Compared with these numbers, India is currently achieving about 125 mtpa of crude steel and about 5 mvpa of passenger cars. India has a long way to go. Not just that, the global hub numbers are truly mind boggling. What characterises as a ‘global manufacturing hub (GMH)’? For comparisons, the total output of China’s manufacturing sector was about $4.9 trillion in 2022, whereas India was a comparatively low less than $1 trillion. (see figure 1)

China’s numbers are double that of US that have been achieved in the last twenty years or so. It is incredible and serves as a beacon of hope for those who want to emulate.

Dimensions of a GMH

There are at least five dimensions which a country should be aware of, to become a GMH.

Quantity of goods: A billion tonnes of crude steel, at least 10 to 20 mvpa of passenger cars, about 5 to 10 mvpa of commercial vehicles, about 30 to 35 mtpa of aluminium, between 1,000 to 2,000 GW of installed electric power generation capacity — and the list goes on. The point is that the numbers are big, the investments needed to create such capacities are also big, and the capital required is neither easy to imagine nor easy to secure.

For example, setting up a one mtpa integrated steel plant takes about ?50 billion. It could be less if done on a brownfield site. If this is accepted, then we will need about ?500 billion per annum to create a capacity of 10 mtpa, which has been achieved in India in the past. To create the capacity of 300 mtpa targeted by GOI by 2030, from the current level of 180 mtpa, an additional capital investment of about ?1000 billion per year will be needed for the next six years. That’s a lot — and only for one industry.

Similar amounts are needed in other basic industries like mining, aluminium, electric power, railways, and other infrastructure. This scale of effort requires recognising the importance of project management and construction management. Just imagine — to build this quantum of industrial structures, we will need at least 400,000 personnel per annum. And this is for just one industry. As of now, there is an acute shortage of skilled manpower for construction projects in India.

To get an idea of the magnitude of the task in becoming a GMH in terms of quantum of output, we list five key industries outputs in India and China. (table 2)

One can easily guess the enormity of the task of becoming a GMH.

·        Availability of basic infrastructure factors

Manufacturing thrives on scale — the bigger, the better. Even for major economies like the USA and China, this requires strong infrastructure: land, water, power, steel production, manpower, roads, railways, and ports. As shown in Figure 1, the gap between India and the USA is smaller than between India and China. Therefore, comparing India with the USA offers a more realistic benchmark and greater hope for progress. See (table 3)

The USA numbers are not too far way from those of India. However, to get the correct perspective, let’s look at the per capita picture. The total output value of the manufacturing GDP in India and USA for 2022 were: $470 million and $2,730 million (with China at 4,648 $ million). This is summarised in the table below:

The productivity of the key infrastructure variables per capita are shown in table 4:

Barring electricity, the USA uses its infra far more effectively than India. The effectiveness is reflected in the amount of each infra ‘consumed’ to produce a unit of manufacturing output. This analysis has the flaws of aggregate analysis, but, directionally, it indicates that India can improve its infrastructure usage to catch up with the USA in the manufacturing sector. Hence, the GOI could look more closely at these figures and find out if this route can be applied to some extent to reach the GMH goal of India.

·        Land availability

Manufacturing requires substantial land — for factories, inventory storage, housing supply chain participants, mining, mineral production, and in India’s case, agricultural farming. While agriculture isn’t classified as manufacturing, it plays a significant role in India’s land-use analysis compared to China and the USA.

India’s land area is 1.597 million square km, far smaller than China’s 9.6 million square km and the USA’s 9.53 million square km. This puts India at a clear disadvantage. In terms of agricultural land use, India dedicates 60 per cent, compared to 44 per cent in the USA and just 10 per cent in China. As a result, the land available for industry and other purposes is approximately 8.6 million square km for China, 5.33 million square km for the USA, and only 0.64 million square km for India.

The GDP productivity per square km of land area for these three countries is shown in Table 5:

India’s land usage for manufacturing is more productive than in China or the USA, but its limited available land leaves few options: either boost current productivity or convert agricultural land into industrial use.

·        Logistics
Manufacturing heavily depends on transportation, involving the movement of raw materials, components, and finished products. Globally, logistics costs range from 8 per cent to 10 per cent of production costs, but in India, it exceeds 10 per cent. Initiatives like PMGSS aim to reduce this. Logistics relies on land, roads, railways, and ports, though India still mainly uses road, rail, and sea routes, with limited pipeline infrastructure.

For manufacturing, logistics splits into domestic and export channels. Domestic logistics depends on roads and railways, while exports face additional complexities like customs and international practices. In the last decade, India’s transport infrastructure has improved significantly, though productivity data tells a more detailed story, as shown in Table 6.

Here’s a clearer and more concise version:

India’s logistics productivity parameters are significantly lower than those of the USA, posing a major bottleneck for the country’s manufacturing ambitions. Poor transport infrastructure and weak last-mile connectivity to ports and commercial centers hinder efficiency. The Pradhan Mantri Gati Shakti Scheme (PMGSS) addresses these issues through a coordinated, multi-level approach, but this remains a key area for improvement.

·        Ports
Ports are essential for any nation aiming to become a global manufacturing hub (GMH). Efficient inland connectivity to ports directly impacts overall logistics performance, but sea transport remains slow due to global chokepoints like the Suez Canal, Panama Canal, and South China Sea. In India, domestic factories rely on ports for both exports and internal movement — for instance, Gujarat’s cement plants use sea routes for distribution.

However, the lack of point-to-point connectivity at ports results in multiple loadings, inspections, and delays. Despite these inefficiencies, sea and rail transport remain the most cost-effective options for bulk goods, typically moving products into warehouses before final distribution. Table 7 highlights the productivity comparison of ports in India, China, and the USA.

Note:

India has 229 ports, with 12 classified as major, handling only 54 per cent of the country’s cargo. Unlike the USA and China, where only major ports manage most of the cargo, India’s overall port productivity remains low, even when considering only its major ports.

Port productivity reflects cargo-handling capacity, processing speed, and ease of booking and release procedures — all critical for efficient trade. Two key productivity measures stand out: "traffic productivity," indicating the volume of goods moved, and revenue generated per port, with higher figures signaling better infrastructure.

India falls short on both measures, highlighting the urgent need for more efficient and world-class port facilities. A recent Government of India report revealed a 47 per cent increase in India’s coastline length, offering greater potential for developing new, high-capacity ports.

Conclusion

India still has a long way to go to become a global manufacturing hub, requiring significant improvement across key areas. While the financial investment needed is massive, the country has ample manpower and ingenuity. Success will depend on determined leadership at the national and state levels, along with skilled project managers, engineers, and workers. The past decade has proven that India has the potential to achieve this goal.

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About the author:

R Jayaraman is the Head-Capstone Projects, Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities, including Tata Steel, for over 30 years. He has authored over 60 papers in academic and techno economic journals in India and abroad. Jayaraman is a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.

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