The capital goods industry employs 1.4 million of people and is estimated to employ 2.8 million by 2017.

Manufacturing Sector in India

Latest update: July, 2015

Rapid growth in electronics production in India

•Total production of electronics hardware goods in India is to reach US$ 31.6 billion in FY15 and US$ 104 billion by 2020 

•Production expanded at a CAGR of 10.1 per cent during FY07–15 

•High production is majorly contributed by accelerating demand for advanced TVs, Mobile phones, Computers and defence related electronic equipments during FY07 to FY15 


Landscape of Indian Electronic Sector

•Consumer Electronics has the highest share (29.7 per cent) in the total production of electronic goods in India.

•The Electronic Components had witnessed a growth of about 23.74 per cent from the previous year which was supported by the rapid growth in domestic manufacturing of electronic components

•Not surprisingly, computers are a key component of total electronics output in India (9.9 per cent in FY15); the segment’s share is likely to go up over this decade, given greater policy focus on encouraging computer hardware manufacturing


Last Updated: July, 2015




With launch of the ‘Make in India’ initiative, Mr Narendra Modi, the Prime Minister of India, aims to give global recognition to the Indian economy and also place India on the world map as a manufacturing hub.

India has also set for itself an ambitious target of increasing the contribution of manufacturing output to 25 per cent of gross domestic product (GDP) by 2025, from 16 per cent currently.

India's economy is expected to grow at 7.4 per cent in 2014-15 as per a Government forecast. According to a new formula which uses 2011-12 as the new 'base year', the revised statistics showed inflation-adjusted economic growth rate for October-December 2014 at 7.5 per cent, making India the fastest growing major economy in the world.

Market Size

Business conditions in the Indian manufacturing sector continued to improve in January 2015 fuelled by accelerated growth of output, marking the third straight month of expansion on the HSBC Services Purchasing Managers' Index (PMI). The PMI rose to 52.4 points in January 2015 from 51.1 in December 2014. The composite PMI that combines both services and manufacturing sectors rose to 53.3 points in January 2015 from 52.9 in the previous month.

India’s manufacturing sector could touch US$ 1 trillion by 2025, according to a report by Mckinsey and Company. There is potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90 million domestic jobs by 2025.

In a major boost to the 'Make in India' initiative, the Government has received confirmation from top technology firms such as GE, Bosch, Tejas and Panasonic regarding their decision to invest in the electronic, medical, automotive and telecom manufacturing clusters in India. "We have received 57 investment proposals of over Rs 19,000 crore (US$ 3.05 billion) of which 30 proposals worth Rs 6,500 crore (US$ 1.04 billion) have been approved," said Mr Ravi Shankar Prasad, Union Minister for Communications and Information Technology, Government of India.

The domestic market size of the chemical industry is around US$ 118 billion and it is approximately 3 per cent of the global chemical market, according to a report by Tata Strategic Management Group. It is highly diversified with more than 80,000 chemicals and currently accounts for 15 per cent of manufacturing GDP which makes it very crucial for the economic development of the country.


The Government of India has received investment proposals for electronics manufacturing worth Rs 18,000 crore (US$ 2.89 billion) for 2015-16 and expects the figure to double in another two years.

India has become one of the most attractive destinations for investments in the manufacturing sector. Some of the major investments and developments in this sector in the recent past are:

  • US-based First Solar Inc and China’s Trina Solar have plans to set up manufacturing facilities in India. Clean energy investments in India increased to US$ 7.9 billion in 2014, helping the country maintain its position as the seventh largest clean energy investor in the world.
  • Samsung Electronics Co Ltd has invested Rs 517 crore (US$ 83.11 million) towards the expansion of its manufacturing plant in Noida, Uttar Pradesh (UP) under the UP Mega Policy. “Samsung India Electronics is committed to strengthen its manufacturing infrastructure and will gradually expand capacity at this plant to meet the growing domestic demand for mobile handsets, as per the company.
  • India is currently among the top 10 sourcing countries for IKEA. The plan is to double sourcing from India to €630 million (US$ 688.61 million) by 2020.
  • Shantha Biotechnics Pvt Ltd has started building a facility to manufacture Insuman, an insulin product to treat diabetes. Sanofi SA, which acquired Shantha Biotechnics, will invest Rs 460 crore (US$ 73.93 million) to build the facility.
  • BMW and Mercedes-Benz have intensified their localisation efforts to be part of ‘Make in India’ initiative. "The localisation efforts will reduce the waiting period and accelerate the servicing process of our cars as we had to (previously) depend on our plants overseas for supply and will help us on the pricing front.”
  • Suzuki Motor Corp plans to make automobiles for Africa, the company’s next big bet, as well as for India at its upcoming factory in Hansalpur, near Ahmedabad, Gujarat, as per Mr Toshihiro Suzuki, Executive Vice-President, Suzuki.

Government Initiatives

In a bid to push the 'Make in India' initiative to the global level, Mr Narendra Modi, Prime Minister of India, plans to pitch India as a manufacturing destination at the World International Fair in Germany's Hannover. Mr Modi is likely to showcase India as a business friendly destination to attract foreign businesses to invest and manufacture in the country.

The Government of India has taken several initiatives to promote a healthy environment for the growth of manufacturing sector in the country. Some of the notable initiatives and developments are:

  • The government has asked New Delhi's envoys in over 160 countries to focus on economic diplomacy to help government attract investment and transform the 'Make In India' campaign a success to boost growth during the annual heads of missions conference. Prime Minister Mr Modi has also utilised the opportunity to brief New Delhi's envoys about the Government's foreign policy priority and immediate focus on restoring confidence of foreign investors and augmenting foreign capital inflow to increase growth in manufacturing sector.
  • The Government of Uttar Pradesh (UP) has secured investment deals valued at Rs 5,000 crore (US$ 803.77 million) for setting up mobile manufacturing units in the state.
  • The Government of Maharashtra has cleared land allotment for 130 industrial units across the state with an investment of Rs 6,266 crore (US$ 1.01 billion)
  • Dr Jitendra Singh, Union Minister of State (Independent Charge) of the Ministry of Development of North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances & Pensions, Atomic Energy and Space, Government of India, has announced the 'Make in Northeast' initiative beginning with a comprehensive tourism plan for the region.

Road Ahead

The Government of India has an ambitious plan to locally manufacture as many as 181 products. The move could help infrastructure sectors such as power, oil and gas, and automobile manufacturing that require large capital expenditure and revive the Rs 1.85 trillion (US$ 29.74 billion) Indian capital goods business.

India is an attractive hub for foreign investments in manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country.

With impetus on developing industrial corridors and smart cities, the government aims to ensure holistic development of the nation. The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing.

Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015

References: Media Reports, Press Releases, Press Information Bureau, Mckinsey, Deloitte Report

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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