The resurgence of the manufacturing sector opens up new avenues for growth
There are many benefits associated with starting a manufacturing business in India. /Representative image | Image by Peter H from Pixabay
With services impacted in the post-COVID-19 scenario, the resurgence of the manufacturing sector is now opening up new avenues of growth for entrepreneurs and business enterprises in 2022.
Manufacturing sector in India
The manufacturing sector is one of the important parts of the Indian economy. According to World Bank estimates, the size of India’s economy is around $3.1 trillion, with the manufacturing sector contributing around 30% of the total GDP. This underscores the importance of manufacturing and considering the huge boost that the manufacturing sector in India has started to receive from policy makers, this is the best time for entrepreneurs and new business ventures to make a foray into the sector.
Advantages of manufacturing in India
India is home to the second largest population in the world after China. We are slowly approaching the 1.4 billion mark and while such a large population comes with its own set of challenges, it is equally attractive in terms of presenting a huge consumer market for manufacturing organizations. .
There are many benefits associated with starting a manufacturing business in India. In addition to getting government grants and support, production organizations can benefit immensely from the huge market potential of the target market.
The 8 Best Crafting Ideas in the Country
There are a wide variety of crafting ideas for you to choose from, although the following 8 main areas are the top 8 areas where the crafting prospects are comparatively brighter than other categories:
1) Ready-to-eat/cook foods: The revenue outlook for ready-to-eat/cook food in 2022 is approximately $55.60 billion, with the category expected to grow at a CAGR of 10.21% between 2022 and 2027. These encouraging numbers stem from changes in lifestyle that Indian society is going through – especially in metropolitan areas and Tier II cities of the country, consumers do not have enough time to prepare food and hence their reliance on produce convenient food is growing. This change in lifestyle has emerged as an attractive opportunity for manufacturing companies that can capitalize on the trend and make decent money by filling the need by producing quality packaged food products.
2) Biodegradable packaging products: Sustainability took center stage today with clamors to save the environment growing crescendo. Plastic, being one of the main culprits of environmental degradation, is at the center of the rage. While some plastic manufacturing companies fear the trend, others are turning it into a business opportunity by branching out into manufacturing biodegradable packaging products. Take, for example, the pulp packaging category which is expected to grow at 12.1% CAGR between 2020 and 2028 with an estimated total size of $600 million by 2028. In addition, demand for other products sustainable packaging is also expected to accelerate in the future, a signal for new companies to capitalize on the growing demand and start manufacturing biodegradable packaging products in the country.
3) Cosmetics without chemicals: The use of harsh chemicals, preservatives, artificial colors and fragrances has long been common practice in the cosmetics industry. However, with increasing consumer awareness and the launch of many herbal medicine brands in the market, the trend is now moving towards the use of organic ingredients in personal care products.
4) Animal food: Gone are the days of people feeding their pets generic foods. These days, pets receive specialized attention and from their veterinary care to food choices, everything has been fully taken care of by their owners. The category is expected to grow at a CAGR of 4.7% between 2022 and 2027, presenting an exciting opportunity for companies to explore this growing niche segment.
5) Agrochemicals: As policymakers strive to expand agriculture’s contribution to the economy from 15% to 20-25%, the use of agrochemicals to improve crop yields has seen a steady increase over the years. years. It is an attractive manufacturing area where companies can choose to produce a range of products including pesticides, nematicides, herbicides and fungicides.
6) Biodegradable products: The idea of producing biodegradable products that easily break down in the environment makes decent business sense, especially in the wake of growing consumer awareness and increased environmental activism. The hospitality industry has widely promoted these sustainable products and the total market volume is expected to reach 295 billion units by 2026. This huge potential can be tapped by manufacturers involved in the production of bags, cups, straws, plates, trays, etc.
7) Electronic products: India has the potential to become an electronics manufacturing hub with the country expected to produce $300 billion worth of electronics goods by 2026. Electronic manufacturing is also important for India becomes a $5 trillion economy. To achieve this dream, the government has introduced various incentive programs to promote the manufacturing of electronic products in the country. Another key asset to start electronics manufacturing is the wide range of choices that one can choose to manufacture. From semiconductors to cell phones and consumer durables to televisions, everything can be produced and sold by the manufacturing company in the marketplace. In addition, companies can also choose to set up an auxiliary unit to support the manufacture of high-priced products in the country.
8) Pharmaceuticals: COVID-19 has resulted in unprecedented growth for the pharmaceutical industry. The pandemic has also highlighted the importance of an adequate supply of medicines and a vibrant healthcare infrastructure for a country. For FY2022, the industry grew 13-15% domestically, while in emerging markets, the industry grew 14-16%. Also in European business, the Indian pharmaceutical industry has shown a growth rate of between 10 and 11%.
In order to ensure that there will be no shortage of essential medicines, the government is encouraging companies to engage in the manufacture of pharmaceuticals. In such a scenario, it will be advantageous for new companies to start producing pharmaceuticals and earn good returns on investment while enjoying higher margins than other sectors.
Government support and policies
The time is absolutely right to start manufacturing in India as the sector is enjoying unprecedented support from government and policy makers. The pandemic has exposed flaws in the service sector and made policymakers realize that an overreliance on services may not be a good idea for the economy.
This has prompted the government to push the manufacturing sector even further by offering a range of incentives and promotional programs to entrepreneurs, startups and business ventures. Some of the important programs under which new business ventures in the manufacturing sector can reap a range of benefits include the “Make in India” campaign (covering 25 sectors of the economy) and the Production Linked Incentives Program (incentives from 4% to 6% on incremental sales) with this last founding mention in the Global Economic Outlook World Bank report released in January earlier this year. No wonder India saw 210% manufacturing growth in FY22.
Also, the wide availability of raw materials in India makes the country a very attractive destination for manufacturing organizations. The low cost of labor in the country, which is one third to one fifth compared to developed countries, further adds to the attractiveness of India.
The manufacturing sector in India remains at the forefront of technology adoption in the country. Not only does it make a significant contribution to the economy, but it is also of strategic importance from the point of view of job creation. Given the importance that policy makers place on the manufacturing sector, new businesses and organizations should explore the possibility of starting manufacturing in India.
If you are also planning to venture into the manufacturing industry, you can register with SolutionBuggy to gain access to verified manufacturing consultants from a wide range of fields and expertise in India. The platform has already completed more than 2,000 consultancy projects across the country and serves the largest companies operating in the Indian manufacturing sector.
(Guruprasad Bangle, Co-Founder and CTO, SolutionBuggy-tonline olatform for the manufacturing industry)