IBEF-印度制造业分析（英文）-2018.11-34页-1mb

Summary of India's Manufacturing Sector

Core Content

India's manufacturing sector is a vital component of the economy, contributing significantly to GDP, employment, and export growth. It is seen as a key driver for the country's economic development and a potential global manufacturing hub. The government has launched various initiatives to support this growth, including Make in India, Skill India, and Startup India, alongside infrastructure development and policy reforms.

Main Points

Economic Growth and Employment

• Organised manufacturing is the largest private sector employer in India, employing over 30 million people (organised and unorganised), with a focus on semi-skilled labor.
• The sector is expected to be a growth engine, especially in rural areas, where over 5 million manufacturing units are already operational.
• The government aims to increase the GDP share of manufacturing to 25% and create 100 million new jobs by 2022.

Global Competitiveness

• India is moving towards Industry 4.0, with a focus on automation, robotics, and digital technologies.
• The sector has already become a global leader in pharmaceuticals and textiles, and companies like Cummins and Abbott have established manufacturing bases in India.
• Port infrastructure improvements are being made to support global manufacturing ambitions.

Market Overview

• The manufacturing sector has experienced strong growth in recent years, with GVA at basic prices growing at a CAGR of 8.95% between FY16 and FY18.
• The Index of Industrial Production (IIP) for manufacturing grew by 4.50% in FY18, and 5.4% during Apr-Aug 2018.
• The Index of Eight Core Industries (ICI) showed a 4.2% growth in 2017-18, with 5.5% growth in Apr-Aug 2018.

Exports and Investment

• Manufacturing is a major component of India's merchandise exports, which grew by 9.78% in 2017-18 to US$ 302.84 billion.
• FDI inflows have increased significantly since the launch of Make in India, reaching US$ 61.96 billion in 2017-18.
• Foreign investments are encouraged through 100% FDI under the automatic route, with key sectors like Automobiles, Pharmaceuticals, and Chemicals receiving substantial inflows.

Digital Transformation

• Digital technologies are being increasingly adopted by Indian manufacturers, with 65% expected to be highly digitalised by 2020.
• Companies like Ashok Leyland are using machine learning and telematics to enhance efficiency.
• The Industrial Internet of Things (IIoT) and Industry 4.0 are being integrated into manufacturing processes, with Indian Railways implementing remote diagnostics and predictive maintenance.

Skill Development

• The Skill India initiative aims to train 400 million people by 2022, with 14,866 Industrial Training Institutes (ITI) operating across the country.
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has trained 3.04 million candidates as of July 2018.
• World Bank-assisted projects like SANKALP and STRIVE are aimed at improving the quality of skill development in India.

Startup Ecosystem

• The Startup India campaign provides tax incentives, IP protection, and exemption from labor and environmental inspections for the first three years.
• Techstars and Softbank are investing in AI, IoT, and robotics startups, with Xiaomi planning to invest US$ 1.09 billion in 100 start-ups over five years.
• Income tax for startups has been reduced to 25% for those with annual turnover up to US$ 7.76 million.

National Manufacturing Policy

• The National Manufacturing Policy (2011) aims to increase the manufacturing sector's GDP share to 25% and create 100 million jobs by 2021.
• National Investment and Manufacturing Zones (NIMZ) are being developed to support industrial growth, with 14 NIMZs granted in-principle approval and 4 final approvals.
• A Technology Acquisition and Development Fund (TADF) is in place to support domestic manufacturing and energy efficiency.

Key Industry Organisations

• The Textile Association (India) (TAI), All India Food Processors' Association (AIFPA), Cement Manufacturers' Association (CMA), and Automotive Component Manufacturers Association of India (ACMA) are major industry bodies that represent different sectors of the manufacturing industry in India.

Key Information

• GVA of the manufacturing sector in 2017-18 was US$ 390.84 billion, with a CAGR of 4.46% from FY12 to FY18.
• Capacity utilisation in the manufacturing sector reached 73.8% in the first quarter of 2018-19.
• New order books grew by 43.1% year-on-year to Rs 1.80 billion in the same period.
• Make in India has helped India move up 65 spots in the World Bank's Ease of Doing Business rankings.
• India's manufacturing PMI was 52.20 in September 2018, indicating positive expansion.
• Gross Fixed Capital Formation grew at 10.44% annually between FY16 and FY18.

Conclusion

India's manufacturing sector is undergoing a transformative phase, driven by policy reforms, digital adoption, and skill development initiatives. The government's Make in India and Skill India campaigns are playing a crucial role in positioning India as a global manufacturing hub. With a large domestic market, strategic investments, and improved infrastructure, the sector is well-positioned for sustained growth and employment creation.