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Indian Manufacturing Industry Analysis

February, 2018

The Gross Value Added (GVA) from the manufacturing sector is estimated at US$ 326.3 billion in FY18. The sector’s contribution to the country’s GDP stood at 16.51 per cent in 2016. Quarterly GVA at basic prices from manufacturing sector grew by 10.92 per cent in the third quarter of FY18. India has been ranked at 30th position on a global manufacturing index*, ahead of BRICS peers, Brazil, South Africa and Russia.

In January 2018, Index of Industrial Production for manufacturing sector grew 8.7 per cent. India’s Index of Eight Core Industries advanced 4.36 per cent year-on-year during April 2017-February 2018. Manufacturing sector PMI of India stood at 51.00 in March 2018 indicating an expansion in the manufacturing sector.

The electronic goods industry is one of the fastest growing industries and is expected to be worth US$ 400 billion by 2020. Government is working on an export-oriented policy for Electronic products. The idea behind this policy is to promote greater exports of electronics and drive larger investments by setting up port-based electronic manufacturing clusters. Also, as of November 2017, Ministry of Electronics and Information Technology is going to come up with a new electronics manufacturing policy and is in process of setting up industry-specific groups.

The Government of India has been supportive towards this growth. It set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and brought about a favourable climate for Foreign Direct Investment (FDI). The government has also increased liberalisation and relaxed tariffs to promote growth in the sector. In addition, it has given the nod to Modified Special Incentive Package Scheme (MSIPS) under which the central government will be offering up to US$ 1.7 billion in benefits to the electronics sector in next five years.

The growing customer base and the increased penetration in consumer durables segment have provided enough scope for the growth of the Indian electronics sector. Also, digitisation of cable could lead to increased broadband penetration in the country and open up new avenues for companies in the electronics industry.

Note: *By World Economic Forum (WEF)

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