Manufacturing

December 2023
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Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 16

Growth Drivers and Opportunities 19

Key Highlights of Union Budget 2023-24 27

Key Industry Contacts 29

Appendix 31

2
Executive summary

Pillar for economic growth Potential to become a global hub

• The Indian manufacturing industry • India has the capacity to export goods
generated 16-17% of India’s GDP pre- worth US$ 1 trillion by 2030 and is on the
pandemic and is projected to be one of road to becoming a major global
the fastest growing sectors. manufacturing hub.
• The machine tool industry was literally • India is planning to offer incentives of up to
the nuts and bolts of the manufacturing Rs. 18,000 crore (US$ 2.2 billion) to spur
industry in India. Today, technology has local manufacturing in six new sectors
stimulated innovation with digital including chemicals, shipping containers,
transformation a key aspect in gaining and inputs for vaccines.
an edge in this highly competitive • With 17% of the nation’s GDP and over
market. 27.3 million workers, the manufacturing
• The manufacturing sector of India has sector plays a significant role in the Indian
the potential to reach US$ 1 trillion by economy. Through the implementation of
2025. different programmes and policies, the
• Manufacturing is emerging as an Indian government hopes to have 25% of
integral pillar in the country’s economic the economy’s output come from
growth, thanks to the performance of manufacturing by 2025.
key sectors like automotive, • India now has the physical and digital
engineering, chemicals, infrastructure to raise the share of the
pharmaceuticals, and consumer manufacturing sector in the economy and
durables. make a realistic bid to be an important
player in global supply chains.

Competitiveness
• Technology has today encouraged creativity, with digital transformation being a critical element in gaining
an advantage in this increasingly competitive industry. The Indian manufacturing sector is steadily
moving toward more automated and process-driven manufacturing, which is projected to improve
efficiency and enhance productivity.

Source: Bain & Company, News Articles

3
Advantage India

4
Advantage India
2. INCREASING INVESTMENT 3. POLICY SUPPORT
• Propelled by growth in priority sectors and driven by favourable
• The Production Linked Incentive (PLI) scheme has been
megatrends, India’s manufacturing sector has opened itself into
notified for Large Scale Electronics Manufacturing in
new geographies and segments.
India. The scheme aims to attract large investments in
• Building on the competitive advantage of a skilled workforce and
the mobile phone manufacturing and specified electronic
lower cost of labour, the manufacturing sector is also witnessing
components, including Assembly, Testing, Marking and
an increased inflow of capex and heightened M&A activity,
Packaging (ATMP) units.
leading to a surge in manufacturing output and resultant
• Initiatives like Make in India, Digital India and Startup
increased contribution to exports.
India have given the much-needed thrust to the
Electronics System Design and Manufacturing (ESDM)
sector in India.

4. COMPETITIVE
1. ROBUST DEMAND ADVANTAGE
• Manufacturing exports have • The positive developments in the
registered highest ever annual manufacturing sector, driven by
exports of US$ 447.46 billion production capacity expansion,
with 6.03% growth during government policy support,
FY23 surpassing the previous 2 3 heightened M&A activity, and PE/VC-
led investment, are creating a robust
year (FY22) record exports of
US$ 422 billion. pipeline for the country’s sustained
• By 2030, the Indian middle economic growth in the years to
class is expected to have the come.
second-largest share in global
consumption at 17%.
1 4

Note: PE - Provisional Estimate

Source: Brookings Institute, DPIIT, Economic Times, Make in India, Bain & Company

5
Market Overview

6
Evolution of the Indian manufacturing sector

Pre-Independence 1948-91 Post 1991 reforms 2014-22

▪ Most of the products were ▪ Focus of Indian Government on ▪ Indian markets were ▪ Make in India campaign was
handicrafts and were exported in basic and heavy industries with opened to global launched to attract manufacturers and
large numbers before the British the start of five-year plans. competition with the LPG FDI.
era started. ▪ A comprehensive Industrial reforms and gave way to ▪ Government is aiming to establish
▪ The first charcoal fired iron making Policy resolution announced in private sector India as global manufacturing hub
was attempted in Tamil Nadu in 1956. Iron and steel, heavy entrepreneurs as license through various policy measures and
1830. engineering, lignite projects, raj came to an end. incentives to specific manufacturing
▪ India’s present-day largest and fertilisers formed the basis ▪ Services became the sectors.
conglomerate Tata Group started of industrial planning. engines of growth while ▪ In FY21, there were 39,539 new
by Jamsetji Tata in 1868. ▪ Focus shifted to agro-industries the industrial production business registrations in the
▪ Slow growth of Indian industry due as a result of many factors saw volatility in growth manufacturing sector, a 50% increase
to regressive policies of the time. while license raj grew in the rates in this period. from 26,406 in FY20.
▪ Indian industry grew in the two country and public sector ▪ MSMEs in the country ▪ Electronics, vehicle, and solar panel
world war periods in an effort to enterprises grew more were given a push production account for around 80% of
support the British in the wars. inefficient. The industries lost through government’s total manufacturing expenditure, with
their competitiveness. policy measures. semiconductors/electronics value
chain accounting for 50% of total
Note: MSME - Micro, small and Medium Enterprises, FDI - Foreign Direct Investments, SE- Second Estimate
expenditure in February 2022.
Source: data.gov.in, Central Statistics Office, Indian Express

