Manufacturing Industries in India & its Growth – IBEF

Report on India’s Manufacturing Sector and its Alignment with Sustainable Development Goals

Advancing SDG 8: Decent Work and Economic Growth

Economic Contribution and Performance

• The manufacturing sector is a key pillar of India’s economy, contributing 16-17% to the nation’s GDP in the pre-pandemic period.
• Government policy aims to increase the manufacturing sector’s contribution to 25% of the economy’s output by 2025, fostering sustained economic growth.
• The HSBC India Manufacturing PMI registered 58.2 in April 2025, indicating the strongest sector improvement in ten months and reflecting robust economic activity.
• Foreign Direct Investment (FDI) in the manufacturing sector has seen a 69% increase over the past decade, reaching US$165.1 billion, which stimulates economic growth.

Employment and Workforce Development

• The sector is a significant source of employment, providing jobs for over 27.3 million workers, directly contributing to the goal of full and productive employment.
• India’s large workforce is identified as a key competitive advantage in the global market.
• The “National Manufacturing Mission” includes a focus on developing a future-ready workforce to ensure decent work for all.
• Major corporations, including Apple and its contract manufacturers, are expanding their workforce to meet rising production demands.

Fostering SDG 9: Industry, Innovation, and Infrastructure

Industrial Modernization and Digital Transformation

• The Indian manufacturing sector is progressively shifting towards automation and process-driven manufacturing, aligning with Industry 4.0 principles to enhance efficiency and productivity.
• Digital transformation is recognized as a critical element for gaining a competitive advantage and fostering innovation within the industry.
• India’s digital economy is projected to account for 20% of the national income by 2029-30, underscoring the importance of resilient infrastructure and digitalization.

Strategic Policies and Infrastructure Development

1. National Manufacturing Policy: Aims to increase the share of manufacturing in GDP to 25% by 2025, building resilient infrastructure and promoting inclusive industrialization.
2. Production-Linked Incentive (PLI) Schemes: Launched to develop the core manufacturing sector to global standards and attract investment. An additional US$2.2 billion in incentives is planned for six new sectors, including chemicals and shipping containers.
3. National Manufacturing Mission: Announced in the 2025-26 Union Budget, this initiative supports the “Make in India” program by providing policy frameworks and improving the ease of doing business to foster innovation.

Sectoral Innovation and Value Addition

• Key sectors such as automotive, engineering, chemicals, pharmaceuticals, and consumer durables are driving the industry’s growth.
• In the electronics sector, value addition has increased from 30% to 70% and is projected to reach 90% by FY27, demonstrating a move towards more sophisticated and sustainable industrial processes.

Supporting SDG 7 and SDG 12: Affordable Clean Energy and Responsible Production

Leadership in Clean Energy Manufacturing

• India is positioned to become a global manufacturing hub for wind power components, contributing to affordable and clean energy (SDG 7).
• The nation has the potential to supply 10% of the global wind energy demand by 2030, leveraging its manufacturing capacity and technology.

Promotion of Sustainable Production and Clean Technology

• The National Manufacturing Mission explicitly aims to support clean tech manufacturing, aligning with goals for sustainable consumption and production patterns (SDG 12).
• The transition to more automated and efficient, process-driven manufacturing is expected to boost productivity and support more sustainable industrial practices.

Strengthening SDG 17: Partnerships for the Goals

Global Competitiveness and Partnerships

• India is enhancing its role in global supply chains, with the potential to become a major international manufacturing hub.
• According to the World Bank, India has the potential to produce technology at a lower cost than China if manufacturing processes are efficiently mastered.
• The country’s ability to attract major global players and integrate into international markets is strengthened by its advantages in raw materials, industrial expertise, and entrepreneurship.

