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

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

Sources

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