7
Sub-sectors under manufacturing
As per National Industrial Classification, following 24 activities make up the manufacturing sector in India:

Manufacturing

Food products Paper and paper products Fabricated metal products, except
machinery and equipment

Beverages Printing and reproduction of recorded Computer, electronic and optical

media products
Tobacco products
Electrical equipment
Coke and refined petroleum products

Textiles Machinery and equipment n.e.c.

Chemicals and chemical products
Motor vehicles, trailers and semi-trailers
Wearing apparel
Pharmaceuticals, medicinal chemical Other transport equipment
and botanical products
Leather and related products Repair and Installation of machinery
and equipment
Rubber and plastics products
Wood and products of wood and cork,
Other manufacturing which includes
except furniture; manufacture of
jewelry, bijouterie and related articles,
articles of straw and plaiting materials Other non-metallic mineral products
musical instruments, sports goods,
games and toys, medical and dental
Furniture Basic metals instruments and supplies

Source: udyogaadhaar.gov.in

8
Gross value added by manufacturing

▪ In the first quarter of FY22, India’s economy increased by 20.1% Visakhapatnam port at
traffic (million tonnes)
Quarterly estimates of GVA current prices (US$ billion)
YoY, driven by growth in manufacturing and construction sectors.

▪ India’s gross value added (GVA) at current prices was estimated at

US$ 626.5 billion as per the quarterly estimates of the first quarter of 900.0
FY22.
800.0 770.08
▪ The manufacturing GVA at current prices was estimated at US$
110.48 billion in the first quarter of FY24. 713.01
700.0
▪ Significant initiatives have been introduced under Aatmanirbhar 620.7 626.5
Bharat and Make in India programmes to enhance India’s
600.0
manufacturing capabilities and exports across the industries. Sector
specific Production Linked incentives (PLI) have been introduced in 495.3
500.0
the aftermath of the pandemic to incentivize domestic and foreign
investments and to develop global champions in the manufacturing
400.0
industry.

300.0

200.0

100.0

-
Q1'20 Q1'21 Q1'22 Q1'23 Q1'24

Source: Ministry of Statistics and Programme Implementation, Economic Survey 2022-23

9
Industrial production

▪ The Index of Industrial Production (IIP) is prepared by the Central Annual Growth Rates of IIP (%) at Sector Level
Statistics Office to measure the activity happening in three industrial
sectors namely mining, manufacturing, and electricity.

▪ It is the benchmark index and serves as a proxy to gauge the growth 10.00

of the manufacturing sector of India since manufacturing alone has a

9.00 9.4 9.4
weight of 77.63% in the index.

▪ The Index of Industrial Production (IIP) from April-October 2023 8.00

8.0
stood at 143.5.
7.00
▪ The fourth quarter of FY21 highlighted recovery prospects in the
manufacturing industry, with earnings of 213 companies that 6.00 6.4
indicated an increase of 15% in the total sales.
5.00
o In the fourth quarter of FY21, the income and net sales of these 5.0
213 companies increased YoY by 9.5% and 12.8%, respectively. 4.00
4.0
3.00

2.00

1.00

0.00
Apr 2022 - October 2022 Apr 2023 - October 2023
Mining Manufacturing Electricity

Source: Central Statistics Office, Ministry of Statistics & Programme Implementation

10
Performance of eight core industries

▪ The Index of Eight Core Industries (ICI) is an index reflecting the production performance of eight core industries - coal production, crude oil
production, natural gas production, petroleum refinery processing, steel production, cement production and electricity generation.

▪ The combined index of eight core industries stood at 154.1 for April-September 2023 against 143.0 for April-September 2022.

▪ The cumulative index of eight core industries increased by 7.8% during April-September 2023-24 over the corresponding period of the previous
year.

