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The manufacturing sector in India is pivotal to its growth and represents a complex and dynamic tapestry of industries. At the core, the sector encompasses transforming raw materials into finished goods and ranges from industries for traditional crafts to cutting-edge technology. India’s manufacturing sector analysis demonstrates its potential to grow exports to a staggering USD 1 trillion by 2030 with the middle-class having the 2nd largest share in global consumption at 17% (Source: IBEF). Here we take a look at India’s manufacturing growth rate, manufacturing clusters and companies in India, and an overview of the Indian manufacturing sector, that makes it globally an economic powerhouse.
Manufacturing sector in India – Meaning & Overview
India is emerging as a global manufacturing hub with the sector contributing to almost 17% of the nation’s GDP.
As can be understood, the nature of the sector makes manufacturing the right choice for large and small businesses to invest in. In fact, to empower and support the growth of the MSME sector in India, the government has introduced new schemes, incentives, and exemptions for them. It has also relaxed the small business investment limit to encourage entrepreneurship, innovation and production. The government moreover, expects that with the right policies in place, almost 25% of the economy’s output will come from the manufacturing sector by 2025.
Today, the country has the physical and digital infrastructure required to be a global powerhouse. Some of the factors that drive this change are:
- Availability of natural resources, raw materials, and people across regions
- Market opportunities for exports, internal demand and contract manufacturing
- Marketing automation and use of digital technology such as IoT, AI and Machine Learning, Industry 4.0 etc.
- Logistics and maritime potential
- Tax and government policy reforms facilitating ease of doing business
- Focus on sustainability and environment conservation
Market size analysis – India manufacturing industry
India’s manufacturing sector is experiencing significant growth and transformation across urban and rural sectors. In FY23, India manufacturing sector analysis will show highest ever annual exports of USD 447.46 billion with 6.03% growth (Source: IBEF).
As per quarterly estimates (Q1, FY22), India’s GVA (gross value added) was estimated at USD 626.5 billion. For the same quarter in 2024 (Q1, 2024), the manufacturing GVA was estimated at USD 110.48 billion.
At its current manufacturing growth rate, the country has the potential to emerge as a global manufacturing hub by 2030 and contribute over USD 500 billion annually to the global economy.
Home to some of the largest industries in India, the manufacturing sector also creates employment opportunities for millions. In 2019-20, the manufacturing sector employment rate was estimated at 6.24 crores.
Some of the top sectors contributing to this economic transformation are – automotive, pharmaceuticals, textile, and heavy engineering.
Top industrial manufacturing clusters
In an information series kit, Great Places for Manufacturing in India by Invest India (in collaboration with JLL) some important insights and observations about India’s manufacturing industries and regions is available.
In recent years, India attracted large-scale investment in the manufacturing sector especially for processes that were labour-intensive. Some of the key processes include: textiles, electronics assembly, and footwear. Investments also came in for resource-intensive sectors (e.g., food processing) and R&D (e.g., engineering, biotechnology).
Listed below are the largest industrial regions in India for manufacturing across the states of Maharashtra, Gujarat, Uttar Pradesh, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu:
1. Mumbai-Aurangabad and Pune (Maharashtra)
The state of Maharashtra is home to one of the largest manufacturing clusters in western India with the Mumbai-Aurangabad corridor and the city of Pune.
Mumbai is the financial capital of India. It’s also home to JNPT, India’s largest container port and supports a staggering 40% of the country’s container volume (Also read about containerised transportation). Over the years, the Mumbai-Aurangabad belt has carved a niche for itself with a thriving IT, textile, consumer durable and pharmaceutical sector.
Pune, on the other hand, has grown to be an automobile hub with German, Korean, Chinese and American auto-companies having a strong presence in the city. Aurangabad too has shown potential as an automobile manufacturing hub.
Also read: Top logistics and transportation companies in Mumbai
2. NH48, Gurugram and Noida (Delhi NCR, Haryana, Uttar Pradesh)
When it comes to the largest industries in India, the automobile sector is one of them. And the states of Uttar Pradesh, Haryana and the Delhi NCR region, with the Gurugram-Manesar-Bawal belt is the country’s largest four-wheeler automobile manufacturing belt. (Also read about automotive logistics)
NH48 connects Delhi with Mumbai and is another prominent industrial corridor. Noida and the surrounding areas are known for being the nation’s largest electronics manufacturing zone for mobile and mobile component manufacturing. Other sectors of importance include automobile OEMs and ancillaries.
