The Trillion-Dollar Manufacturing Exports Opportunity for India | Bain & Company
A beautiful article by Bain and company on Manufacturing being as Megatrend in India. Summarizing for the clarity of thoughts
Source – Bain and Company
Introduction –
- India is on the cusp of structural shifts in the manufacturing sector
- Export growth grown from 5-10% to 15% CAGR in last 2 years
- FY21–22 reached $418 billion, an overall growth of more than 40% compared to the $290 billion from the previous year
- Top 15 export categories accounted for over 72% of total export
- India is expected to scale up its manufacturing exports to $1 trillion by FY28
- Thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables
What’s Driving this manufacturing growth?
- Supply chain diversification- India among the top four destinations for relocation of operations and shift from China to India
- Sectoral Advantage - India is becoming a destination for exports thanks to low manufacturing costs and strong capabilities in technology. Key sectors automotive, engineering, chemicals, pharmaceuticals, and consumer durables
- Government Initiatives- PLI outlay of $47.8 billion
- Capex-led growth- Projected next five years capex is six times higher than last five years
- Mergers and acquisitions- In 2021, 90 strategic deals with cumulative value of $100 billion finalised
- PE/VC-led investments- PE/VC investments in Indian firms up 55% since 2019, hit record $70 billion in 2021
Sectors where Megatrends Visible-
- Chemicals are estimated to grow at CAGR 19%–23% . Hot Segment Speciality and Agro
- Reasons – Low cost Manufacturing, emerging popularity of CDMO and CRAMS
- Pharma – CAGR 16-18%. Hot Segment Active API
- Reason – PLI , Strong capex, 100% FDI, low labour cost
- Industrial Machinery – CAGR 18-20%. Hot segment- Textile Machines
- Reason - Indian steel is becoming globally competitive, with availability of cheap raw material (iron ore), new and innovative techniques
- Electronics – CAGR 35% -40% Hot Segment- Industrial electronics
- Reason - Increasing the focus on supply chain diversification is also going to make India an export hub for mobile phones and robust demand for integrated circuits and semiconductors
- Automotive- CAGR: 15%–18% - Hot Segment – EV Components
- Reason - e PLI and sharp uptick in FDI will increase capital inflow and EV
- Textile Apparels – CAGR- 13-16% . Hot Segments – Technical Textiles
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