Production Performance of Eight Core Industries

1,800.00
1,600.00

1617.72
1,400.00

1484.36
1390.02
1374.89

1373.08
1,200.00
1306.6
1242.11
1173.6

1,000.00
800.00

892.74
337.32

334.48
297.56
283.46

279.98

263.04
262.94
262.36
254.38

254.31
778.2
243.26
231.92

294.4

380
739.4

736.15
600.00

356
716.08
248.9
688.41
671.53

125.32
650.79

120.01
116.52
111.32
106.36
100.75
90.98

400.00

48.52
47.89

43.59
42.59
41.24

41.33

41.34

41.49
36.94

36.01

35.68
31.24

30.92

31.83

32.06

30.25

28.00

33.66
32.17

30.49
118

34.02
34.2

29.9

29.2
200.00
0.00
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY22 FY23
Natural Gas Production (in BCM) Crude Oil Production (in MT) Fertilizer Production (in MT)
Steel Production (in MT) Petroleum Refinery Products (in MT) Cement Production (in MT)
Coal Production (in MT) Electricity Generation (in Million MWH)

Note: MT - Million Tonnes, BCM - Billion Cubic Metres, MWH - Mega Watt Hour
Source: Office of the Economic Adviser

11
Manufacturing sector PMI

▪ The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) Nikkei India Manufacturing PMI (Monthly)
indicates the sentiments relating to manufacturing activity in the
economy.
70
▪ A value above 50 reflects positive sentiments and potential

58.1
expansion of the sector.

53.9
55.9

55.5

54.6
55.3

54.9
60

54.7
53.7
52.3

54

54
▪ In FY23, the Manufacturing Purchasing Managers’ Index (PMI) in

48.1
India stood at 55.6.
50
▪ India's manufacturing sector activity continued to expand in
November 2023, with the S&P Global Purchasing Managers' Index
(PMI) reaching 56. 40

30

20

10

Source: IHS Markit

12
Capacity utilisation in manufacturing sector

▪ Capacity utilisation in the manufacturing sector is measured by

Reserve Bank of India (RBI) in its quarterly order books, inventories Capacity Utilisation in Manufacturing Sector (in %)
and capacity utilisation survey.
▪ It indicates not only the production levels of companies but also the
potential for future investment. 76.00

▪ As per the survey conducted by the Federation of Indian Chambers 74.00

74.0
of Commerce and Industry (FICCI), capacity utilisation in India’s 72.00
manufacturing sector stood at 72.0% in the second quarter of FY22,

72.0

72.0
indicating a significant recovery in the sector. 70.00

▪ In Q2 FY24, the survey, which covered 380 manufacturers that

69.1
68.00
account for about Rs. 4.8 trillion (US$ 58 billion) in sales, showed a
robust 74% capacity utilization and improved future investment 66.00
outlook during Q2. 64.00
▪ Capacity utilisation at manufacturing facilities was at a robust 74.3%

63.3
62.00
in Q3 of FY23, up from 74% in Q2. Utilisation has held above the
72% mark since Q3 of FY22, indicating that the manufacturing 60.00
activity is taking place at a brisk pace.
58.00
▪ As per RBI’s Industrial Outlook Survey, manufacturing firms
56.00
estimated further strengthening of production, orders and

Q2FY22
Q2FY20

Q2FY21

Q2FY23

Q2FY24
employment in the fourth quarter of FY21. Also, the first three
months of FY22 were projected to record improvements in capacity
utilisation, production, business improvement and employment
generation.
▪ At the aggregate level, capacity utilisation (CU) for the manufacturing
sector recovered to 68.3% in Q2:2021-22 after the waning of the
second wave of COVID-19 pandemic in the country, which had
caused plummeting of CU to 60.0% in the previous quarter

Source: Reserve Bank of India Order Books, Inventories and Capacity Utilisation Survey

13
Exports of manufactured goods
▪ Manufacturing is a key component of India’s merchandise export.

▪ India’s manufacturing exports have traditionally grown between 5% and 10% pre-COVID-19 years, but exports have seen tremendous growth over
the last two years, with a compound annual growth rate (CAGR) of 15%.

▪ Manufacturing exports registered the highest ever annual exports of US$ 447.46 billion with 6.03% growth during FY23 surpassing the previous
year (FY22) record exports of US$ 422 billion.

▪ Chemicals, pharmaceuticals, electronics, automotive, industrial machinery, and textiles (among others) are expected to propel manufacturing
exports to reach US$ 1 trillion by FY28.

▪ In FY23, the export of the top 6 major commodities (Engineering goods, Petroleum products, Gems and Jewellery, Organic and Inorganic
chemicals, and Drugs and Pharmaceuticals) stood at US$ 295.21 billion.

