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Manufacturing Sector in India

March, 2013

Manufacturing: Brief Introduction

Indian economy has made significant progress over the last few years, with the gross domestic product (GDP) growing at an average rate of 5.3 per cent. The country is the world's third largest economy in terms of the purchasing power parity (PPP) and has investments amounting to nearly a trillion dollars lined up in partnership with the private sector in the coming years. Manufacturing, as an industry segment, is a crucial cog in the wheel of progress and has largely insulated the Indian economy from a future global turmoil; thanks to its innovation-driven orientation. The Government has also ensured a suitable manufacturing eco-system for domestic and international majors by strengthening the sector in every possible way.

India's manufacturing sector is poised for immense growth in future owing to its eminent talent pool in science, technology and research. Deloitte's global index, 2013, for 38 nations, has ranked India the fourth most competitive manufacturing nation, behind China, the US and Germany. Not only this, but even the Global Manufacturing Competitiveness Index, 2013, based on a survey of CEOs, executives and other officials of 550 global manufacturing companies, has positioned India as second five years down the line, next only to China.

Growth Trend

Driven by a robust pick in domestic orders and strengthening of international demand, India's manufacturing sector registered remarkable growth in February 2013. The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production - stood at 54.2 in February 2013, up from 53.2 in the previous month, indicating an improvement in the overall health of the Indian manufacturing sector.

The volume of incoming new orders at manufacturing firms in India rose during the month with around 29 per cent of monitored companies reporting higher levels of new work.

Manufacturing: Key Developments and Investments

  • Parker Hannifin India, a part of the US-based Parker Hannifin Corporation, has established a Rs 100-crore (US$ 18.32 million) - factory near Chennai to manufacture components for a wide range of industries. The company has invested over US$ 34 million in Chennai in the last couple of years and considers India as an important component to propel its growth in the Asia-Pacific region. India accounts for a revenue of about US$ 130 million
    The company acknowledges industries like automotive (including on-road and off-road), telecom, oil and gas, mining and primary metals sector
  • Switzerland-headquartered Starrag Group has set up a machining plant in Bangalore via its subsidiary Starrag India. The new plant, a green-field facility built with an investment of Rs 60 crore (US$ 10.99 million), would focus on building WMW machining centres in India. The factory was approved by Karnataka Udyog Mitra and is expected to rollout four popular models of WMW Horizontal Machining Centres from July 2013 to December 2014. A cost reduction programme through a local supply chain is also in an advanced stage of implementation
  • Home appliances brand Godrej Appliances has announced a technology-collaboration with Bosch and Siemens (BSH) to develop an entire new range of energy-efficient refrigerators for Indian, Asia-Pacific, West Asian and African markets. The company currently manufactures refrigerators, air-conditioners and other home appliances for the Indian market
    This range of highly energy-efficient refrigerators will be manufactured at Godrej's manufacturing plant at Shirwal near Pune. The refrigerator range manufactured under this partnership will be marketed by Godrej and BSH under their respective brand name in India, Asia-Pacific, West Asia and Africa
  • Shanghai Hitachi Electricity Appliances Company, a joint venture (JV) company of China-based Shanghai Highly Group and Hitachi Appliances of Japan, has decided to invest Rs 500 crore (US$ 91.58 million) over 2013-15 in Gujarat to manufacture air-conditioning compressors and relevant refrigeration products to focus on India and West Asian markets
    The company has already acquired land for the facility, which would offer employment to nearly 1,000 people, and also provide job work to many small and medium enterprises (SMEs). The Phase I work of the project is projected to be completed by October 2013 and second and last phase would finish by the end of 2014
  • US-based specialty glass major Corning Inc has decided to infuse about Rs 588 crore (US$ 107.7 million) for setting up an optical cable manufacturing facility at Chakan near Pune. The investment would be done through its Indian arm Corning Technologies India Pvt Ltd and the Maharashtra Government has facilitated a window of five years for making the investment. A senior Industries Department official has revealed that the State Government would enter into a memorandum of understanding (MoU) with the company, which will enable the company to avail a number of sops under the 'Mega Projects Scheme'