Last Updated: April 15, 2015
J S Shin
CEO and President, South West Asia, Samsung
Updated: March, 2015
CHEMICALS SECTOR REPORT | October, 2014
ELECTRONICS SECTOR REPORT | October, 2014
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.
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:
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 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.