Export performance of select industries (US$ million)

1,20,000.00

1,12,039.66
1,00,000.00

1,07,042.34
43,199.45

41,020.70
39,286.50

39,098.08

37,956.87
94,524.57
35,898.48
80,000.00

30,312.00
28,600.00

26,482.00
26,019.72

25,394.03
24,444.96
81,017.29

22,195.34
22,082.78

24,605.11
20,703.46
78,704.38
19,091.12

76,626.79
76,204.40

17,250.00
16,912.00

16,840.00

15,914.60

14,754.07
12,062.28

60,000.00
11,684.64

65,442.89
65,239.20

41,288.73
58,597.44
27,059.35

29,049.37

34,939.78

38,235.00

25,887.10
40,000.00

20,000.00

0.00
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Engineering Exports Petroleum Products Exports Gems and Jewellery Exports Pharmaceutical Exports Chemical Exports

Source: EEPC, DGCIS, GJEPC, CHEMEXCIL, PHARMEXCIL, Bain & Company, News Articles

14
Role in employment
▪ Manufacturing constitutes a significant part of employment in India.

▪ During the financial year 2022-23, around 1.39 crore net members
were added by EPFO with an increase of 13.22% compared to the
previous financial year 2021-22 wherein EPFO had added Net subscribers in
Age-wise analysis
approximately 1.22 crore net members. September 2023

▪ The Employees' Provident Fund Organisation (EPFO) added

18-21 3.5 lakh
1,720,615 in September 2023.

▪ Gender-wise analysis of payroll data reflected that enrolment of net

female members was 2.57 lakh in March 2023, which is around 22-25 4.15 lakh
19.21% of the net member addition for the month. Of these, 1.91 lakh
female members were the new joinees. 26-28 2.44 lakh
▪ Samsung India has partnered with the National Skill Development
Corporation (NSDC) to train 50,000 young people as part of a CSR
29-35 3.67 lakh
programme called ‘Samsung DOST’ (Digital & Offline Skills Training)
to prepare them for careers in the electronics retail industry.
More than 35 3.36 lakh
▪ Keeping in view India’s vision of becoming ‘Atmanirbhar’ and to
enhance India’s Manufacturing Capabilities and Exports, an outlay of
Rs. 1.97 lakh crore (US$ 23.9 billion) was announced in Union
Budget 2021-22 for Production-Linked Incentive (PLI ) schemes for
selected key sectors for a period of 5 years starting from fiscal year
2021-22.

▪ The overall intent to hire, across manufacturing and services sectors

combined, increased from 61% in Q2 to 65% in Q3 and is projected
to cross 70% in the next few quarters, according to the “Employment
Outlook Report” for Q3, which surveyed 311 manufacturing
companies across 14 cities in India.
Note: Updating of employee records is a continuous process, thus data gets updated in subsequent months
Source: MOSPI, World Bank, Press Information Bureau, EPFO

15
Recent Trends and Strategies

16
Notable trends in India’s manufacturing sector

3. INDUSTRIAL INTERNET OF THINGS (IIOT)

2. MOTHERBOARD AND INDUSTRY 4.0
MANUFACTURING • The fourth industrial revolution, Industry 4.0 is poised to happen on a global
• Electronic motherboards demand in India is scale, taking the automation of manufacturing processes to a new level by
expected to grow by over six folds to reach ~ US$ linking the cyber & physical, incorporating AI and enabling customized and
81.5 billion by 2026, according to Manufacturers' flexible mass production technologies.
Association for Information Technology report.
Between FY21 and FY26, India is expected to
generate cumulative export revenue of US$ 101 4. TECHNOLOGY INNOVATION
billion.
PLATFORMS
• Six new technology innovation
platforms launched to enhance
1. EXPORT-DRIVEN indigenous manufacturing. The
EXPANSION platforms have been developed with the
aim of facilitating globally competitive
• Mobile phone production has manufacturing in India.
increased fivefold in the past five • These six platforms will work towards
years, and India is on track to urging industries (including Original
emerge as a global exporting
hub of mobile phones, which
2 3 Equipment Manufacturers (OEMs), Tier
1, Tier 2, and Tier 3 companies and raw
creates robust demand for material manufacturers), start-ups,
integrated circuits and domain experts/professionals, R&D
semiconductors. This will get a institutions and academia (college and
boost with the focus moving from universities) to come up with technology
assembly
expertise
to
in
developing
end-to-end
1 4 solutions, suggestions and opinions on
matters related to manufacturing
hardware component technologies
manufacturing.

