The manufacturing sector in India is gearing up for a remarkable transformation, with its contribution to the Gross Value Added (GVA) projected to rise from the current 14% (USD 459 billion) to 21% (USD 1,557 billion) by 2032. A report by Sharekhan highlights the sector’s pivotal role in driving India’s economic evolution, forecasting an incremental contribution of over 32% to the economy during this period.
The report, titled “Manufacturing Set to Get a Higher Slice of GVA,” attributes this surge to robust capital expenditure (capex) by both the government and private corporations. Infrastructure investments in ports, railways, highways, and power sectors are laying the groundwork for manufacturing expansion. Additionally, India’s extensive domestic market, bolstered by robust consumption, and its strategic role in global supply chain diversification are further enhancing its manufacturing potential.
A key catalyst in this transformation is the government’s Production-Linked Incentive (PLI) scheme. Launched in 2020, the initiative aims to boost domestic manufacturing while reducing reliance on imports. With an outlay of Rs 1.97 lakh crore (over USD 24 billion), the scheme covers 14 critical sectors, including electronics, textiles, pharmaceuticals, automobiles, telecom, and renewable energy.
The PLI scheme adopts a performance-driven model, incentivising manufacturers based on measurable outcomes like increased production and incremental sales. This approach has attracted significant investments from domestic and international players, driving the adoption of advanced technologies and achieving economies of scale.
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As of August 2024, the PLI scheme has seen substantial success, with Rs 1.46 lakh crore in actual investments. These investments have fueled production and sales worth Rs 12.50 lakh crore and generated approximately 9.5 lakh direct and indirect jobs. India is leveraging its workforce and infrastructure to position itself as a global manufacturing hub.
The nation’s focus on enhancing exports and aligning manufacturing with the Atmanirbhar Bharat vision is expected to yield significant long-term benefits. With strong policy support and strategic investments, India’s manufacturing sector is on track to play a transformative role in reshaping the country’s economy, driving it toward a USD 10 trillion benchmark by 2034.