Trade Analytics

This is the ARCHIVED section of the website. To visit the current content of the website please CLICK here


Go Back


March, 2012

Manufacturing: Brief Introduction

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.

Growth Trend

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.

Manufacturing: Key Developments and Investments

  • Shanghai Electric, China's biggest power equipment company, is all set to establish a manufacturing facility in India. The company is in advanced stages of negotiations with French power major Alstom for a joint venture facility that would manufacture boilers for power projects
  • Detroit-headquartered automaker Ford Motor Co will make India its manufacturing hub for small, low-cost cars that would cater to markets in Africa and the Asia-Pacific region. The company will set up a plant in northwest India in 2014 that would entail an investment of US$ 1 billion and would have an annual capacity of 2, 40, 000 units. Ford's existing manufacturing unit in Chengalpattu is undergoing enhancements and is expected to be in full production mode by the end of 2012
  • Germany-based Hummel AG Group's subsidiary Hummel Connector Systems is establishing a manufacturing facility at Neelambur, near Coimbatore, entailing an investment of €3,00, 000 (US$ 3,94,360.03). Hummel produces cable glands, circular connectors, industrial enclosures, touch panels and electronics for medical, measurement and control technology
  • In order to price its new offering competitively, Japanese bike-maker Yamaha is planning to manufacture its soon-to-arrive 250cc sports bike locally in India
  • Japan-based electronics and durables giant Toshiba has commenced local manufacturing of selected TV models in limited numbers at a facility in Dehra Dun. In order to ramp up its volumes across various categories, the company is conducting a feasibility study to go-in for local manufacturing in a bigger way