Unlocking the growth potential of the Indian manufacturing sector

Indian manufacturing sectors are growing day by day that offer the best job opportunities for several people. However, they are facing some problems due to Covid-19 pandemic. On the other hand, the good news is that they expect a huge growth in upcoming years. In fact, they contribute more to India’s economy development to a large extent. The Indian government is also focusing more on implementing new policies in order to attract more investments in manufacturing sectors. In addition, India is becoming a global hub for exports and other industries due to various factors.

Factors which influence Indian manufacturing sectors

Indian manufacturing sectors are witnessing a lot of changes over recent years owing to reforms announced by the government. Some other factors which influence the growth of production units include cheap labour, excellent infrastructure, subsidies, incentive schemes, FDI relaxations, and strong policies. In order to improve manufacturing in local markets, the Indian government recently reduced the corporate taxes to fulfil the needs of production units. Another thing is that it identified large-sized companies across various states in India which ultimately benefit new manufacturing companies.

Why is India emerging as the alternate manufacturing destination?

Although India suffered a setback due to covid-19, the manufacturing sectors see a bright growth. This is because many multinational companies like to expand their operations in Indian markets. Furthermore, India is emerging as the alternate manufacturing destination next to China owing to excellent infrastructure facilities. This will increase better job prospects in Indian markets that will enhance the quality of life. Many countries are in now discussion with Indian authorities to shift their companies. Besides that, they are exploring joint ventures and partnerships in order to plan their operations accordingly.

Role of manufacturing in the Indian economy

Manufacturing holds a key position in the Indian economy, accounting for nearly 16 per cent of real GDP in FY12 and employing about 12.0 per cent of India’s labour force. Growth in the sector has been matching the strong pace in overall GDP growth over the past few years. For example, while real GDP expanded at a CAGR of 8.4 per cent over FY05-FY12, growth in the manufacturing sector was marginally higher at around 8.5 per cent over the same period. Consequently, its share in the economy has marginally increased during this time – to 15.4 per cent from 15.3 per cent. Growth however has remained below that of services, an issue that has not escaped the attention of policy makers in the country.

Strong growth has been accompanied by a change in the nature of the sector – evolving from a public sector dominated set-up to a more private enterprisedriven one with global ambitions. In fact, according to UNIDO, India (with the exception of China) is currently the largest producer of textiles, chemical products, pharmaceuticals, basic metals, general machinery and equipment, and electrical machinery. In the coming year, the sector‟s importance to the domestic and global economy is set to increase even further as a combination of supply-side advantages, policy initiatives, and private sector efforts set India on the path to a global manufacturing hub.

The growth of manufacturing sectors in India

India is going to rank the top among 5 world economies after a few years. Experts say that the country will see huge growth of manufacturing sectors due to skilled workers, expert technicians, and quality education. The Indian government also aims at promoting the best practices in manufacturing sectors with advanced technologies. Moreover, it will assist new entrepreneurs to integrate and develop strategies for setting up a manufacturing unit without any hassles. As a result, India will become one of the largest economies in the world as soon as possible. Also, Indian manufacturing sectors will see rise in the production to meet the demands of customers in the markets.

The Indian Warehousing Market is expected to be an estimated $12.2 billion in 2020, growing to $19.5 billion by 2025.

The warehousing market is driven by the country’s flourishing manufacturing, retail, FMCG and logistics sectors. Furthermore, supportive government policies such as establishment of logistic parks and free trade warehouse zones is expected to spur the market growth through 2025. Also, introduction of GST has led to reduction in inventory and turnaround time, which has led to the removal of check points thereby diminishing state boundaries.

Besides, technological advancements such as advent of AI, IoT, 3D Printing, among others, in the warehousing industry is further expected to create lucrative opportunities over the next few years. Moreover, the emergence of third part logistics and supergrid logistics is further expected to fuel the market growth during the forecast period.

Further, the sudden outbreak and spread of COVID-19 will have short-term impact on warehousing demand due to lockdown and reduced manufacturing activities. Further, it will help in strengthening the warehousing industry in India on account of the shifting consumer preference from offline mode of shopping to online in order to adhere to the social distancing norms.

The Indian Warehousing Market is segmented based on type, ownership, sector, usage pattern, infrastructure, end-user industry, company and region. Based on type, the market can be segmented into general, specialty and refrigerated. The refrigerated segment is expected to witness significant growth owing to the rising demand for such warehouses for storing perishable food items and ensuring food security & safety. Based on ownership, the market can be categorized into public, private and bonded. The public ownership segment is expected to dominate the market during the forecast period. These warehouses are owned by government and semi-government agencies and are rented by them. Such warehouses aid the small traders who don’t have their own warehouses.

Based on usage pattern, the market can be split into single and co-warehousing segments. The co-warehousing segment is expected to witness significant growth in the market through 2025. This can be ascribed to the increasing demand for last mile distribution and growing preference for co-warehousing among manufacturers, suppliers, logistic companies as well as startups. Additionally, co-warehousing provides flexible storage that can help businesses meet their needs and give them a better control over their budgets. Co-warehousing provides scalability and helps in reducing overall operational costs.