From Local to Global: India’s Journey to Manufacturing Supremacy

India has become an increasingly attractive manufacturing destination for global MNCs, marked by significant developments in various sectors and supported by governmental initiatives. Here are the key factors contributing to this trend:

  1. Global Capability Centres (GCCs): As of FY 2023, India hosts 1,580 unique GCCs, with several global MNCs establishing their first global centre outside their headquarters in India. These GCCs are not just driving engineering expansion activities but are also pivotal in transformation efforts with their HQ. The growth of GCCs in India is primarily fueled by engineering and R&D services, which account for 56% of the overall revenue share. The GCCs, employing 1.66 million people, are acting as core technology hubs for their headquarters, specializing in niche skills like AI/ML/NLP, cybersecurity, and blockchain​​​​​​.
  2. Skilled Workforce and Startup Ecosystem: India’s skilled engineering and digital talent, along with a mature startup landscape, continue to attract global corporations for setting up or expanding GCCs. This ecosystem fortifies India’s tech industry and enables collaborations with startups, academia, and external partners, thus fueling innovation​​.
  3. Manufacturing Sector Growth: India is now the third most sought-after manufacturing destination globally, with the potential to export goods worth US$ 1 trillion by 2030. The manufacturing sector, contributing significantly to India’s GDP, is experiencing robust demand, with manufacturing exports reaching US$ 447.46 billion in FY23. The sector is expected to see a growth in its contribution to the global economy and employment, with the Indian middle class projected to have the second-largest share in global consumption by 2030​​.
  4. Government Initiatives and Policies: The Indian government has introduced several initiatives, such as the Make in India, Digital India, and Startup India programs, to boost the manufacturing sector. Additionally, the Production Linked Incentive (PLI) scheme aims to attract large investments in key manufacturing sectors. The National Manufacturing Policy and the PLI scheme for manufacturing, launched to develop the core manufacturing sector, are instrumental in India’s progression towards Industry 4.0. By 2025, the government aims to increase the manufacturing sector’s share in GDP to 25%​​​​.
  5. Foreign Direct Investment (FDI) and Economic Indicators: India received a total FDI inflow of US$ 48.03 billion in FY23, with significant investments in sectors like automobile, chemicals, pharmaceuticals, and food processing. The Manufacturing Purchasing Managers’ Index (PMI) in India stood at 55.6 in FY23, indicating a robust pace of manufacturing activity. The manufacturing sector’s Gross Value Added (GVA) was estimated at US$ 110.48 billion in the first quarter of FY24​​​​.

In summary, India’s growth as a manufacturing hub is driven by its skilled workforce, technological innovation, and supportive government policies, making it an attractive destination for global MNCs. The country is on track to become a major player in the global manufacturing landscape, contributing significantly to the global economy.



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