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September, 2012


The Indian manufacturing industry is undoubtedly the mainstay of the economy. The industry is not only propelling the country’s growth, but is also helping other sectors like agriculture and services to enhance their capabilities. The developments made on the Indian manufacturing canvas over the last few years have made the country competitive in global markets as well.

India is well-equipped with the requisite skills in product, process and capital engineering which have, eventually, attracted foreign players to invest in the country. Considering such positive business outlook, India is expected to become the fifth largest consumer market in the world, according to a research by McKinsey Global Institute, and manufacturers are eyeing this promising opportunity in a big way.

Moreover, wide acceptance of information technology (IT) systems in various manufacturing processes has given the industry a complete makeover. Driven by manufacturing sub-segments like automotive, chemicals and consumer products, IT spending by the Indian manufacturing sector is likely to grow at 14.5 per cent to touch US$ 8.78 billion by 2016.

Apart from that, Indian manufacturers are also increasingly adapting to global changes and self-motivated to make the sector’s growth sustainable. They are ensuring environmental responsibility through green technologies, energy efficiency, and optimal utilisation of natural resources and restoration of damaged / degraded eco-systems.

Growth Trend

The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, was at 52.8 in August 2012. The latest reading indicated a marked expansion of the Indian manufacturing sector which was spurred by increase in output, quantity of purchases and employment.

The sector also showed a remarkable overall business sentiment in April-June 2012 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, remained in the growth terrain and stood at 107.4 for the assessment quarter.