Manufacturing

India’s gross domestic product (GDP) at current prices stood at Rs. 51.23 lakh crore (US$ 694.93 billion) in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22. The manufacturing GVA at current prices was estimated at US$ 77.47 billion in the third quarter of FY22. India has potential to become a global manufacturing hub and by 2030, it can add more than US$ 500 billion annually to the global economy.¬

The manufacturing sector has seen some major developments, investments and support from the Government in the recent past.

In April 2022, the Manufacturing Purchasing Managers’ Index (PMI) in India stood at 54.7 from 54 in March 2022.

In April 2022, the combined index of eight core industries stood at 143.2 driven by production of coal, electricity, refinery products, fertilizers, cement and natural gas.

In April 2022, outputs increased for coal by 28.8%, electricity (10.7%), refinery products (9.2%), fertilizers (8.7%), cement (8%), natural gas (6.4%).

In May 2022, export of top 10 major commodities (Engineering goods, Petroleum products, Gems and Jewellery, Organic and Inorganic chemicals, Drugs and Pharmaceuticals, RMG of all Textiles, Electronic goods, Cotton Yarn/Fabs./Madeups, Rice, Plastic and Linoleum) stood at US$ 37.29 billion.

According to Department for Promotion of Industry and Internal Trade (DPIIT), India received a total foreign direct investment (FDI) inflow of US$ 58.77 billion in FY 2021-22.

In the Union Budget 2022-23, Ministry of Defence has been allocated Rs. 525,166 crore (US$ 67.66 billion). The government allocated Rs. 2,403 crore (US$ 315 million) for Promotion of Electronics and IT Hardware Manufacturing.

The PLI for semiconductor manufacturing is set at Rs. 760 billion (US$ 9.71 billion), with the goal of making India one of the world's major producers of this crucial component.

Electronics, vehicle, and solar panel production account for around 80% of total manufacturing expenditure, with semiconductors/electronics value chain accounting for 50% of total expenditure in February 2022.

As per the survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI), capacity utilisation in India’s manufacturing sector stood at 72.0% in the second quarter of FY22, indicating significant recovery in the sector.

In September 2021, Prime Minister Mr. Narendra Modi approved the production-linked incentive (PLI) scheme in the textiles sector—for man-made fibre (MMF) apparel, MMF fabrics and 10 segments/products of technical textiles—at an estimated outlay of Rs. 10,683 crore (US$ 1.45 billion).

The 'Operation Green' scheme of the Ministry of the Food Processing Industry, which was limited to onions, potatoes and tomatoes, has been expanded to 22 perishable products to encourage exports from the agricultural sector. This will facilitate infrastructure projects for horticulture products.

To propagate Make in India, in July 2021, the Defence Ministry issued a tender of Rs. 50,000 crore (US$ 6.7 billion) for building six conventional submarines under Project-75 India.

Production-linked incentive (PLI) was launched to establish global manufacturing champions across 13 sectors with an allocation of ~Rs. 1.97 lakh crore (US$ 27.02 billion) over the next five years (starting FY22).

India's display panel market is estimated to grow from ~US$ 7 billion in 2021 to US$ 15 billion in 2025.

The future outlook of the manufacturing sector looks on track with pandemic easing out.

The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025. The implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of US$ 2.5 trillion along with a population of 1.32 billion people, which will be a big draw for investors. With impetus on developing industrial corridors and smart cities, the Government aims to ensure holistic development of the nation.