Overview
India’s industrial growth has made noteworthy progress over recent years, driven by increasing manufacturing output, strategic government initiatives, and rising investments.
However, despite these advancements, there remains significant untapped potential in the industrial sector, especially in manufacturing and exports.

Progress in Industrial Growth

• The industrial sector grew robustly at around 9.5% in the recent fiscal period, with manufacturing maintaining an average growth rate of 5.2% over the last decade, contributing about 14.3% to GDP and accounting for over 35% of total industrial output.
• Government initiatives such as Make in India, Production-Linked Incentive (PLI) schemes, and the National Manufacturing Mission have boosted investment and capacity expansion. FDI in manufacturing has notably increased by 69%, reaching Rs. 14.45 lakh crore (about US$165 billion).
• Technological advancements like automation, AI, and Industry 4.0 tools are being integrated, improving efficiency and competitiveness, particularly in electronics and automobile sectors. The manufacturing Purchasing Managers’ Index (PMI) also reflects sustained expansion.

Untapped Potential

• Industrial exports, especially in services and manufacturing, hold considerable untapped potential for foreign investments. Expanding export capabilities could enhance global market share and economic resilience.
• The engineering and power tools sectors represent emerging opportunities, currently underrepresented in global trade but with strong growth and export potential if infrastructural and regulatory bottlenecks are addressed.
• Structural challenges like infrastructure gaps, complex regulatory frameworks, skill shortages, and outdated technology hinder the industrial sector’s full potential. MSMEs face significant compliance burdens, and the negative perception of manufacturing jobs limits skilled labor availability.

Key Challenges to Address

• Improving multimodal connectivity, power supply, and logistics infrastructure to reduce costs and enhance supply chain efficiency.
• Simplifying regulatory compliance particularly for MSMEs to reduce transaction costs and promote ease of doing business.
• Bridging the skill gap in manufacturing roles through formal training and vocational education to align workforce skills with industry needs.
• Encouraging innovation and adoption of new technologies at scale to enhance productivity and competitiveness.

Conclusion

• India’s industrial sector has demonstrated strong growth momentum driven by policy support, investment, and increasing domestic demand.
• Unlocking its untapped potential will require focused efforts to resolve infrastructural and regulatory challenges, skill development, and promotion of technology adoption along with leveraging export possibilities.

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