The manufacturing sector in India has the potential to reach USD 1 trillion by FY 2025-26, with conducive policies from the Central government and States in place.
Key Highlights
- Government policies will play a determining role in the growth of the manufacturing sector, according to a report by Colliers India.
- The best states for investment enjoy access to ports and have good infrastructure.
- Semi-conductors, Waste management, and Agritech are emerging industries, with conducive government policies in place.
The Indian Manufacturing sector has hitherto been overshadowed by the services sector, at least since the liberalisation of the economy.
The manufacturing sector of India has now received a thrust from the government with the official policy inclined to utilise the sector’s employment generation capabilities for efficient resource mobilisation.
A report by Colliers India mentions that government policies will play a determining role in shaping the growth trajectory of the sector.
According to the report, the ‘Make in India’ initiative, along with policy reforms like the Production-linked Incentive (PLI) schemes have made India an attractive destination for investment in the manufacturing sector.
Similarly, states like Telangana, Rajasthan, Gujarat, and Maharastra have implemented various schemes to help the manufacturers in the state and crowd in investment.
The report found that while Rajasthan provides subsidies covering upto 75% of the state tax due, Madhya Pradesh provides financial assistance upto INR 1 crore for the development of roads, power, water, and other infrastructural projects.
In Q1 of FY-24, the GVA of the manufacturing sector of India was reckoned at US$ 110.48 billion according to the report.
However, it postulates that the sector has the potential to reach US $1 trillion with support from both the central and state initiatives to boost manufacturing.
Best States for Investment in the Manufacturing Sector
The Colliers report, after analysing and conducting a study ranked 9 states based on their policies for the manufacturing sector.
The top 3 states for investment in industries according to the report are:
1. Gujarat
Gujarat secured the top rank for investment in industries due to the easy availability of labour and cheap prices of land for development.
The report mentioned that infrastructural projects providing last-mile connectivity and access to ports make it one of the best destinations for investment for manufacturing.
2. Maharashtra
Maharastra followed Gujarat to secure the second spot among other states to be labelled as the second-best state to invest in a manufacturing business.
The report attributed its rank to the existing presence of industries in the state, with major businesses having a presence in the state.
The state is already the highest recipient of Foreign Direct Investment (FDI).
3. Tamil Nadu
Tamil Nadu is the third-best state to invest in India, according to the report. It mentioned that the state enjoys the availability of labour, combined with subsidies for the industrial sector.
Just like Gujarat and Maharashtra, Tamil Nadu enjoys access to ports, too.
With the Indian Manufacturing Sector poised for growth, the report concludes by mentioning that semiconductors, agri-tech, and waste management are emerging industries that have also received a policy thrust from the government.