Note: ISRO - Indian Space Research Organisation, * - by PwC, IISC - Indian Institute of Science
Source: PwC India Manufacturing Barometer, FICCI, Bloomberg Quint, News Articles

17
Strategies adopted
2. FOCUS ON BACKWARD 3. FOCUS ON FORWARD
INTEGRATION INTEGRATION
• Forward integration is a strategy
• Backward integration gives a business higher
adopted by businesses to reduce
control on the cost, quality, and quantity of raw
production costs and improve the
material (the level of control depends on how
firm’s efficiency by acquiring supplier
far up the value chain a business can reach).
companies and, therefore, replacing
These synergies result in lower costs and
the third-party channels and
better margins, especially in high-volume, low-
1. DIGITAL margin industries like steel manufacturing or
consolidating its operations.
TECHNOLOGIES refining.
4. COLLABORATION
• The fourth industrial revolution,
Industry 4.0 is poised to happen • Raksha Mantri Mr. Rajnath Singh has
on a global scale, taking the invited US companies to set up
automation of manufacturing manufacturing units in India and develop
processes to a new level by linking technology collaborations with Indian
the cyber & physical, incorporating industries to create a global supply chain
AI and enabling customized and free from vulnerabilities and
flexible mass production uncertainties.
technologies. • The Raksha Mantri emphasised that the
• Six new technology innovation
platforms launched to enhance
2 3 path to ‘Aatmanirbhar Bharat’ is a
comprehensive set of policy frameworks
indigenous manufacturing. The that seeks to build indigenous
platforms have been developed technological and production capacity &
with the aim of facilitating globally capability with cooperation, participation
competitive manufacturing in and collaborations with reputed
India. institutions and Original Equipment
1 4 Manufacturers (OEMs) from friendly
nations.

Source: Annual Reports and Company Presentations, Press Information Bureau, News Articles,

18
Growth Drivers and Opportunities

19
Growth drivers for manufacturing in India

1. Government 5. Public Private

initiatives
5 Partnerships (PPP)
1

Growth
Drivers
2. Domestic
2 4 4. International
consumption
investment

3
3. Huge labour
pool

20
Make in India 2.0

▪ Make in India' is an initiative which was launched on September 25, 2014, to facilitate investment, foster innovation, build best-in-class
infrastructure, and make India a hub for manufacturing, design, and innovation. It is one of the unique 'Vocal for Local' initiatives that promoted
India's manufacturing domain to the world.
▪ Make in India' initiative has significant achievements and presently focuses on 27 sectors* under Make in India 2.0. Department for Promotion of
Industry and Internal Trade (DPIIT) is working closely with 24 sub-sectors which have been chosen keeping in mind the Indian industries
strengths and competitive edge, need for import substitution, potential for export and increased employability. These 24 sub-sectors are:
Furniture, air-conditioners, leather and footwear, ready to eat, fisheries, agri-produce, auto components, aluminium, electronics, agrochemicals,
steel, textiles, EV components and integrated circuits, ethanol, ceramics, set top boxes, robotics, televisions, close circuit cameras, toys, drones,
medical devices, sporting goods, gym equipment.
▪ The Government of India is making continuous efforts under Investment Facilitation for implementation of Make in India action plans to identify
potential investors. Support is being provided to Indian Missions abroad and State Governments for organizing events, summits, road-shows and
other promotional activities to attract investment in the country under the Make in India banner. Investment Outreach activities are being carried
out for enhancing International co-operation for promoting FDI and improve Ease of Doing Business in the country.
▪ Government has taken various steps in addition to ongoing schemes to boost domestic investments in India. These include the National
Infrastructure Pipeline, Reduction in Corporate Tax, easing liquidity problems of NBFCs and Banks, trade policy measures to boost domestic
manufacturing. Government of India has also promoted domestic manufacturing of goods through public procurement orders, Phased
Manufacturing Programme (PMP), Schemes for Production Linked Incentives of various Ministries.

Note: *Make in India 2.0 - 27 sectors: Manufacturing Sectors: Aerospace and Defence, Automotive and Auto Components, Pharmaceuticals and Medical Devices, Bio-Technology,
Capital Goods, Textile and Apparels, Chemicals and Petro chemicals, Electronics System Design and Manufacturing (ESDM), Leather & Footwear, Food Processing, Gems and
Jewellery, Shipping, Railways, Construction, New and Renewable Energy ; Service Sectors: Information Technology & Information Technology enabled Services (IT &ITeS), Tourism
and Hospitality Services, Medical Value Travel, Transport and Logistics Services, Accounting and Finance Services, Audio Visual Services, Legal Services, Communication Services,
Construction and Related Engineering Services, Environmental Services, Financial Services, Education Services

