India's Manufacturing Momentum: A Competitive Edge for Global Growth

India has made significant strides in boosting its manufacturing sector, making the country increasingly appealing to investors. This progress is outlined in a recent report by S&P Global, which highlights India's growing competitiveness through the Strategic Opportunity Index® (SOI).

The analysis underscores India's potential gains from the global trend of rising trade protectionism. While such policies present challenges, they also offer opportunities for supply-chain diversification that could benefit India in the future. Despite moderate reliance on external trade, India remains somewhat insulated from global trade disruptions, yet not fully immune to the impact of protectionist shifts.

Manufacturing currently contributes 17.2% to India's real GDP, leading to governmental efforts to bolster domestic manufacturing capabilities. Key initiatives include the Production Linked Incentive schemes, which since March 2020 have fostered growth in sectors like electronics, pharmaceuticals, and automobiles. Notably, mobile phone exports surged from zero in 2016 to USD 20.4 billion by 2024, largely due to Apple relocating part of its production from China to India.

The private sector remains optimistic, reflected in consistent high readings of India's manufacturing PMI over global averages for the past year. Robust domestic demand, increased hiring, and inventory build-up contribute to this resilience. Moreover, S&P Global Market Intelligence notes India's ability to leverage potential US tariff hikes on other Asian economies, potentially enhancing its manufacturing growth and share in global exports.

(With inputs from agencies.)