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Articles- May 30,23
In April 2023, manufacturing activity in India grew the fastest in four months of 2023, driven largely by growth in domestic consumption, and limited impact of rising raw material prices.
In April 2023, manufacturing activity in India grew the fastest in four months of 2023, driven largely by growth in domestic consumption, and limited impact of rising raw material prices. The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 57.2 in April 2023 from 56.4 in March. In contrast, the global manufacturing PMI, excluding India, is in a contraction mode. Factors like robust rise in new orders, relatively mild price pressures, better international sales and improving supply-chain conditions contributed to the growth in production.
For 22 straight months now, the PMI has remained above 50 - the mark separating expansion from contraction - indicating the inbuilt strength of India's economy. According to Morgan Stanley, India is expected to contribute 16 percent of the global gross domestic product (GDP) growth over 2023-24.
Though, India's goods exports shrank 12.7 per cent year-on-year to $34.66 billion in April 2023, experts believe the worst is behind us. With strong consumption and investment, India's story is quite unique at a time when there is a global problem for growth across regions and economies.
Looking at cyclical recovery in consumption, increased private sector capex, and acceleration on government spending industry experts expect 6.2 per cent growth in India's GDP in FY24. But, RBI is projecting GDP growth at 6.5 per cent for 2023-24 with Q1 pegged at 7.6 per cent as the manufacturing sector is all set to rebound.
In line with rise in consumption and manufacturing activity, the demand for warehousing has been witnessing continuous rise. The market for warehousing is expected to reach Rs 2,872 billion by 2027 from Rs 1,206 billion in 2021, growing at a CAGR of about 15.64 per cent. The demand for Grade A warehousing has seen a sharp rise as they provide sufficient docking stations, heavy vehicle movement as well as multi-modal connection among other facilities.
To emerge stronger in manufacturing, India will need logistics of global standard. At present, India reportedly spends 13-14 per cent of its GDP on logistics costs, compared to the global average of around eight per cent. According to Union Minister Nitin Gadkari, the government is working to bring down logistics cost to 9 per cent of GDP in the next three years.
Industries can contribute to the government's efforts by making their warehouses - which are an integral part of the logistics chain - more efficient. Warehouses are becoming more modern with companies investing in advanced material handling equipment (MHE) to optimise space. Material handling, which includes the movement, storage, and protection of products, is only as effective as the technology it relies upon. With horizontal space getting squeezed, warehouses in India are moving faster to vertical racking generating demand for very narrow aisle (VNA) trucks.
With the consumer purchasing behaviour changing (especially towards online buying), warehouse operations are moving toward semi or fully automated processes. Robotics, along with enhanced artificial intelligence (AI) feature, is another big thing in material handling arena to watch out for in the future.
rising raw material prices
S&P Global India Manufacturing
Purchasing Managers’ Index
India's economy
GDP
warehousing
logistics
material handling equipment
artificial intelligence
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