Manufacturing

• Organised manufacturing is the biggest private-sector employer in India with 70% of manufacturing units under the private sector
• More than 30 million people are employed by the sector both organized and unorganized
• Quarterly Gross Value Added (GVA) at Basic Prices for Q1 2019-20 grew by 0.6% as compared to growth of 12.1% in Q1 2018-19
• At current prices, Gross Capital Formation of the sector increased to INR 9.84 trillion in FY19 from INR 6.15 trillion in FY12
• India’s manufacturing Purchasing Manufacturers Index (PMI) PMI reached 27.40 in April 2020 from 51.8 in March 2020
• Merchandise export decreased by 4.78% y-o-y to reach $314.31 billion in FY20
• The government aims to achieve a 25% GDP share and 100 million new jobs in the sector by 2022

Competitive Advantage for India

• India has all the necessary ingredients for its major industrial push – a huge semi-skilled labour force, multiple Government initiatives like Make in India, high investments and a big domestic market
• Rapidly increasing middle class and overall population, an increasing share of the young working population in the total population
• A resource-rich country with fifth-largest reserves of coal in the world and immense potential for renewable energy like solar and hydro is ready to meet the need of the growing industry

Government Policies

• Initiatives like ‘Make in India’ and sector-specific incentives to various manufacturing companies, aiming to make India a global manufacturing hub
• Skill India, a multi-skill development programme, was started to equip the workforce with the necessary skills required by the sector
• Government incentives like free land to set up base and 24*7 power supply is making India competitive on a global scale
• National Manufacturing Policy was introduced in 2011 to increase the share of the manufacturing sector in India’s GDP to 25% and create 100 million jobs by 2021
• 100% FDI is approved in the sector through automatic route under the current FDI Policy

Investments

• Gross Fixed Capital Formation, which represents net investment in fixed assets, stood at INR 28,36,661 crore in H1FY20.

Market Overview

• Quarterly GVA at basic prices for FY20 grew by 0.7%
• The sector’s GVA at current prices was estimated at $403.47 billion in FY19
• The manufacturing component of the Index of Industrial Production (IIP) stood at 129.8 during FY20
• The overall index of eight core industries (ICI) stood at 131.9 during FY20
• The capacity utilization in India’s manufacturing sector stood at 69.1% in Q2FY20

Strategies Updated

• Various organizations are looking at backward integration as a means to reduce costs
• Forward integration strategies also help organizations to realize cost benefits
• Indian manufacturing companies have started adopting digital technologies in their production processes, which will help in increasing efficiency

Growth Drivers

• Government initiative
• Public-Private Partnerships (PPP)
• International Investment
• Huge labour pool
• Domestic consumption

New Opportunities

• Business leaders expect global demand to play a major role in the expansion of India’s manufacturing industry
• 3D printing has huge potential in India with the rise of mega projects coming up
• The manufacturing sector has started implementing this new network of sensors and actuators using IoT for data collection, monitoring, decision making and process optimisation over internet infrastructure
• It is estimated that 65% of manufacturing companies will have high levels of digitalization by 2020.

Key Industry Organizations

• ACC Limited
• Deccan Cements
• JSW Steel
• OCM Birla Group
• Wonder Cement
• Zuari Cement

Sources

https://www.ibef.org/download/Manufacturing-May-2020.pdf

https://www.ibef.org/download/Manufacturing-October-2019.pdf