The Indian manufacturing sector is the mainstay of entire Indian industry as manufacturing output constitutes over 75 per cent of the index of industrial production (IIP). Indian manufacturers have adopted a global mindset while carefully selecting their product segments. They are continuously working to achieve cost excellence and marketing capability which has even attracted foreign players to proactively develop India as their sourcing and manufacturing hub.
India enjoys a competitive advantage on the global canvas owing to key reforms in taxation, infrastructure and clusters (like special economic zones [SEZs]) implemented by the Government, availability of reasonably-priced skilled labour workforce and a positive eco-system. Moreover, the global trend to manufacture and source products in low-cost countries has gained pace in the past decade, particularly in skill-intensive industries, and India has been able to leverage on the opportunity to its best.
The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production -was at 56.6 in February 2012. The latest reading indicated a marked expansion of the Indian manufacturing sector which was spurred by new orders (that touched a 10-month high) and a rise in new export business for the month.
The Indian manufacturing sector also showed moderate overall business sentiment in October-December 2011 quarter, as per the Industrial Outlook Survey conducted by the Reserve Bank of India (RBI) for the quarter. The business expectation index (BEI), which acts as a barometer of the overall health of the manufacturing sector, stood at 110.1 for the assessment quarter while RBI expects it at 117.2 for the January-March 2012 quarter.
The IIP for the Mining, Manufacturing and Electricity sectors for the month of December 2011 stood at 136.2, 190.7 and 149.8 respectively wherein manufacturing grew by 1.8 per cent. In terms of industries, 15 out of the 22 industry groups (as per 2-digit NIC-2004) in the manufacturing sector have shown positive growth during the reported month.