Indian Manufacturing Industry Analysis

The Gross Value Added (GVA) from the manufacturing sector is estimated at US$ 390.84 billion in FY18PE. During 2017-18, Index of Industrial Production for manufacturing sector grew 4.50 per cent. India’s Index of Eight Core Industries advanced 4.2 per cent year-on-year during 2017-2018. Manufacturing sector PMI of India stood at 52.30 in July 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, 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. Under the scheme, subsidy for investment in capital expenditure is provided to the extent of 20 per cent of investment in SEZs and 25 per cent of investment in non-SEZs.

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: PE – Provisional Estimate