The Indian manufacturing sector has undergone a transformative evolution, propelled by persistent governmental endeavors to enhance business-friendly conditions. This article delves into the initiatives and reforms that have established India as a global hub for outsourcing manufacturing. It explores how the government’s focus on ease of business, infrastructure development, and skilled labor has captivated international investors. India is primed to be a significant manufacturing powerhouse.
The manufacturing sector, contributing 17% of the GDP and employing over 27.3 million workers, is pivotal to the Indian economy.
Survey From FICCI
This article highlights metal fabrication’s role, success stories, and investment prospects.
Introduction
Over the past decade, India’s proactive efforts have magnetized businesses seeking manufacturing ventures, transforming it into an enticing investment locale. By prioritizing business facilitation, India has become a preferred manufacturing destination and an esteemed global hub for outsourced production. India is steadfastly becoming a monumental manufacturing force with a vision to export goods worth $1 trillion by 2030. This article scrutinizes the vital components fostering a business-friendly milieu in India’s manufacturing landscape, accentuating metal fabrication’s pivotal position.
It has been observed that India’s economic outlook is promising in the medium to long run compared to other Asian countries, except China. The country is expected to experience robust growth, improving income and purchasing power. With a considerable presence of millennials in the population, businesses will need to develop innovative strategies to penetrate the sizable rural market, where median incomes are rising faster than in urban areas. These factors favor the manufacturing industry as there is pent-up demand, and recent policy initiatives aimed at manufacturing could lead to a sustainable recovery.
The manufacturing industry in India is experiencing rapid growth due to the country’s increasing population. Investment in the sector is expanding, and initiatives like ‘Make in India’ are working to make India a leading global manufacturing hub. During the fiscal year 2022, the manufacturing industry experienced an annual production growth rate of 11.4 percent.
Government Initiatives and Reforms
The Indian government has allocated INR 1.97 lakh crore (equivalent to over US$ 26 billion) towards the Production Linked Incentive (PLI) schemes for 14 crucial manufacturing sectors in the Union Budget 2021-22 manufacturing sectors. These schemes aim to enhance India’s manufacturing capabilities and increase exports. The PLI schemes are expected to significantly grow production, employment, skill development, economic expansion, and exports in the next five years and beyond.
Despite the challenges caused by the COVID-19 pandemic, the manufacturing sector has experienced positive growth in Gross Value Addition (GVA), as reported in the Economic Survey 2021-22. Additionally, the employment rate in the sector has risen from 57 million in 2017-18 to 62.4 million in 2019-20.
Economic Survey 2021-22
- Make in India: Make in India is an initiative that promotes local and foreign enterprises to manufacture their goods in India. The campaign encourages investments in manufacturing, focusing on 25 major sectors, including metal fabrication.
- Single Window Clearance: To streamline the regulatory processes, the Indian government introduced a single window clearance system. This system enables businesses, including metal fabrication units, to obtain all the necessary approvals and licenses from various departments through a unified platform, significantly reducing red tape. It ensures faster approvals, transparent processes, and minimal paperwork.
- Goods and Services Tax (GST): In 2017, GST replaced multiple state and central taxes with a unified tax structure. This tax reform simplified the taxation system, reducing compliance burdens and eliminating tax cascading for metal fabrication businesses. It has streamlined supply chains and enhanced cost competitiveness.
- Labor Law Reforms: The government has undertaken reforms to simplify compliance requirements and provide flexibility to businesses, including metal fabrication firms. These reforms aim to enhance labor market efficiency and create a conducive business environment.
Infrastructure Development and Connectivity Improvements
A thriving manufacturing sector requires robust infrastructure to facilitate global exports, a focus steering India’s trajectory. The nation’s infrastructure developments are strategically designed to fortify its status as an export-oriented manufacturing hub:
- Dedicated Freight Corridors: India’s commitment to export-driven manufacturing is underscored by dedicated freight corridors. These corridors amplify the export of metal-fabricated goods, linking key industrial centers to ports seamlessly. The Eastern and Western Dedicated Freight Corridors expedite logistics and enhance supply chain efficiency.
- Road and Rail Networks for Export Prowess: As an export-centric manufacturing hub, India’s investments in road and rail networks resonate. Expansion and modernization of these networks empower industries with streamlined connectivity, ensuring the smooth movement of goods across the nation’s expanse.
- Export-Oriented Vision: Rooted in an export-oriented vision, India’s infrastructure development fosters an ecosystem encouraging metal fabrication exporters to harness global markets efficiently. India is poised to shape a thriving export-driven manufacturing landscape by aligning infrastructure progress with export ambitions.
- Port Modernization and Coastal Connectivity: The export thrust extends to enhancing port modernization and coastal connectivity. Modernized ports and improved coastal links empower manufacturers to ship their metal-fabricated products to global markets efficiently. Deep-water ports and advanced container terminals magnify cargo-handling capacity, benefitting exporters.
Skilled Labor Force and Technical Expertise
India’s demographic dividend lies in its vast pool of young and skilled labor, including technicians and engineers essential for metal fabrication. The country’s growing emphasis on education and skill development has created a workforce with technical expertise. The government has also launched skill development programs to address the specific needs of the manufacturing sector, including metal fabrication.
Skill India Mission
Launched as part of the Make in India initiative, the Skill India Mission aims to provide vocational training to millions of youth nationwide. It focuses on industry-relevant skills, including technical training in metal fabrication, manufacturing, engineering, and technology.
