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Manufacturing sectors' share in India's GDP, jobs generated & investment opportunities

The manufacturing industry in India is forever expanding and growing from strength to strength. Now, more than ever, with Prime Minister Narendra Modi’s call to be ‘atma nirbhar’ (self reliant) amidst the coronavirus pandemic and call to boycott Chinese goods, it is essential to delve deeper into the details of each sector in India and recognise the investment potential.

It goes without saying that the more the investments and opportunities within the country, the more jobs that will be generated, which in turn will bolster India’s efforts to encourage people to use ‘made in India’ products and services.

Here’s a look at India’s growth story — share of each sector in the country’s GDP, industry growth rate and how many jobs each sector generates.

Source: https://www.investindia.gov.in/

National Investment Promotion and Facilitation Agency of India, the first point of reference for investors in India. Invest India focuses on sector-specific investor targeting and development of new partnerships to enable sustainable investments in India.

Auto Components: The $57 bn Auto Components industry in India is expected to grow to $200 bn by 2026.

Auto Components industry exports, which is currently valued at $15.2 bn, is expected to grow at an annual rate of 23.9% to reach $80 bn by 2026. USA, Germany, UK, Thailand and Italy are the top destinations for exports. Aftermarket segment which includes tyre, battery, brake parts, is expected to reach $32 bn by 2026 from $10.1 bn currently. The overall industry which accounts for 2.3% of India's GDP currently, is set to become the 3rd largest in the world by 2025.

Automobile: The $74 bn Automobile industry is expected to reach $300 bn by 2026.

India's annual production has been 29.08 mn vehicles in 2018 as against 25.33 mn in 2017, registering a healthy growth of 14.8%. The industry is expected to reach $135 bn by 2020 and $300 bn by 2026 at a CAGR of 15%. In FY 2018-19, sale of passenger vehicles has increased by 2.70%, two-wheeler by 4.86% and three-wheeler by 10.27% as compared to FY 2017-18.7. In April-March 2019, overall automobile exports grew by 14.50%. The overall Commercial Vehicles segment registered a growth of 17.55% in April- March 2019.

Aviation: The Aviation sector in India currently contributes $72 bn to GDP.

India has 464 airports and airstrips, of which 125 airports are owned by Airport Authority of India (AAI). These 125 AAI airports manage close to 78% of domestic passenger traffic and 22% of international passenger traffic. Passenger traffic in India stood at 316.51 mn during April 2018 - Feb 2019. Out of which domestic passenger traffic stood at 252.92 mn while international traffic stood at 63.59 mn. The aircraft movement, passenger traffic and freight traffic increased by 4.9%, 4.5% and 3.1% respectively in February 2019 viz-a-viz February 2018, across all Indian airports taken together. However, the share of international cargo traffic is much higher at 68.5% in comparison with 31.5% of domestic cargo traffic. Maintenance, Repair & Overhaul (MRO) industry is expected to grow to $1.2 bn by 2020 from $950 mn currently.

BFSI – Fintech & Financial Services: FinTech in India is expected to increase at a CAGR of 20.2% during 2017-21 to reach $92 bn

The Fintech industry in India is categorised into 4 major segments namely WealthTech, Payments, Lending and InsureTech. The WealthTech Industry in India is witnessing the emergence of startups with innovative technologies and business models. Growing personal wealth, increased adoption of mobile & digital channels, reduced asymmetry of information between small & large financial institutions and investors, are some of the factors propelling the industry forward.

Digital payments have been the flag bearer of the Indian FinTech space. In 2010, India launched its first real-time payments systems ‘IMPS’ and introduced UPI in 2016. There are 375 Payment startups in the country. Mobile/digital wallets, gateways, POS/ mobile POS sub-segments account for over 50% of the payment startups in India. 

In consumer credit, the urban population is likely to leverage FinTech lending services to avoid heavy documentation, and the rural population (which is new to credit) can benefit from alternative credit scoring mechanisms to stay away from loan sharks.

The scope of IoT in Indian Insurance goes beyond telematics and customer risk assessment. Currently, there are 110+ InsureTech start-ups operating in India.

Biotechnology: The Indian Biotechnology industry that was valued at $64 bn in 2019 will reach $150 bn target by 2024-25.

The sector is divided into five major segments- Bio-pharma, Bio-services, Bio-agri, Bio-industrial, and Bio-informatics. The biopharmaceutical sector accounts for the largest share of the biotech industry with a share of 64% of total revenues, followed by bio-agri with 14% market share (2019). Bio-services accounted for 18% of the Biotech industry as India is becoming a leading destination for clinical trials, contract research, and manufacturing activities, which is further fuelling the growth of the bio-services sector, while the remaining market is catered by bio-industrial (6%).

  • India currently has 5,48,719 sq. ft. of incubation space

  • 50 bio-incubators have been supported by BIRAC and established since 2014, with more planned across the country

India is also one of the first countries to have a department dedicated to Biotechnology. The Department of Biotechnology has also set up BIRAC (Biotechnology Industry Research Assistance Council). This not-for-profit an interface agency to strengthen and empower emerging biotechnology enterprises to undertake strategic research and innovation.

Capital Goods: The Capital Goods in India has a market size of $ 43.2 bn.

The industry is divided into 10 sub-sectors where Electrical equipment is the largest sub-sector followed by Plant equipment, and Earthmoving/ Mining machinery. The market size of each of the sub-sectors are as follows:

  • Heavy electrical equipment: $ 24.2 bn

  • Process plant equipment: $ 3.7 bn

  • Earth-moving and mining machinery: $ 3.3 bn

  • Printing machinery: $ 3.01 bn

  • Food processing machinery: $ 2.4 bn

  • Dies, moulds and press tools: $ 2.3 bn

  • Textile machinery: $ 1.8 bn

  • Machine tools: $ 1.4 bn

  • Plastic machinery: $ 0.5 bn

  • Metallurgical machinery: $ 0.4 bn

Government sectors