India: As the Manufacturing hub

Picture of by Protima Venugopal
by Protima Venugopal

Content Creator

No country is ever successful in the long term without a really strong and vibrant manufacturing base

The true success of a country can be measured through its potential to be a leading hub of research and development, a problem-solver, a high employment index, and an indispensable seat for global manufacturing needs. Since the last few years, the focus has shifted from the “world’s factory”-China to India. The Asian subcontinent’s fast-paced adaptations to refreshed policies, young and energetic talent hub, government facilities, and cordial international relations are bolstering it to newer ventures. From PLI schemes and the Make in India initiative to tax reforms, everything is in India’s favor and cultivating a strong base for manufacturing, innovation, and becoming a supply-chain powerhouse.

An insight into schemes and initiatives favoring India

Since 2014, the government’s encouragement to “Make in India’ has set the pace for globally recognized start-ups, high FDI influx, and incentives across sectors to scale-up domestic manufacturing capability. But what are the various schemes and initiatives that are helping India achieve an unparalleled level of manufacturing capacity? Policies and mandates underwent a radical revision and this section explains how.

PLI schemes

Through the PLI scheme, the Govt. has already sanctioned an outlay of Rs 2 lakh crore across 14 sectors automobile and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and apparel, white goods, drones, and advanced chemistry cell batteries. Sectors such as leather, bicycle, some vaccine materials, and certain telecom products benefit an additional rs 35000 crore through the scheme this year. PLI schemes can generate production worth Rs 10,69,432 crore and enable employment for 7,00,000 people.

Revised FDI policies

Revision of Foreign Direct Investment (FDI) caps across sectors paved the way for further foreign investments and facilitated the “Make in India” concept. 
Recent FDI provisions (mainly through automatic route) encourage foreign entities to set up their companies here in various sectors, some of which are listed in the table below:

SectorFDI percentage permitted
Auto Components100%
Defense 74%
Food processing100%
Renewable Energy100%

Goods and Services Tax (GST): The complex tax system was confusing for foreign investors and impeded global exposure. Tax reforms introduced in 2016 were a way to incorporate several taxes under a single header of GST. GST simplified the taxation policy enabling foreign investors to invest  better and boost the manufacturing business scape.

Corporate Tax Reduction
The corporate tax reduction to 15% for newly incorporated companies in India is a major step to encourage “Make in India”. By boosting manufacturing, GDP would get the necessary surge in the long run. Such new schemes and policy-reforms propelled many global companies to start shifting their focus to India.
Global companies focusing on India as a manufacturing hub

Shifting the global evalue chain is a giant step and a building block for the Indian economy. India is on the radar of focus for global business. With a promising business landscape, India attracts the attention of thriving conglomerates which is a positive factor for GDP surge. 


The technology giant announced its commencement of assembling the latest iPhone 14 in Sriperumbudur, India in September 2022. Its earlier marketing strategy entailed assembling in China, and India was merely for older models. This huge strategic move confirmed Apple’s strong momentum in India and the diversification of 5% of its production to India by the end of 2022.


During the Australia-India Business Exchange (AIBX) held in October 2022, many Australian and Indian companies met to discuss economic opportunities in India as a manufacturing hub. India is scaling the electric vehicle market by manufacturing two and three-wheeler electric vehicles. The country is the largest lithium producer in the world and has vast lithium mines. Lithium is an essential component of EV batteries that are imperative for the Renewable energy sector. The positive collaboration between these two countries would further catapult India’s position as a manufacturing hub in the coming years.

Global recognition for Indian start-ups

Industry 4.0 is the global mantra for manufacturing and other sectors. Rapid technological advancement with AI, robotics, and automation is catching up with the manufacturing sector to expedite and ease mundane jobs. One of the leading global start-ups specializing in AI, factory 4.0 integration, and automation is the Pune-based start-up Nirvedha Technology Solutions. Such companies with recognition on an international scale are morale alleviating for India’s manufacturing sector. 

Apart from introduction and revision of policies and schemes India has several other factors working favourably and propelling the country into unparalleled levels of manufacturing capabilities.

Factors facilitating this “manufacturing-hub” title

Manufacturing sectors are labor-intensive and highly benefit from affordable labor. Cost-effective labor is a  strength that India capitalizes on brilliantly. Apart from labor, the talented workforce that speaks English is capable of research and development. The dense population also needs rewarding employment opportunities that these Manufacturing units provide.

PM Gati Shakti, launched on 13th October 2021, facilitates multimodal connectivity infrastructure across various economic zones in India.

The National Logistics policy (NLP) aims to simplify logistics policies across India beckoning transparency, visibility and reduced transportation time. Better logistics and connected infrastructure enhance export competitiveness.

India also has a massive consumption market of manufactured goods. Making India as the manufacturing base would further decrease costs and amplify production.


The pandemic caused massive uncertainty and diversification of the world’s focus. While the traditional reliance on existing manufacturing hubs proved futile, it paved the way for India to become the new focus for manufacturing and supply chains. India has received the necessary force to emerge as a global hub through recent developments and policies enabling this growth. An alluring nation for investments and production, the country aims to add a yearly $500 to the global economy through this positive shift. Amidst various other reforms and movements, being a manufacturing hub is imperative for India’s global competitiveness and presence.

Are you interested in getting consultation about setting up your company in India? Our UJA experts are here to help you through every step of your journey.

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