I do believe it is important to be future-ready with a portfolio to be able to deal with however the market evolves. This is better than just forecasting accurately— having the weapons ready to deal with the uncertainties.   Anand Mahindra

In the last few years, many new initiatives have been taken up in the Indian manufacturing sector, to make India a global manufacturing hub. Let’s see briefly what these are, which industries are in focus. By and large, the first industry to come out of the cold is the defence industry. What has changed- everything. From the imports dependent, corruption ridden transactional industry, this industry is now coming of age in India. HAL leads the pack.

Newly developed fighter jets, trainer planes, and a lot of developmental work under its belt, this sleepy company, often kept so by disinterested governments prior to 2014, has woken up to a possibly great future. But then, a sleeping giant for long, does take time to rev up, like Kumbhakarna, who wakes up after six months of slumber. The latest news is that the Tejas aircraft is behind schedule. However, the momentum has been triggered. In other spaces, companies like L&T, Tata, BEL, BEML have all increased their involvement in this field, and are doing some substantial work. While L&T is into submarines, missiles, etc., Tata is into trucks, electronic components, as are BEL and BEML. All these developments are due to the efforts of the central government in ‘Indianising’ defence supplies. In view of the many threats from the western and northern borders, (and now, the eastern front too), India needs to develop indigenous defence supply chain which will provide the country with reliable and high-quality supplies in the needed volumes.

Another giant that has woken up in the ISRO. Not that this agency ever went into disuse, it was always active, but at a low key. But the moon landing and the subsequent satellite launches and missiles launches have firmly established that ISRO means business. With the defence budget slated to increase from $79 billion in 2025 to 416 B in 2030, this industry will surely contribute enormously to the GDP growth, and the beginning has already been made.

The industry in focus in India, after defense, is iron and steel. The latest news is that the demand for steel in 2030 is likely to be above 230 mtpa. And the capacity builds up, from around 165 mtpa in 2024 to 300 mtpa in 2030, is indeed a tall order. Mittal – Nippon, Vedanta, Tata, SAIL are all vying with each other to come up with huge investments, and this industry is going to be in a new avatar. I am reminded of what Muthuraman, a former MD of Tata Steel, had said in 2000, that the Indian steel capacity should be at 300 mtpa in the next 25 years. How true, and visionary. Just imagine, at an average of about Rs 25 billion per mtpa investment, the funds needed to create this capacity would be not less than INR 400 billion. This is apart from the millions that Indian steel companies are planning to spend in investments abroad. This change has likely come about due to the PLI, Make in India and the Atmanirbhar programmes.

Another industry coming out a temporary slumber is electric power generation. There was a cloud hanging over this sector due to the ‘environmental’ issues and the Kyoto declarations etc. However, it appears that, as of now, this sector has been given the green signal to expand. BHEL has received an order form NTPC worth Rs 80 billion recently, and others are in the pipeline. It is likely, that, with the EV business picking up speed, at the expense of the ICE powered vehicles, and the massive power requirements of the data centres industry to house clouds, AI computing, and big data processing, this sector is likely to see some growth in the next few years.

Another industry in the limelight is aircraft parts manufacturing. Thanks to the efforts put in by the Indian government and business groups like Tata, and others, there are quite a few parts manufacturing factories coming up. However, the crux is the availability of electronic parts and components, which are not in abundant supply presently in India. Once this gap is addressed, the downstream industries, like, aircraft manufacturing, data centres, automobiles, etc. will start putting out more numbers and more sophisticated products in the markets. In fact, if what Dr G. Govindarajan and Venkat have written in their recent book is any guide, every industry will see the use of electronic micro chips in every product, like every family munches potato chips today.

Indian Railways Minister Ashwini Vaishnaw does not want to be left behind. If anything, Indian Railways are on the fast track, literally and figuratively. Indian trains have gained in speed, and have almost doubled the earlier ones. The work done by the railways in making sure the tracks and stations, as well as signalling and other infra, are upgraded is nothing short of extraordinary. Mumbai and Delhi are the main beneficiaries, but other cities are not getting left behind. Lucknow is getting ready for metro, Hyderabad and Chennai, as well as Bengaluru, already have metros running successfully. And many other cities in India have lined up investments in this area. Of course, the bullet is yet to bite, but it is now almost 70% plus ready. Obe can expect it to fire in the next two or three years, at least in the trial phase for short distances.

Elsewhere, Schneider Electric has announced plans to establish three new manufacturing plants in India, further expanding its production capabilities. The new facilities will be located in Kolkata, Hyderabad, and Ahmednagar, reinforcing the company’s commitment to India’s industrial growth’. Former India captain Sourav Ganguly has announced his intentions to start a steel plant of 0.8 mtpa at a cost of Rs 25 billion. Siemens AG, a leader in technology and infrastructure solutions, is scaling up its factory capacity in India as part of the Make in India initiative. The Indian government has increased funding for the Ministry of Electronics and Information Technology (MeitY) by 48 per cent which raising its budget to over Rs 260 billion. This boost focuses on expanding India’s semiconductor manufacturing, artificial intelligence (AI) capabilities, and technological self-reliance. Tesla has entered India through local partners, and should be here soon. Maybe, a factory will come up, too.

The above are some of the recent headlines, which show that the Indian government has taken the necessary next steps to boost manufacturing in the country. Make in India, which kicked off when PM Modi took over, and which was an object of suspicion for some time, has now blossomed into a full blown, mini-industrial revolution, putting India firmly on the way to a notable manufacturing centre. Of course, it is far away form being a global hub, but then, Rome was not built in a day. 

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About the author:

R Jayaraman is the Head, Capstone Projects, at 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.