The ‘Make in India’ program aims to create a $5 trillion economy by 2027 through a manufacturing revolution. However, the country’s low manufacturing GDP proportion and agrarian and service-led economy offer manufacturing opportunities.
The government has focused on India for years, promoting tourism and launching the ‘Make in India’ manufacturing revolution. The International Monetary Fund (IMF) predicts that India will become the world’s third largest economy by 2027, and the current administration aims to make it $5 trillion. The majority of India’s GDP is rural and increasingly service-led, with little manufacturing.
India has a unique chance in geopolitical realities where supply lines are armed, forcing China +1 measures. Production-linked incentives (PLI) and Phased Manufacturing Programs (PMP) are smart fiscal incentives and policy assistance. Corporate India has embraced the PLI plan, which has led to gains in 14 sectors. Companies who used the PLI to boost local output have also benefited from the stock market. Dixon Technologies, a leading homegrown EMS company, applied for a PLI grant and is up 53% YTD. Amber Enterprises, a well-known RAC/HVAC OEM, gained 53% during the last six months. Kaynes Technology India, a prominent end-to-end integrated electronics manufacturing player in India that offers all ESDM services, is an outlier with a 219 percent YTD stock price rise.
The administration realizes the necessity for public investments to enhance economic capability, especially with private investments slow. Creating and expanding infrastructure, especially mobility infrastructure, is the plan. In the 2023 union budget, the government allotted INR 2.41 Lakh crore to Indian Railways, including INR 27,482 crore for dedicated freight routes, a 75% YoY increase. Railway minister Ashwini Vaishnav’s announcement that the government will build 3000 Vande Bharat Express trains over the next 5–6 years is positive. This effort will require a localized or significantly localized eco-system to support it and enable homegrown companies like Amber to produce world-class railway sub-system solutions.
Local mobility champions include Titagarh Rail Systems, Amber Enterprises, Sidwal, and others. These companies have used government programs like the PLI and PMP to buy components from India and progress up the value chain from assembling. However, taxes difficulties persist. A fast-growing middle class, a top-three economy, and a geopolitical inflexion point that could be capitalized on make this a chance worth seizing.
Conclusion
The ‘Make in India’ program promotes manufacturing to make India a $5 trillion economy by 2027. PLI and the Phased Manufacturing Program provide monetary incentives and policy support from the government. Titagarh Rail Systems and Amber Enterprises, local HVAC companies, have expanded using these strategies. The 28% GST on ACs remains a taxation bottleneck. India’s fast-growing middle class and geopolitical inflexion point offer manufacturing opportunities.
