The Global Shift to Resilience
The global manufacturing landscape is changing fast. For years, companies focused on efficiency, creating complex supply chains. But recent global events—like pandemics, conflicts, and trade disruptions—have shown these chains are fragile. Estimates suggest this fragmentation could reduce global GDP by 7%. Now, governments and businesses see supply chains as vital strategic assets, not just cost centers. This environment creates a 'resilience premium' for countries offering stability and scale. India, with its strengths and supportive policies, is well-placed to benefit from this global recalibration.
India's Strengths as a Manufacturing Hub
India's appeal as a manufacturing hub comes from four key advantages. First, its huge domestic market allows for large-scale production even before exports begin. Second, its workforce is young and growing, unlike in many older Asian economies. Third, its stable democratic institutions and predictable legal system attract global investors looking to reduce risk. Fourth, a growing network of Free Trade Agreements (FTAs), including recent deals with Australia and the UAE, and ongoing talks with the US, give India preferential access to major global markets. These factors together make India a more attractive anchor for manufacturing.
Growth in Electronics and Key Sectors
The electronics sector is a prime example of India's manufacturing growth. Production value has soared, with mobile phone manufacturing alone jumping from ₹189 billion in 2014-15 to an estimated ₹5.5 trillion in 2024-25. Smartphone exports have doubled to about $30 billion in FY 2024-25, as global brands like Apple and Samsung expand their operations in India. This boom is significantly boosted by the Production Linked Incentive (PLI) scheme. This program, active across 14 sectors from pharmaceuticals to auto parts, links incentives to increased production. As of early 2026, PLI schemes have led to over ₹20.4 trillion in cumulative production and sales, surpassing initial goals.
India vs. Competitors and Global Standing
While India leverages its scale, it faces competition. Vietnam, for example, is known for efficient electronics assembly and higher worker retention. Vietnam's industrial P/E ratios are often lower than India's Nifty Manufacturing Index P/E, which is around 25-26. However, India's overall manufacturing sector is projected to reach $2.47 trillion by 2031, with electronics growing at a strong 13.46% annually. Foreign direct investment (FDI) in India's manufacturing has also grown significantly, reaching $165.1 billion over the past decade, thanks to initiatives like PLI and 'Make in India.' India's export growth has also outpaced many major economies, increasing its global export share by 6.3% from 2010 to 2023. Though historically high, logistics costs (14-15% of GDP) are gradually falling due to infrastructure improvements, but still face challenges compared to global averages. India's expanding trade agreements are crucial for preferential market access, especially amid global geopolitical shifts.
Challenges Ahead for India's Manufacturing
Despite its strengths, India's manufacturing growth faces hurdles. Execution gaps and complex bureaucracy are major concerns that could hinder its ability to fully benefit from the global demand for resilient supply chains. Vietnam's advantages in specific assembly and worker retention show areas where India needs to improve efficiency. Streamlining regulatory processes remains a challenge, as a multi-layered bureaucracy can slow operations, unlike Vietnam's 'single-window' approach. India's historically higher import duties have impacted competitiveness, though efforts are underway to address this. The success of PLI schemes also depends on continued investment and stable policies. Past issues, like the US revoking India's GSP status, highlight how sensitive export markets are to policy changes. Developing upstream manufacturing capabilities, as in the solar sector, also needs faster progress to reduce reliance on imports.
Outlook: Securing India's Manufacturing Future
India's manufacturing sector's future hinges on its ability to speed up execution and deepen its integration into global value chains. The ongoing expansion of trade deals and programs like PLI 2.0 show a clear government intent to strengthen its position as a global manufacturing hub. Continued global geopolitical instability reinforces the need for stable, resilient supply chain partners. If India can effectively scale its manufacturing capabilities, improve logistics, and maintain policy stability, it is well-positioned to become a key player in the next phase of globalization.