The manufacturing sector in India has been witnessing a proliferating growth in investment, depicting crucial phase in the country's economic arena. As per the published dossiers by the 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. This surge emphasizes intensified investor confidence and exhibits India's attractiveness as one of the most lucrative manufacturing destinations in the world, as per Colliers India.
The 'Make in India' initiative, a government-led campaign aimed at encouraging domestic manufacturing, has played a pivotal role in accelerating investments. Furthermore, 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.
The manufacturing GVA at current prices was estimated at US$ 110.48 billion in the first quarter of FY24.
The 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 Government of India's Ministry of Heavy Industries and Public Enterprises has launched SAMARTH Udyog Bharat 4.0 in 2021 as a strategic initiative intended to enhance the manufacturing sector's competitiveness, predominantly in the capital goods domain.
The 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.
There has been various MoUs signed but different states in India to boast industrial and manufacturing sector. The Maharashtra government has signed 21 memorandums of understanding (MoUs) of Rs 88,420 crore at World Economic Form in 2023. The 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 2023with 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 Rs. 3,000 crores for textile, industrial park, engineering, including auto sector; 9,000 new employment opportunities followed by Tamil Nadu state, which has signed total 79 MoUs in year 2022-23 with the total sum of 165,748 cr.
Various states in India, including Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Telangana, and Andhra Pradesh, have strategically implemented a range of incentives to attract and support manufacturing plants within their borders.
As of 2023, the current size of the Industrial Warehousing and Logistics market is approximately 38.4 million square metres, which includes both Grade A and Non-Grade A developments. According to projections, the market will grow significantly, reaching around 69.7 million square metres by 2026, with Grade A developments accounting for 60% and Non-Grade A developments accounting for the remaining 40%. The Grade-A warehousing sector has experienced consistent growth, owing to the country's surge in e-commerce, and is expected to maintain a 15% growth rate over the next three years. The overall progress of the industrial market is fueled by the continuous expansion of e-commerce, which is facilitated by advanced technologies and robust networking. In addition, the manufacturing sector has shifted from traditional to cutting-edge technology-based facilities, attracting both domestic and international firms.
The increasing adoption of electric vehicles (EVs) is one of the key drivers of this growth. Consumers and manufacturers are making deliberate decisions to embrace EVs, resulting in rapid growth in the sector. Government policies and incentives are also important in promoting this expansion. Another factor that contributes to growth is infrastructure development initiatives such as the Bharatmala Pariyojana. This programme has proposed 11 industrial corridors with the goal of improving connectivity and logistics networks and, as a result, fostering better trade and commerce. In essence, the dynamic forces of e-commerce, technological advancements, the rise of electric vehicles, and strategic infrastructure development initiatives are driving the multifaceted growth of the Industrial Warehousing and Logistics market.
