India’ top regions for manufacturing sector investment include Gujarat, followed by Maharashtra and Tamil Nadu. A report by SURFACES REPORTER.
Rising FDI inflow in the manufacturing sector
According to a recent report by Colliers, manufacturing sector in India is witnessing a supreme growth with rising investors' confidence. As per the published dossiers by the Department for Promotion of Industry and Internal Trade (DPIIT), manufacturing sector engrossed substantial Foreign Direct Investment (FDI), with FDI equity inflows tallying around USD 17.51 billion in the FY 2020-21 itself. This surge emphasizes intensified investor confidence and exhibits India's attractiveness as one of the most lucrative manufacturing destinations in the world, as per Colliers India.
The 'Make in India' initiative, a government-led campaign aimed at encouraging domestic manufacturing, has played a pivotal role in accelerating investments. Furthermore, policy reforms and incentives, comprising of the Production Linked Incentive (PLI) scheme, the government has pro - actively incentivized various manufacturing industries, such as automobiles, electronics, and textiles, nurturing an environment conducive to augmented investment.
Emphasis on the competitive advantage of a skilled workforce and lower cost of labor, the manufacturing sector is also beholding an amplified inflow of capital investment and M&A activity, leading to a surge in manufacturing output and consequential increased contribution to exports.
The manufacturing sector contributes around 17% to the GDP supported by robust physical and digital infrastructure which is expected to grow to 21% in the next 6-7 years. India is well-positioned to enhance its manufacturing sector, making considerable advances in global supply chains. Major players including Tesla and Ford are already establishing their manufacturing facilities in India .
Top regions to invest in India as per Colliers' research
• Gujarat - Due to easy labour availability and at a cheaper cost along with the government supporting policies for the labour force; the state has cheaper land rates for industrial developments. The infrastructure availability in the state, which has such great last mile connectivity and presence of major ports, roadways, railways and also provides water, electricity and renewable energy resources at a cheaper rate compared to other states with very minimal energy dependence. Gujarat also has other financial offering to give to the developers setting up their business within Gujarat.
Toyota is set to invest approximately Rs 3,300 crore for a new plant scheduled to be operational by 2026. The Gujarat government has granted a sizable 1.6 lakh sq. mtrs. of prime land in Sanand, near Ahmedabad, for the establishment of an innovative concentrate manufacturing facility by the renowned Coca-Cola Company
• Maharashtra - Due to the best policies, subsidies, and incentives offered by the state government. All major and competing businesses have at least a presence in Maharashtra and the state has the highest FDI inflow, industry GDP share, lower unemployment rate, higher number of healthcare and educational facilities, which all combine to make a better general economic scenario of the state. Maharashtra always offers a great deal of support infrastructure in terms of roadways, waterways and railways.
• Tamil Nadu- The state has great availability of labor with cheaper rates and favourable labor policies. Tamil Nadu also has good policies, subsidies, and incentives for the industrial sector and has a fair presence of support infrastructure with many industrial companies having their footprint in the state.
Source: Colliers India