaceuticals, chemicals, electronics, and renewable energy.

• For instance, it is expected to account for over 20% of incremental global consumption of chemicals in the next two decades2.

1. Investment Incentives: According to Cushman & Wakefield’s 2021 World Manufacturing Danger Index, India has surpassed the United States as the world’s second most desired manufacturing destination3. Even with a conservative projection, India’s manufacturing output could reach $3.5 trillion by 2047, potentially creating 85 million additional jobs1.

• The Indian government offers various incentives to attract foreign direct investment (FDI) in manufacturing. These include tax benefits, subsidies, and special economic zones (SEZs).

In summary, India’s favorable demographics, cost advantages, government support, and growing market make it a promising destination for manufacturers.

The Muwork advantage :

We are creating and curating domain specific vendor networks in India to deliver on our promise of the best to clients and customers looking to enter India for manufacturing their products. Reach out to us to learn more!