The share of manufacturing in India's GVA (Gross Value Added) has seen a gradual fall in the last one decade despite a surge in private consumption demand. According to the government data, the contribution of manufacturing in India's GVA had declined to 15.1 per cent in 2019-20 from 18.4 per cent in 2010-11. The share of manufacturing witnessed further fall to 14.4 per cent in FY2020-21 due to the Covid induced downturn. In 2021-22, it is expected to improve to 15.3 per cent in 2021-22, according to the Economic Survey 2021-22. On the back of industrial contraction in the corresponding period of 2020-21, the survey now expects India's manufacturing sector to grow by 12.5 per cent in 2021-22. The Union Budget 2022-23 has extended Emergency Credit Line Scheme to March 2023 and its guarantee cover has been enhanced by Rs 500 billion to Rs 5 trillion. An additional credit of Rs 2 trillion is expected to be facilitated for the MSME sector too. Surety bonds to fill in for Bank Guarantees is also another new financial intervention which can help fend financial needs.

 

Owing to the recovery of global demand coupled with a revival in domestic activity, India's merchandise exports and imports rebounded strongly and surpassed pre-Covid levels during the current financial year. During April-December 2021, India's merchandise exports grew by 49.7 per cent compared to the corresponding period of last year and 26.5 per cent over April-December 2019. Exports of India’s engineering goods jumped to $ 81.8 billion during April-December 2021 as compared to $ 52.9 billion during same period in the previous year (2020), registering a stupendous growth of 54 per cent. The engineering goods sector - which constitutes the largest share (more than 27 per cent) of India’s total exports basket - comprises of metal products, industrial machinery and equipment, automobiles and its components, transport equipment, bicycles, medical devices and renewable equipment.

 

Overall, India is all set to achieve its ambitious merchandise export target of $ 400 billion in 2021-22. However, this number is too less compared to China's merchandise exports which stood at $ 2.59 trillion in 2020. For a country (India) that intends to become a global manufacturing hub comparison with China is inevitable.

 

In majority of industrial product segments, China has 10 times more manufacturing capacity than India. Gap is very wide between the present scale of India's manufacturing sector and where it should be to become a strong contender for a global manufacturing hub. India has been taking some measures to improve its manufacturing capability and schemes like PLI (Production Linked Incentive) will fasten this process. To fight against a Goliath in a global arena, it is important to target sectors where India already has a connect with the OEMs. As suggested by experts during the recently held webinar (titled “Aatmanirbhar Bharat: The story so far”) by IPF as part of 3i EXPO 2022 series, this sector-specific focused approach can fetch higher dividend than targeting all sectors at one go.

 

Besides, increasing manufacturing scale and establishing long-term relationship with OEMs that is built on trust will do wonders for the Indian manufacturing sector. At 3i EXPO, we will showcase on how to build a robust manufacturing and supply chain using automation & digital solutions as they are important tools to improving efficiency and productivity. For more details on 3i EXPO, visit https://3iexpo.com/ or simply scan the QR Code below.

Founder & Editor-in-chief Pratap Padode