Fortifying India’s I&L Landscape with a New Manufacturing Growth Formula

India's emergence as a dynamic manufacturing hub has garnered significant global attention and investments. The country's rich endowment of resources, coupled with a skilled workforce and a conducive business environment, have majorly catalysed this transformation. This industrial renaissance is pivotal to India’s economic growth and the diversification of its industrial landscape.

India’s Manufacturing Growth Catalysts

- A Resilient Economy: India's economy continues to demonstrate resilience, exhibiting sustained growth underpinned by several positive indicators, including a narrowing current account deficit, near-record foreign exchange reserves, and a healthy fiscal position.

- Manufacturing-Focused Policy Enablers & Infrastructure Initiatives: To foster a more competitive manufacturing landscape in the country, the government has implemented a multi-pronged strategy to tackle production costs, encompassing several key policy and infrastructure initiatives.

- India's Demographic Dividend: India is poised to be the world's leading provider of human resources, a vital asset considering the rapidly ageing populations in developed nations, which face potential labour shortages.

- Geopolitical Disruptions Leading to Production Shifts: Over the past few years, a series of disruptive events, including trade wars, the COVID-19 pandemic, natural disasters, supply bottlenecks, Brexit, the war in Ukraine, and assertive industrial policies, have profoundly impacted the global manufacturing landscape for exports. These developments are fundamentally reshaping the map of global manufacturing. With its competitive cost structure, abundant labour resources, and growing capabilities across diverse industries, India rapidly emerges as a future powerhouse for export manufacturing.

- India's Strategic Trade Partnerships: India's focus on trade agreements holds immense potential for its manufacturing sector. These agreements act as catalysts by opening doors, streamlining supply chains, attracting investments and technology, and fostering innovation.

- Key Sectors Propelling Manufacturing Growth: India’s expanding electronics, defence, and food processing sectors provide an opportunity for the manufacturing segment to place itself on the global supply chain map.

Manufacturing Landscape - An Industrial & Logistics Overview

India's engineering and manufacturing (E&M) sector has seen a significant surge in warehouse leasing. The report shows that the sector's share of total warehouse leasing grew from 8% in 2023 to 11% in 2024 (YTD). Similarly, the share of industrial space demand from manufacturing has also risen sharply. The E&M sector’s space demand accounted for 38% of the total industrial space in 2019, which has surged to 51% in 2024 (YTD). The top sub-sectors driving warehouse leasing from 2019 to 2024 (YTD) include domestic appliances, auto components, and the automobile industry.

The Way Forward: India’s Push Towards Becoming a Manufacturing Giant

To drive India's manufacturing sector forward, embracing advanced technologies and smart factories is essential for boosting productivity and competitiveness, particularly in key industries such as renewable energy and semiconductors. Fast-tracking infrastructure development and integrating sustainable practices aligned with global ESG standards would ensure long-term growth while addressing market and environmental demands.

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