India Manufacturing: A need and an opportunity

India’s Amrit Kaal has a critical need and direction: Atmanirbharta on its own manufacturing capabilities. A theme that rings true with Indians at least since the days of Swaraj, today, more than ever we need to step up our Manufacturing capabilities. And rightly so, we seem to be on that path.

Identifying the need for Manufacturing

India needs Atmanirbharta in Manufacturing for 3 key reasons:

1. Holistic Growth

A study of economic successes in the past few decades, and indeed, past few centuries since the Industrial revolution would show that Manufacturing is behind the success of emerging economies. Hence, to achieve our goal of becoming a developed economy, India is targeting a 20% share in Manufacturing by 2030, up from 15% currently.

Take the below example:

2. Large Scale Employment

India has a large working age population that is expected to increase by 15.2 crore people by 2045. To employ such a large workforce, improving our Manufacturing base becomes a key requirement. Manufacturing jobs could also lead to increasing incomes, as labour productivity in the Manufacturing sector is 4x that of Agriculture, where 45% of the current labour force is currently employed.

3. Macroeconomic Stability

As India touches higher levels of per-capita GDP, it is expected that consumption of goods will increase at a faster pace. This trend has led to rising imports for India. This has a negative impact on India’s current account balance, Rupee as a currency, and India’s inflation. In this context, it is critical to increase capabilities of India’s Manufacturing sector to meet demands of the Indian consumer.

The Opportunity

Recognizing this need, the government has taken significant efforts to propel India’s Manufacturing.

On account of these efforts and the convergence of several enablers, India’s Manufacturing is a multi-decadal investment opportunity. To capture this opportunity, you could consider investing in the HDFC Manufacturing Fund that invests a minimum 80% of its assets in the manufacturing theme. NFO is currently open, and the NFO period ends on 10th May 2024.