Commerce Dashboard
Manufacturing Sector in India
In October 2020, India's manufacturing sector recorded improvement for the third consecutive month, with businesses growing production to the greatest extent in 13 years in the middle of robust sales growth.

Indian Manufacturing Industry Analysis

    Last updated on Dec, 3 2021

India’s gross domestic product (GDP) at current prices stood at Rs. 51.23 lakh crore (US$ 694.93 billion) in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22. The manufacturing GVA at current prices was estimated at US$ 97.41 billion in the first quarter of FY22.

The IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 53.7 in September 2021.

As per the survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI), capacity utilisation in India’s manufacturing sector stood at 72.0% in the second quarter of FY22, indicating significant recovery in the sector.

The Index of Eight Core Industries (ICI) is an index reflecting the production performance of eight core industries - coal production, crude oil production, natural gas production, petroleum refinery processing, steel production, cement production and electricity generation.

India has potential to become a global manufacturing hub and by 2030, it can add more than US$ 500 billion annually to the global economy.

The overall index stood at 134.0, as of July 2021. This rise in the index was supported by growth in production of natural gas, steel, cement, fertilisers, coal, refinery products and electricity.

The overall index stood at 133.5 as of August 2021. This rise in the index was supported by growth in production coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity.

In August 2021, natural gas output increased by 20.6%, coal by 20.6%, petroleum refinery production (9.1%), steel (5.1%), cement (36.3%) and electricity (15.3%); however, fertilisers output declined by 3.1%.

In August 2021, the manufacturing component of IIP stood at 130.2

Merchandise exports from select industries (including engineering, petroleum products, gems & jewellery, drugs & pharmaceuticals and chemicals) stood at US$ 128.37 billion between April 2021 and September 2021.

In September 2021, Prime Minister Mr. Narendra Modi approved the production-linked incentive (PLI) scheme in the textiles sector—for man-made fibre (MMF) apparel, MMF fabrics and 10 segments/products of technical textiles—at an estimated outlay of Rs. 10,683 crore (US$ 1.45 billion).

In August 2021, the EPFO added 14.81 lakh net subscribers, a growth of 12.61% over July 2021.

The appliances and consumer electronics (ACE) market in India is expected to grow to US$ 21.18 billion by 2025 from US$ 10.93 billion in 2019. In April 2021, the Union Cabinet approved a PLI scheme for white goods (ACs and LEDs) worth Rs. 6,238 crore (US$ 840.89 million), boosting the manufacturing industry.

The Union Budget 2021-22 is expected to enhance India’s domestic growth in manufacturing, trade and other sectors. Development of a robust infrastructure, logistics and utility environment for the manufacturing sector is a primary focus field.

Some of these initiatives are as follows:

  • The Mega Investment Textiles Parks (MITRA) scheme to build world-class infrastructure will enable global industry champions to be created, benefiting from economies of scale and agglomeration. Seven Textile Parks will be established over three years.
  • The government proposed to make significant investments in the construction of modern fishing harbours and fish landing centres, covering five major fishing harbours in Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat, along with a multipurpose Seaweed Park in Tamil Nadu. These initiatives are expected to improve exports from the textiles and marine sectors.
  • The 'Operation Green' scheme of the Ministry of the Food Processing Industry, which was limited to onions, potatoes and tomatoes, has been expanded to 22 perishable products to encourage exports from the agricultural sector. This will facilitate infrastructure projects for horticulture products.
  • The Union Budget 2021-22 allocated funds of Rs. 1,000 crore (US$ 137.16 million) for the welfare of tea workers, especially women and their children. About 10.75 lakh tea workers will benefit from this, including 6.23 lakh women workers involved in the large tea estates of Assam and West Bengal.
  • In May 2021, the government approved a PLI scheme worth Rs. 18,000 crore (US$ 2.47 billion) for production of advanced chemical cell (ACC) batteries; this is expected to attract investments worth Rs. 45,000 crore (US$ 6.18 billion) in the country, and further boost capacity in core component technology and make India a clean energy global hub.

