India’s Industrial Sector Set to Unlock $3 Trillion Opportunity by 2035, Manufacturing to Lead the Way

India's manufacturing industry is expected to overtake agriculture as a GDP contributor by 2035, with estimates placing it at potential 30-32% of the country's GDP.

Its growth, with an estimated $3 trillion opportunity, will primarily be powered by the manufacturing industry, projected to capture two-thirds of industrial output and more than 20% of GDP by 2035.

The Omniscience Capital report identifies that growing domestic consumption, an increase in per capita income, and the government's vision of reaching $1 trillion in merchandise exports are major drivers for this growth. The manufacturing industry is already a pillar of India's economic growth, serving both domestic and foreign markets, and is poised to further rise.

Major government initiatives, such as the Production-Linked Incentive (PLI) scheme, the 'Make in India' initiative, Foreign Direct Investment (FDI) policy liberalization, public-private partnership (PPP) models, and infrastructure growth, are driving the manufacturing industry ahead.

For India to realize the ambitious $1 trillion merchandise export goal by 2030, exports need to expand from $450 billion to $1 trillion, a growth rate of 12% per annum. India's contribution to world merchandise exports has already doubled in value from 0.9% in 2005 to 1.8% in 2023, with more substantial improvement in recent years. Merchandise exports have expanded at a 3-year CAGR of 18.8% between FY21 and FY24 and at a 5-year CAGR of 9.4% between FY19 and FY24.

India is becoming a favored location for manufacturing investment because of its access to raw materials, cheap labor, favorable corporate tax for manufacturing, and pro-active government incentives. Moreover, the construction of 11 industrial corridors through the National Industrial Corridor Development Programme (NICDP) will generate 1 million direct and up to 3 million indirect jobs, which will go a long way in socio-economic development.