A latest report released Tuesday pegged the manufacturing sector in India to grow once-in-a-generation on the back of the production-linked incentive scheme. This would see the sector register manifold expansion, keeping its eyes on increasing its market size from the existing $459 billion in FY24 to as much as $1.66 trillion. This growth, of late, comes as a departure from the average annual increase of $175 billion seen during the last decade.
These projections estimate that the share of manufacturing in GDP increased from 14% in FY 24 to around 21% in FY34. According to DSP Mutual Fund, this increase can be attributed to lowered logistics costs and infrastructure development. On the optimistic side, investments in infrastructure are likely to rise from 33 percent of GDP in FY24 to 36 percent by FY29, which may trigger the broader economic benefits.
Charanjit Singh of DSP Mutual Fund was very optimistic about the prospects of a pick-up in manufacturing, citing that demand in various subsegments is bound to rise due to impending earnings growth for companies. He pointed out that recent reforms and policy adjustments at the government level have set the base for this growth phase.
He also said that in the coming times, from FY25 to FY30, execution would be the key looking ahead. Bringing updates on FY26, the report has pegged a revival of private capex, helped by improving utilization rates and strong corporate balance sheets, along with continuity of political stability.
Of this, big capital investments could get generated through the PLI scheme, to the tune of around USD 39 billion across sectors from FY24 to FY26. The sectors under the current PLI regime will be pharmaceuticals, mobile phones, and solar PV modules. Semiconductors, specialty steel, textiles, and automobiles would be those which may gather pace post FY25.
Besides, other potential sectors would be power, defense, water, and manufacturing, the report said, due to likely organic demand-driven growth rather than by way of government-driven initiatives only. This holistic approach underlines broad-based optimism about India's manufacturing resurgence in the coming years.
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