Manufacturing Can Reach $1 Trillion by FY26

Chennai: The Indian manufacturing market has the potential to reach $1 trillion by 2025-26, finds Colliers.

The manufacturing sector contributes around 17 per cent to the GDP supported by robust physical and digital infrastructure which is expected to grow to 21 per cent in the next 6-7 years. India is well-positioned to enhance its manufacturing sector, making considerable advances in global supply chains.

The manufacturing GVA at current prices was estimated at $110.48 billion in the first quarter of FY24. With all the policy incentives and various initiatives, the Indian manufacturing market has the potential to reach $ 1 trillion by 2025-26, according to Colliers.

The automotive sector has been depicting intents to establish or expand their manufacturing footprints in the country. Electronics manufacturing experienced a rise in investments, particularly in smart phone production.

Major players like Apple's contract manufacturers established assembly units in India. Textiles and garment manufacturing sectors have witnessed an upsurge in investment activities. The Ministry of Heavy Industries and Public Enterprises launched SAMARTH Udyog Bharat 4.0 in 2021 to enhance the manufacturing sector's competitiveness, predominantly in the capital goods domain.

There have been various MoUs signed with different states to boost the industrial and manufacturing sector. Maharashtra government has signed 21 MoUs of Rs 88,420 crore at the World Economic Forum in 2023. Gujarat signed 3 MoUs in October 2023 worth Rs. 3,000 crores for textile, industrial park, and engineering, including the auto sector and Tamil Nadu has signed a total 79 MoUs in 2022-23 with a total sum of Rs 165,748 crore.

In Gujarat, which is ranked top for investments, Toyota is set to invest approximately Rs 3,300 crore for a new plant scheduled to be operational by 2026 and the government has granted land for a manufacturing facility to Coca-Cola Company

All major and competing businesses have at least a presence in Maharashtra and the state has the highest FDI inflow, industry GDP share, and lower unemployment rate.

Tamil Nadu also has good policies, subsidies, and incentives for the industrial sector and has a fair presence of support infrastructure with many industrial companies having their footprint in the state.