Industrial Parks and Special Economic Zones (SEZs)
To attract investments and facilitate manufacturing activities, including metal fabrication, the Indian government has established numerous industrial parks and SEZs. These zones offer various benefits, including tax incentives, reduced customs duties, and simplified regulatory procedures, making them attractive destinations for international and local manufacturing investments.
- National Investment and Manufacturing Zones (NIMZs): The government has identified specific areas as NIMZs to promote industrial growth in key regions. These zones provide world-class infrastructure, efficient transportation, and a business-friendly environment, attracting metal fabrication units and other manufacturing businesses.
- Special Economic Zones (SEZs): SEZs are designated areas with favorable trade and tax policies to promote exports and boost manufacturing activities, including metal fabrication. These zones offer numerous incentives, including duty-free imports, to attract businesses.
Government Incentives for Manufacturing Investment
India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury, and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country. India’s manufacturing sector has the potential to reach US$ 1 trillion by 2025.
Some of the significant investments and developments in this sector in the recent past are mentioned in the chart below-
INVESTMENT AND DEVELOPMENT HIGHLIGHTS IN THE INDIAN MANUFACTURING SECTOR
| INVESTMENT/DEVELOPMENT | AMOUNT(USD MILLION) |
| Total FDI inflow in FY22 | 58.770 |
| Automobile Sector FDI inflows( April 2000-September 2022) | 33.774 |
| Chemical manufacturing sector(Excluding fertilizers) FDI inflows(April2000-September2022) | 20.759 |
| Drug and pharmaceutical manufacturing sector FDI inflows(April2000-September2022) | 20.104 |
| Food Processing Industries FDI inflows(April2000-September2022) | 11.541 |
| Combined index of eight core industries(April2000-September2022) | 144.6 |
| Index of industrial Production(IIP) (April2000-September2022) | 137.1 |
| Manufacturing Purchasing Managers Index (PMI)FY23 | 55.6 |
| Total export of top 10 major commodities (FY23 until September 2022) | 187.200 |
| EPFO net subscribers added(FY23until February 2023) | 131,00,000 |
| New Company for R&D in manufacturing(Zoho) | 6.7-13.4 |
| Collaboration for electronics manufacturing(Wistron Corp and Optiemus Electronics | — |
| Samsung’s mobile and IT display manufacturing plant in Noida | 6.7-13.4 |
In addition to the initiatives mentioned above, the Indian government provides a range of incentives to promote manufacturing investments, including metal fabrication. These incentives may include tax benefits, subsidies, grants, and access to financial assistance schemes, further strengthening the ease of doing business in the country.
- Capital Subsidies: The government offers capital subsidies to offset the initial costs of setting up manufacturing units, including metal fabrication. These subsidies are often provided to industries located in backward regions or priority sectors.
- Research and Development (R&D) Incentives: To encourage innovation and technology development in metal fabrication and other manufacturing sectors, the government provides incentives for R&D activities.
Success Stories of Industries in Indian Manufacturing
Numerous success stories of businesses thriving in the Indian manufacturing landscape, including metal fabrication, highlight the sector’s potential. Companies from various industries, including automotive, pharmaceuticals, electronics, and infrastructure, have established successful manufacturing units in India and expanded their global reach.
Metal Fabrication Sector
The metal fabrication industry in India has witnessed substantial growth, catering to diverse sectors such as construction, automotive, infrastructure, and consumer goods. Many domestic and international players have established state-of-the-art metal fabrication units in India, capitalizing on the skilled labor force, business-friendly environment, and ease of business.
Automotive Sector
India has become a significant global hub for automobile manufacturing. In the automotive industry, metal fabrication is vital as it supplies essential components and parts for vehicles produced in India.
Infrastructure Development
With the government’s focus on infrastructure development, metal fabrication is in high demand for constructing bridges, buildings, and other infrastructure projects.
Future Outlook and Opportunities
The future of the Indian manufacturing landscape, including metal fabrication, looks promising. As the government continues improving the ease of business, new opportunities will emerge for global investors across different sectors. India’s large consumer base, low labor costs, and conducive business environment make it an attractive destination for manufacturers seeking to diversify their operations, particularly in metal fabrication.
- Emerging Technologies: Implementing new technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and advanced robotics offers immense possibilities for innovation and expansion in the manufacturing industry, including metal fabrication.
- Green Manufacturing: With a growing emphasis on sustainability and environmental consciousness, the demand for green manufacturing practices, including in metal fabrication, is on the rise. Businesses that adopt eco-friendly manufacturing processes and products stand to gain a competitive advantage.
- Global Supply Chains Realignment: The realignment of global supply chains due to geopolitical and economic factors offers opportunities for India, including its metal fabrication sector, to attract more investments and become an integral part of global manufacturing networks.
Zetwerk: A Global Manufacturing Leader in the Evolving Indian Landscape
The evolution of India’s manufacturing industry, particularly in metal fabrication, is a testament to the government’s commitment to improving business conditions. A combination of initiatives, transformative reforms, a skilled workforce, and robust infrastructure has propelled India to the forefront of global manufacturing. India is a fertile ground for innovation, growth, and triumph, particularly in metal fabrication.
Zetwerk is a distinguished manufacturer of complex metal parts, specializing in crafting precision components and cutting-edge CNC machine parts that surpass geographical limitations. The commitment to delivering top-notch products has earned Zetwerk a prominent position in the industry.