Source: Bloomberg, Economic Times

21
Skill India Mission 2.0

▪ Skill India Campaign was launched in 2015 with an aim to train over 400 million people in various skills. It involves various schemes such as
National Skill Development Mission, Pradhan Mantri Kaushal Vikas Yojana and National Policy for Scheme Development and Entrepreneurship.
▪ In September 2021, Indian government launched Entrepreneurship Development Centre in Kohima, under the SANKALP project, to boost skill
training for rural youths.
▪ As of August 2020, there were about 15,000 Industrial Training Institutes (ITIs) in India.
▪ Under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 1.0, 19.85 lakh candidates were trained, of which 2.62 lakh (13.23%) got placements.
Under the PMKVY 2.0 (2016-20) scheme, which was launched in October 2016, the government trained 1.07 crore candidates across the country.
Of this, 46.27 lakh candidates were given short-term training.
▪ Under Skill India Mission 2.0, the government will impart skills training to the youth for overseas opportunities and for jobs in some sectors under
its production-linked incentive scheme, in what could be a move towards demand-driven and outcome-based approach to skilling. This will be part
of the government's revamped skills programme called Skills India Mission 2.0.
▪ There will also be a thrust on apprenticeship training though enhanced private sector participation, in line with the Prime Minister, Mr. Narendra
Modi's vision of making India the skills capital of the world.
▪ The Centre will soon launch a revamped version of its Skill India initiative with an aim to train young people in the country with “future ready skills,”
▪ Last year, the government had invited ideas for the Skill India 2.0 in a bid to urgently create a “reliable and qualified workforce” and help it to “tap
into new opportunities”.
▪ Under the new scheme, the government is focusing on strengthening the digital skill ecosystem as technical skills like augmented and virtual
reality (AR/VR), machine learning, and the ability to work with data, including automated systems, have “become a must-have”.
▪ Under the revamped Skill India scheme, the government is aiming to train around 50,000 young people in Meghalaya. As far as other states in the
North-East region are concerned, the Skill Development Ministry has set a target to skill around 60,000 youth in Tripura and 35,000 in Nagaland
across a spectrum of approved courses.

Source: Budget, Economic Times, Media sources, Ministry of Skill Development and Entrepreneurship

22
Startup India

▪ In Union Budget 2021-22, the government proposed to allow one-person companies (OPCs) to be incorporated—a move that would favour start-
ups and innovators.

o Minister of Finance Ms. Nirmala Sitharaman stated that the incorporation of OPCs would be encouraged by enabling such companies to
expand without restriction on paid-up capital and turnover by permitting any other form of company to be converted at any time by reducing the
residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and by allowing non-resident Indians to incorporate OPCs in
India.

▪ The Government of India has prepared the 'Startup India Vision 2024' document with tax incentives and other measures to promote new ventures.

▪ Under the ‘Startup India’ initiative, the government recognised 50,000 start-ups which have created 5.5 lakh jobs, as of June 03, 2021.

▪ On January 19, 2021, Amazon announced that it has partnered with Startup India, Sequoia Capital India and Fireside Ventures to initiate an
accelerator programme to support entrepreneurs in delivering products to audiences globally.

o Amazon Global Selling programme is rapidly improving India's exports and helping create Indian global brands. More than 800 Indian MSMEs
exceeded US$ 131,375 (Rs 1 crore) in e-commerce export sales (under the programme) in 2019.

▪ In August 2021, Zetwerk, a B2B manufacturing marketplace, became India’s 25th unicorn in 2021. The company has raised US$ 150 million in a
funding round that took its valuation to US$ 1.3 billion.

▪ In April 2021, Amazon announced a US$ 250 million fund to invest in start-ups and entrepreneurs centred on technological developments in SMB
(small and medium businesses), agriculture and healthcare.

▪ Investment incentives and easing business compliances have created an ecosystem for the start-ups to nurture. The number of recognized
startups has increased from 452 in 2016 to 84,012 in 2022.

▪ India is now the third-largest ecosystem for start-ups globally and ranks second in innovation and quality among middle-income countries.

▪ India is currently home to more than 82,000 DPIIT-recognised startups and 108 unicorns.

▪ The Union Budget 2023-24 proposed to extend the date of incorporation for income tax benefits to start-ups from March 31, 2023, to March 31,
2024. It also provides the benefit of carrying forward of losses on change of shareholding of start-ups from 7 years of incorporation to 10 years.

