New Delhi [India], May 19 : India has made notable progress to improve its competitiveness and made manufacturing sector more attractive to investors, according to a report by S&P Global.
An analysis of S&P Global Market Intelligence's Strategic Opportunity Index® (SOI) over time indicates that India has taken significant steps to enhance its competitiveness.
It said "India has made notable progress in enhancing its competitiveness and making its manufacturing sector more attractive to investors".
The report also noted that India can benefit from the growing trend of trade protectionism across the world. Although rising protectionist policies pose challenges, they can also support supply-chain diversification, which may work in India's favour in the long term.
India's dependence on external trade for growth is moderate. This provides the country with some protection from global trade disruptions and changing tariff policies. However, it is still not completely shielded from the effects of increasing trade protectionism.
Currently, manufacturing accounts for just 17.2 per cent of India's real gross domestic product (GDP). To strengthen this, the government has taken several steps to build domestic manufacturing capabilities and increase India's participation in global supply chains.
One of the major initiatives has been the Production Linked Incentive (PLI) schemes, launched in March 2020. These schemes have supported the growth of several sectors, including electronics, pharmaceuticals, and automobiles, by boosting production and exports.
The report stated that a key highlight is mobile phone exports, which were valued at zero in 2016. By 2024, they had risen sharply to USD 20.4 billion, marking a 44 per cent jump from 2023. This growth was largely driven by Apple shifting part of its mobile phone manufacturing from China to India.
The private sector is also optimistic about India's manufacturing future. High-frequency HSBC PMI data, compiled by S&P Global Market Intelligence, showed that India's manufacturing sector has remained strong even during recent global challenges.
For the past 12 months, India's headline manufacturing PMI readings have consistently stayed above global averages. This resilience has been supported by strong domestic demand, increased hiring, and inventory build-up.
S&P Global Market Intelligence added that India could use the threat of higher US tariffs on other Asian economies, such as China, Vietnam, Taiwan, Thailand, and Bangladesh to its advantage. This may help India boost its manufacturing growth and raise its share in global exports.
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