Also read: MSME Haryana – Registration, login, address and contact information
3. Hyderabad-Bengaluru-Chennai (Telangana, Karnataka, Tamil Nadu)
The next promising manufacturing cluster in the country is in the southern part with the states of Karnataka, Tamil Nadu and Telangana standing out.
While the city of Bengaluru is known for its booming IT industry, it’s also a hub for chip designers and machine tools production. It’s also a hub for aerospace and textiles.
The state of Tamil Nadu is known to have the highest number of factories in India with Chennai home to 12 ports. Apart from automobile, which is the most prominent manufacturing unit in the area, there’s also the strong presence of engineering, leather products and textile sectors. (Also read about how to start an automobile business).
Hyderabad, on the other hand is known for domestic pharmaceutical production.
4. Ahmedabad and Vadodara (Gujarat)
In western India, in the state of Gujarat, though the city of Ahmedabad has a busy chemicals and pharmaceuticals industry, the work going on in the nearby region of Mandal-Becharaji industrial belt is set to make the region the country’s largest automobile hub.
Vadodara and its nearby areas however are known for making its name in power transmission and distribution equipment manufacturing.
Manufacturing sector companies in India
Let us now take a look at the top manufacturing companies in India, industry-wise. Each of these companies exemplifies excellence in their field of work and contributes significantly to the country’s overall revenue and GDP.
Top 10 manufacturing sector companies in India:
- Steel industry – Tata Steel (check Tata Steel product list)
- Aluminium and Copper – Hindalco Industries
- Automobile – Maruti Suzuki
- Two-wheeler manufacturing – Hero MotoCorp
- Heavy Engineering – Larsen & Toubro
- Petrochemicals – Reliance Industries
- Paints and Coatings – Asian Paints
- Electrical Equipment – BHEL
- Pharmaceuticals – Sun Pharmaceutical Industries
How to improve manufacturing sector in India
To ensure that the manufacturing growth rate keeps pace, the government has taken several steps for encouragement and improvement, such as the SAMARTH Udyog Bharat 4.0. This initiative is expected to keep the sector competitive in the capital goods market (Source: IBEF). Similarly, the ZED certification will enable SMEs to improve production quality and stay competitive while being environmentally conscious.
Some of the other strategic initiatives that can drive improvement and growth in manufacturing are:
- Enhancing infrastructure and technology: Investment and adoption of new technologies and infrastructure development is critical for long-term success. Upgrading transportation networks (i.e., manufacturing logistics), power and internet supply, and digital infrastructure such as IoT, automation, Industry 4.0, can boost the overall sector and foster higher productivity.
- Skill development and training: India has a huge workforce comprising of skilled, semi-skilled and unskilled workers. Tailored training programmes, emphasising technical knowledge and soft skills, especially in the rural areas, can prepare the workforce for demands of modern manufacturing. E.g., MSME Chennai office training courses, MSME-DI training programmes in Bangalore, etc.
- Policy reforms and ease of doing business: Business friendly policies, less stringent norms, and a more streamlined regulatory framework can attract more FDI and encourage more home-grown manufacturing startups. Incentives for innovation, simplifying compliance, can further enable entrepreneurs to manufacture home-grown products.
Future potential of manufacturing in India
The manufacturing sector in India has enormous potential for growth. With the surge of foreign investments in the sector across luxury, mobile phone and automobile brands, it is expected that the sector will reach a staggering USD 1 trillion by 2025.
There are talks that incentives worth USD 2.2 billion will be provided in local manufacturing across six sectors including chemicals, shipping containers and inputs for vaccine (Source: IBEF).
As can be seen, fueled by policy reforms and technology transformation, the sector is poised to become a global manufacturing hub, driving economic growth and challenges. This future landscape promises efficiency, global competitiveness, and an environment for manufacturing business ideas to thrive and grow.
Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.