Source: Media sources, Press Information Bureau, Union Budget 2023-24, Economic Survey 2022-23

23
National manufacturing policy

▪ National Manufacturing Policy was introduced in to increase the sectoral share of manufacturing in GOP to at least 25% by 2022; to increase the
rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition,
technological depth and environmental sustainability of growth.

▪ The policy has been formulated after detailed consultations with the industry; subject matter experts; State Governments and the concerned
Ministries/Departments of the Government of India. The policy envisages specific interventions broadly in the areas of industrial infrastructure
development; improvement of the business environment through rationalization and simplification of business regulations; development of
appropriate technologies especially green technologies for sustainable development and skill development of the younger population.

▪ The policy was introduced to create an enabling policy framework and provide incentives for infrastructure development on PPP basis.

▪ Under the policy, National Investment and Manufacturing Zones (NIMZ’s) have been conceived as large industrial townships managed by a
Special Purpose Vehicle (SPV). These SPV’s would ensure planning of the zones, pre-clearances for setting up industrial units and undertaking
other specific functions.

▪ Fourteen NIMZ’s have already been granted ‘in principle’ approval while four of them have been given final approval.

▪ Central and State governments will provide exemptions subject to fulfillment of conditions by the SPV from compliance burdens for industries
located in these zones.

▪ Exemption from Capital Gains Tax on sale of plant and machinery will be granted in case of re-investment of the capital gain amount for purchase
of plant and machinery within the same or different NIMZ within three years of sale.

▪ A Technology Acquisition and Development Fund (TADF) has been launched for acquisition of appropriate technologies, creation of a patent pool
and development of domestic manufacturing of equipment's for reducing energy consumption.

Source: Media sources, Press Information Bureau

24
Foreign investments flowing into the sector

▪ According to the United Nations Conference on Trade and Total FDI equity inflow in the manufacturing subsectors
Visakhapatnam port traffic (million tonnes)
Development (UNCTAD), India ranked among the top 10 recipients between April 2000-September 2023
of Foreign Direct Investment (FDI) in South Asia in 2019, attracting
US$ 49 billion—a 16% increase from the previous year. Services
▪ 100% FDI is approved in the sector through automatic route under
the current FDI Policy. 11.2% Computer Software
& Hardware
▪ In FY23, India received a total foreign direct investment (FDI) inflow
Telecommunications
of US$ 46.03 billion. 10.2%
▪ Between April 2000-September 2023: Trading
• The automobile sector received FDI inflows of US$ 35.40 billion. 4.1%
• The chemical manufacturing sector (excluding fertilisers) received 4.2% Automobile
58.6%
FDI inflows worth US$ 21.71 billion.
3.7% Construction (Infra)
• The drug and pharmaceutical manufacturing sector received FDI Activities
inflows worth US$ 21.58 billion. 3.4% Drugs & Pharma
• The Food Processing Industries received FDI inflows worth US$ 2.3%
12.35 billion. 2.3%
Chemicals (other
than fertilizers)
▪ Samsung Display Noida, which had invested Rs. 4,825 crore (US$
Others
650.42 million) to move its mobile and IT display manufacturing plant
from China to Uttar Pradesh, received special incentives from the
state government.
▪ In October 2021, information technology major Zoho, announced
that it will invest Rs. 50–100 crore (US$ 6.7–13.4 million) and form a
new company, that will focus on research and development (R&D)
in the manufacturing sector.

Source: DPIIT, UNCTAD

25
Opportunities in manufacturing
Defence manufacturing
• Ministry of Defence has set a target of achieving
a turnover of US$ 25 million in aerospace and
defence Manufacturing by 2025, which includes
US$ 5 billion exports. Till October 2022, a total
of 595 Industrial Licences were issued to 366
Electronic goods
•
companies operating in Defence Sector.
A new category of capital procurement ‘Buy
manufacturing
{Indian-IDDM (Indigenously Designed, • By 2030, the Indian government expects
Developed and Manufactured)}’ has been the electronics manufacturing sector to be
introduced in Defence Procurement Procedure worth US$ 300 billion.
(DPP)-2016. • Initiatives like Make in India, Digital India
and Startup India have given the much-
needed thrust to the Electronics System
Design and Manufacturing (ESDM) sector
in India.
Government initiatives • Moreover, the government’s endeavors
such as Modified Special Incentive
Scheme (M-SIPS), Electronics
• In September 2022, the National Logistics Manufacturing Clusters, Electronics
Policy was launched by Prime Minister Mr. Development Fund and National Policy
Narendra Modi which ensures quick last on Electronics 2019 (NPE 2019) have
mile delivery, end transport-related been a huge success.
challenges. • The Scheme for Promotion of
• The government has launched several Manufacturing of Electronic Components
initiatives from time to time like MUDRA and Semiconductors (SPECS) has been
Yojana, Emergency Credit Line Guarantee notified with an aim to strengthen the
Scheme, Scheme of Fund for value chain for the manufacturing of
Regeneration of Traditional Industries electronic products in India.
(SFURTI) etc. to provide necessary and
timely support to the MSME sector, which
has helped benefit crores of people across
the country.

