Although India is still considered to be an agriculture- based economy and the sector employs the most number of the working population, the manufacturing sector contributes more to the Indian economy. Standing at 16% of the country’s GDP, the manufacturing sector has been growing at a compound annual growth rate of approximately 10% over the last five years. As per Deloitte’s and the US Council on Competitiveness Index 2010, India ranked 2nd in terms of current competitiveness in the manufacturing field, as well as from a five year outlook. Recognizing this sector to be the backbone of the country’s economy and its impact on overall development, the Government of India wants manufacturing to reach 25% of GDP by 2025 and to create 100 million jobs in the process.

The government’s recently unveiled Shramev Jayate Yojana initiative is aimed at revamping labor reforms and helping facilitate the “Make in India” campaign. These labor reforms should help the manufacturing sector, as almost 50 percent of the sector employs contract labor and tensions often surface because of ambiguity in contracts.

Opportunities in advanced manufacturing:

Machine Tools: Expected to grow at 12-15% annually, only 30% of India’s machine tool demand is satiated by domestic production. This sector can attract a significant amount of attention and will require US$ 2.7 billion in investments in order to step up to meet 50% of domestic demand.

Electric Vehicles: Indian manufacturing and automotive industry is expected to produce 32,000 hybrid/electric commercial vehicles by 2020. This will also translate into 11% of the global components market for these types of vehicles. This provides an opportunity for advanced manufacturing firms overseas to target partnerships and export promotion deals with Indian companies along the value chain.

Mahindra & Mahindra: One of the biggest players in the automotive industry is planning to open an advanced engineering and R&D center outside of India, with the US or Europe as their preferred destination. This could be a potential chance for UK’s advanced manufacturing and education players to strike a strategic partnership.

Education: A Confederation of Indian Industries report states that only 39.5% of graduates are employable. Government initiatives such as the Technical Education Quality Improvement look to tie the manufacturing and education sectors together.

Shipbuilding: The government looks to take its ship building capacity from 0.2 million DWT currently to 4-5 million DWT by 2020.

Heavy Electricals: The government wants to increase the production capabilities and the underutilized capacity which currently stand at 70-80% via joint ventures with foreign firms.

Earth-moving/Mining Equipment: CAGR of 16-17% is predicted for the next decade and the government is pushing technology transfer partnerships.