Make in India 2.0 presently focuses on 27 sectors. The Government of India is continuously focusing on facilitating investment and establishing schemes to boost domestic investments in India. These include the following:

  • In August 2021, Wistron Corp. collaborated with India's Optiemus Electronics to manufacture products such as laptops and smartphones, giving a major boost to the ‘Make in India’ initiative and electronics manufacturing in the country.
  • To propagate Make in India, in July 2021, the Defence Ministry issued a tender of Rs. 50,000 crore (US$ 6.7 billion) for building six conventional submarines under Project-75 India.
  • In June 2021, Samsung completed construction of its display manufacturing unit in Noida in Uttar Pradesh—this in lieu of the company's plan to shift manufacturing capabilities from China.
  • Production-linked incentive (PLI) was launched to establish global manufacturing champions across 13 sectors with an allocation of ~Rs. 1.97 lakh crore (US$ 27.02 billion) over the next five years (starting FY22).
  • The scheme has created a buzz among global investors. On February 16, 2021, Amazon India announced to start manufacturing electronic products in India, starting first with Amazon Fire TV stick manufacturing. The company plans to start manufacturing with contract manufacturer Cloud Network Technology, a subsidiary of Foxconn in Chennai by end-2021.
  • In April 2021, Bharti Enterprises Ltd. and Dixon Technologies (India) Ltd., formed a joint venture to take advantage of the government's PLI scheme for the manufacturing of telecom and networking products.
  • In India, the market for grain-oriented electrical steel sheet manufacturing is witnessing high demand from power transformer producers, due to the rising demand for electric power and increasing adoption of renewable energy in the country.
    • In line with this, in May 2021, JFE Steel Corporation in collaboration with JSW Steel Limited (JSW) signed a MoU to evaluate a study to establish a grain-oriented electrical steel sheet manufacturing & sales joint-venture company in India.
  • To facilitate manufacturing and investment in sectors such as ICT and telecom, in May 2021, TEMA (Telecom Equipment Manufacturers Association of India) signed a collaboration deal with ICCC (Indo-Canada Chamber of Commerce) to promote ‘Make in India’ and ‘Self-reliant India’ initiatives.
  • India's display panel market is estimated to grow from ~US$ 7 billion in 2021 to US$ 15 billion in 2025.
  • In May 2021, as per IT Secretary of the Ministry of Electronics & Information Technology (MeitY), the government plans to introduce an incentive scheme for 3-4 large investments in the next six months to establish fabless display manufacturing units in India.
  • The government approved a PLI scheme for 16 plants for key starting materials (KSMs)/drug intermediates and active pharmaceutical ingredients (APIs). The establishment of these 16 plants would result in a total investment of Rs. 348.70 crore (US$ 47.01 million) and generation of ~3,042 jobs. The commercial development of these plants is expected to begin by April 2023.
  • As part of efforts to expand its smartphone assembly industry and improve its electronics supply chain, the government, in March 2021, announced funds worth US$ 1 billion in cash to each semiconductor company that establishes manufacturing units in the country.
Indian Manufacturing Sector in India Industry Report (September, 2021)
Download PDF Download PDF  (Size: 1.11 MB )

Click to access the Manufacturing Sector in India Industry Archived Report


Brand India Pharma


+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

Agri Export Policy - Towards smoother trade, wider global presence


+ More Publications >

IBEF Publication


India's nascent gaming industry on the rise
IBEF, Knowledge Centre


Gaming is one of the fastest-growing sunrise industries ...

India's brownfield asset monetization strategy
IBEF, Knowledge Centre


India is the world’s fastest-growing economy and t...

Mining sector reforms and the road ahead
IBEF, Knowledge Centre


India is rich in natural resources, notably minerals, ma...

Women Entrepreneurs Shaping the Future of India
IBEF, Knowledge Centre


Women entrepreneurs and their increasing presence in Ind...

How the Indian talent pool is enriching the global economy
IBEF, Knowledge Centre


India is swiftly gearing towards a US$ 5 trillion econom...

India’s promising outlook in defence manufacturing
IBEF, Knowledge Centre

Overview – Defence Manufacturing in India

The Indian defence se...

Case Studies More


Join now. Enjoy FREE subscriptions downloads, updates and more.


Already a member?
Login / Retrieve Password