Source: Media sources, Invest India, Press Information Bureau, MakeinIndia

26
Key Highlights of Union Budget 2023-24

27
Key highlights of Union Budget 2023-24

▪ As per the Union Budget 2023-24, the income tax rate for new co-operative societies engaged in manufacturing activities has been lowered from
22% to 15% (plus 10% surcharge).

▪ Startups incorporated within a time-period and meeting other conditions can deduct up to 100% of their profits; the end of this period has been
extended from March 31, 2023 to March 31, 2024. In addition, the period within which losses of startups may be carried forward has been
extended from seven to ten years.

▪ The upper limit on turnover for MSMEs to be eligible for presumptive taxation has been raised from Rs 2 crore (US$ 2,43,044) to Rs 3 crore (US$
3,64,528). The upper limit on gross receipts for professionals eligible for presumptive taxation has been raised from Rs 50 lakh (US$ 60,754) to
Rs 75 lakh (US$ 91,132).

▪ Expenditure on fertilizer subsidy is estimated at Rs 1,75,100 crore (US$ 21.2 billion) in 2023-24. This is a decrease of Rs 50,120 crore (US$ 6.09
billion) (22.3%) from the revised estimate of 2022-23. Fertilizer subsidy for 2022-23 was increased substantially in response to a sharp increase in
international prices of raw materials used in the manufacturing of fertilizers.

▪ The Centre will facilitate one crore farmers to adopt natural farming. For this, 10,000 Bio-Input Resource Centres will be set-up, creating a
national-level distributed micro-fertilizer and pesticide manufacturing network.

▪ To avoid cascading of taxes on blended compressed natural gas, excise duty on GST-paid compressed bio-gas contained in it has been
exempted from excise duty. Customs duty exemption has been extended to import of capital goods and machinery required for manufacture of
lithium-ion cells for batteries used in electric vehicles.

▪ To further deepen domestic value addition in manufacture of mobile phones, the Finance Minister announced relief in customs duty on import of
certain parts and inputs like camera lens. The concessional duty on lithium-ion cells for batteries will continue for another year. Basic customs
duty on parts of open cells of TV panels has been reduced to 2.5%. The Budget also proposes changes in the basic customs duty to rectify
inversion of duty structure and encourage manufacturing of electrical kitchen chimneys.

▪ Basic customs duty on seeds used in the manufacture of Lab Grown Diamonds has also been reduced.

Source: Media sources

28
Key Industry Contacts

29
Key Industry Contacts

Agency Contact Information

72-A, Santosh, Dr M B Raut Road, Shivaji Park, Dadar (W),

Mumbai- 400 028
The Textile Association (India) (TAI) Telefax: 91 22 24461145
Website: www.textileassociationindia.org

206, Aurbindo Place Market, Hauz Khas - 110016, New Delhi

All India Food Processors’ Association
Phone: 011-26510860, 41550860
(AIFPA)
E-mail: aifpa@vsnl.net
Website: www.aifpa.net

CMA Tower
A-2E, Sector 24, Noida - 201301, Uttar Pradesh
Cement Manufacturers’ Association (CMA) Phone: 0120-2411955, 2411957, 2411958
E-mail: cmand@cmaindia.org
Website: www.cmaindia.org

The Capital Court

6th Floor, Olof Palme Marg,
Automotive Component Manufacturers Munirka - 110067, New Delhi
Association of India (ACMA) Phone: +91-11-26160315
E-mail: acma@acma.in
Website: www.acma.in

30
Appendix

31
Glossary

▪ BTRA: Bombay Textile Research Association

▪ CAGR: Compound Annual Growth Rate

▪ FDI: Foreign Direct Investment

▪ FY: Indian Financial Year (April to March)

▪ GOI: Government of India

▪ Rs.: Indian Rupee

▪ US$: US Dollar

▪ ACMA: Automotive Component Manufacturers Association

of India

▪ Wherever applicable, numbers have been rounded off to

the nearest whole number

32
Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11
2005-06 44.28 2006 45.33
2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021 73.93
2021-22 74.42 2022 79.82
2022-23 78.60 2023* 83.15

Note: * Until November 2023

Source: Foreign Exchange Dealers’ Association of India

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