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December, 2012

Manufacturing: Brief Introduction

India has undoubtedly become one of the fastest growing economies in the world over the last two decades wherein the manufacturing sector has contributed significantly. India’s manufacturing sector, which accounts for around 16 per cent of the country’s gross domestic product (GDP), is a very vital component of the development model while ensuring sustainability of the entire economy as it facilitates adequate employment. India’s share in the global manufacturing pie is around 1.8 per cent.

India’s strong talent pool in science, technology and research, and the lowest labour rates in the world are certain factors that give the country a lot of scope to propel its manufacturing sector immensely. 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 new orders and intense purchasing activity, India’s manufacturing sector registered the fastest growth in last five months. The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production - stood at 53.7 in November 2012, up from 52.9 in October 2012, indicating an improvement in the overall health of the Indian manufacturing sector.

Manufacturing: Key Developments and Investments

  • Chinese consumer durables giant Haier intends to make India its manufacturing hub to boost its exports to the neighbouring markets and African region. The company would initially export refrigerators and washing machines, most of which would be produced in India
  • Germany-based manufacturer Lemken GmbH and Co KG has established its first non-European manufacturing unit at Butibori, Nagpur in order to grab a pie of the agro equipment market in India which is estimated to touch Rs 3,000 crore (US$ 551.72 million) in future. In the first phase of operations, the company’s subsidiary Lemken India Agro Equipment Pvt Ltd, will manufacture hydraulic reversible ploughs that can be used on tractors (with over 40 HP in power) however, the second phase would involve production of seedbed preparation implements, cultivators and disc harrows. Around Rs 60 crore (US$ 11.03 million) would be infused to implement each of the phases.
  • Chennai-based Voltech group has partnered with the American NanoPV to put up a 100 mega watt (MW) solar module manufacturing plant near Chennai and a solar park near Tuticorin at an estimated cost of Rs 100 crore (US$ 18.39 million). The initial capacity of the plant would be 10 MW which would be ramped up eventually. Voltech is a medium-sized group that manufactures transformers
  • Havells India Limited, a leading Fast Moving Electrical Goods (FMEG) company and power distribution equipment manufacturer has commenced India's first large scale lighting fixture plant at Neemrana, Rajasthan. The company has invested Rs 100 crore (US$ 18.39 million) on the state-of-the-art plant as a part of its strategy to strengthen its position in the fast growing and rapidly emerging lighting fixtures market. Catering to both, consumer and industrial lighting applications, the plant would be instrumental in effectively controlling production efficiency & quality, increasing customer responsiveness and shortening delivery response time
  • China-based solar module manufacturer, ReneSola plans to use India as manufacturing hub for producing cells and modules, for supplying not only to the domestic Indian market, but also to the neighbouring countries. Bagging orders from two Indian solar power developers, ReneSola visions a total quantity of 250 MW from India-made modules over a two-year period
  • Swedish truck, bus and earth-moving equipment producer Volvo plans to infuse an outlay of Rs 3,800 crore (US$ 698.85 million) in India over next few years. Of this, Rs 1,800 crore (US$ 331.03 million) would be invested in its joint venture (JV) with Eicher Motors while the remaining amount would go towards its operations expansion. Meanwhile, the company is preparing to launch new truck models in the value segment to boost its growth in India.