From Detroit to Seoul, They All Want to Make in India

India has emerged as a global manufacturing hub, attracting significant Foreign Direct Investment (FDI) from diverse sectors and countries. The "Make in India" initiative, launched in 2014, has been instrumental in transforming the country into a manufacturing powerhouse. This initiative aims to foster innovation, enhance skill development, and build best-in-class manufacturing infrastructure.

Robust Manufacturing Growth

India's manufacturing sector is experiencing sustained growth, driven by strong domestic demand and investment sentiment. The FICCI Quarterly Survey on Manufacturing for Q2 FY2025-26 indicates continued momentum in production and order books across key industries like automotive, capital goods, chemicals, and electronics. Approximately 87% of respondents reported higher or stable production levels in the second quarter of 2025, compared to 77% in the previous quarter.

The Index of Industrial Production (IIP) reflects this positive trend, with a growth of 3.5% year-on-year in July 2025, significantly up from 1.5% in June 2025. Manufacturing growth also rose by 5.40% in July 2025, compared to 3.7% the previous month. Furthermore, the HSBC India Manufacturing Purchasing Managers' Index (PMI) reached 59.2 in October 2025, signaling the fastest expansion in five years.

Government Initiatives and Incentives

The Indian government has implemented various policies and incentives to support manufacturers and attract investment. These include tax exemptions, subsidies, and infrastructure development initiatives. Special Economic Zones (SEZs) offer manufacturers tax incentives and infrastructure facilities, while the government provides grants and loans for developing industrial parks and logistics hubs.

The Production Linked Incentive (PLI) scheme, introduced in 2020-21, has been a game-changer, stimulating domestic production and enhancing competitiveness across 14 key manufacturing sectors. This scheme provides incentives on incremental sales of goods manufactured in India. The government has also reduced corporate income tax for manufacturing companies to around 25%, with a further reduction to 17% for companies starting production before March 2024.

Key Sectors Attracting Investment

Several sectors are witnessing significant foreign investment. These include:

• Electric Vehicles (EV) and Clean Mobility: The government aims for 30% EV penetration by 2030, allowing 100% FDI through the automatic route.
• Pharmaceuticals and Medical Devices: India, known as the "Pharmacy of the World", permits 100% FDI under the automatic route for greenfield pharma projects.
• IT, AI & Fintech: The demand for local data storage, driven by the rise of AI, is attracting substantial investments in this sector.
• Space & Satellite Manufacturing: The government permits up to 74% FDI in space tech, with India's commercial space market projected to reach $13 billion by 2030.
• Green Hydrogen & Renewable Energy: India allows 100% FDI in the renewable sector and is promoting hydrogen production from clean sources.

Global Corporations Expanding in India

Many global corporations are expanding their operations in India. Airbus is deepening its presence through manufacturing, engineering, training, and supply chain development. Nestle has allocated ₹4,200 crore to establish a new manufacturing plant in Odisha. Nissan and Renault plan to expand their operations with an investment of over ₹5,300 crores. Amazon is investing billions to enhance its operations infrastructure and develop new technologies for its fulfillment network.

Challenges and Future Outlook

Despite the positive momentum, the manufacturing sector faces challenges such as global geopolitical tensions, trade restrictions, rising operational costs, and labor shortages. Addressing these challenges through continued policy support, infrastructure improvements, and skill development initiatives is crucial for maintaining the growth trajectory.

With its strategic geographic position, dynamic market, and supportive government policies, India is well-positioned to become a global manufacturing hub. The "Make in India" initiative, coupled with robust domestic demand and increasing FDI, is driving the country's manufacturing sector towards sustained growth and global competitiveness.