Foreign Direct Investment and Trade

• FDI inflows are a critical component of financing for sustainable development. Total FDI inflows into India over the last five years amounted to US$383.5 billion.
• The growth in FDI is significantly driven by government policies like the PLI schemes, which enhance global partnerships for sustainable development.
• India ranked among the top five nations in services export growth in FY25, demonstrating its increasing competitiveness in the global market.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on India’s manufacturing sector primarily addresses three Sustainable Development Goals (SDGs):

• SDG 8: Decent Work and Economic Growth – The article extensively discusses the manufacturing sector’s role in economic growth, its contribution to GDP, and job creation. It highlights the goal of sustaining economic growth and creating employment opportunities for millions.
• SDG 9: Industry, Innovation, and Infrastructure – This is the most central SDG to the article. It focuses on building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation. The text details India’s efforts to become a global manufacturing hub, upgrade technology, increase the manufacturing sector’s share of the economy, and support industries through policies and digital transformation.
• SDG 7: Affordable and Clean Energy – The article touches upon this goal by mentioning India’s potential to become a global manufacturing hub for wind power components and the government’s support for “clean tech manufacturing,” indicating a move towards sustainable and clean energy technologies within the industrial sector.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, several specific targets under the identified SDGs can be identified:

1. Under SDG 8: Decent Work and Economic Growth
   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article supports this by mentioning that the manufacturing sector generated 16-17% of India’s GDP and is projected to be one of the fastest-growing sectors, contributing to overall economic growth.
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. This is evidenced by the shift towards “more automated and process-driven manufacturing,” “digital transformation,” and increasing “value addition in electronics from 30% to 70%.”
2. Under SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product. The article directly addresses this with the stated government goal “to have 25% of the economy’s output come from manufacturing by 2025” and its current employment of “over 27.3 million workers.”
   • Target 9.3: Increase the access of small-scale industrial and other enterprises…to financial services, including affordable credit, and their integration into value chains and markets. This is reflected in the “National Manufacturing Mission” which aims to support “industries of all sizes” and “MSME growth.”
   • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable…with greater adoption of clean and environmentally sound technologies. The article points to this target by highlighting India’s potential as a “global manufacturing hub for wind power components” and the government’s focus on “clean tech manufacturing.”
   • Target 9.b: Support domestic technology development, research and innovation in developing countries. This is supported by the mention of Production-Linked Incentive (PLI) schemes, the goal to “develop the core manufacturing sector at par with global manufacturing standards,” and the potential to produce technology at a lower cost.
3. Under SDG 7: Affordable and Clean Energy
   • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology…and promote investment in energy infrastructure and clean energy technology. The article connects to this by stating India is “well-positioned to cater to 10% of the global wind energy demand by 2030, leveraging its manufacturing capacity.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions several quantitative and qualitative indicators that can be used to measure progress:

• Manufacturing value added as a proportion of GDP (Indicator 9.2.1): The article provides a baseline of “16-17% of India’s GDP pre-pandemic” and a clear target of “25% of the economy’s output… by 2025.”
• Manufacturing employment (Indicator 9.2.2): The article states that the sector employs “over 27.3 million workers,” which serves as a metric for job creation.
• Foreign Direct Investment (FDI) inflows: The article quantifies FDI in the manufacturing sector at “Rs. 14,34,224 crore (US$ 165.1 billion)” over the past decade, which is an indicator of investment and confidence in the sector’s growth.
• HSBC India Manufacturing PMI: The article cites a specific value of “58.2 in April 2025,” an indicator of the economic health and expansion of the manufacturing sector.
• Value addition in electronics: The progress from “30% to 70%” and the projection to “touch 90% by FY27” is a specific indicator of technological upgrading and moving up the value chain (Target 8.2).
• Share of global wind energy market: The goal to “cater to 10% of the global wind energy demand by 2030” is a clear indicator for progress in clean energy manufacturing (Target 7.a and 9.4).
• Government financial incentives: The plan to offer “incentives of up to Rs. 18,000 crore (US$ 2.2 billion)” is a measurable input aimed at spurring local manufacturing.

4. Table of SDGs, Targets, and Indicators

Source: ibef.org