Manufacturing is the Heart of the Global Economy

India has several strengths that are helping it become a manufacturing powerhouse: a large pool of engineers, a young labour force, wages that are half that of China's

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Manufacturing is a dynamic term that encompasses many overlapping industries. As a global connector and basis for overseas trade, it is a critical force in both developing and developed countries. It wouldn’t be out of place to state that no economy, however advanced or high tech, can be truly successful without the contribution of its manufacturing sector.


In the Indian economy, manufacturing holds a key position accounting for nearly 18% of GDP in the current financial year. The sector’s competitiveness is creating jobs and driving India’s growth although there are some wrinkles still to be ironed out. Furthermore, there is a breakthrough in terms of productivity and quality with many global firms have set up their manufacturing units locally - the latest example being Samsung which has established the world’s largest mobile factory in India.

The Shift in the Ecosystem

In the past, major manufacturing industries comprised of textiles, gems and jewellery. However, now, it is increasingly engineering goods, chemicals, pharma and auto components which take the lead. The share of all these products exported from India has been rising and today the country is exporting to the United States, Western Europe and the Middle East which have become our key markets. The government, as well as private players in the Indian manufacturing sector, have realised that R&D is the key to fulfilling global ambitions. Consequently, in order to meet international standards, investments towards research have been grown noticeably which is a good sign.

Further, through the ‘Skill India’ initiative, the workforce is getting proper training to ensure employability thereby leveraging our demographic advantage. Interestingly, there is also a movement of trained workers – and not just manual labour – to other countries. India has several strengths that are helping it become a manufacturing powerhouse: a large pool of engineers, a young labour force, wages that are half that of China’s, and significant domestic consumption of manufactured goods further enhanced by GST removing internal barriers.

Potential of Manufacturing in India

The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025 and India is expected to rank amongst the top three growth economies and the manufacturing destination of the world by the year 2020 (source: IBEF research). The government is also bringing in positive measures to help the sector’s growth. Through the “Make in India” initiative, the Government is aiming to increase the share of the manufacturing sector in GDP to 25% cent by 2022 thereby creating 100 million new jobs (source: IBEF research).

Although there is some scepticism about globalisation and protectionism at times tends to edge out a free trade, the importance of manufacturing cannot be underestimated especially for a country like ours. Having said that, continual improvement is the need of the day rather than an over-reliance on subsidies. India is well poised to fulfil its ambition of becoming the manufacturing hub of the world.