Why global players are choosing India as a manufacturing hub, ETManufacturing

Policy regimes such as Production Linked Incentive (PLI) schemes have managed to attract both domestic and global players in electronics, pharmaceuticals, automotive components, and textiles. The perception of India in the global manufacturing ecosystem has undergone a significant transformation in recent years. What was once seen primarily as a low-cost labour outsourcing destination is now fast emerging as a complete manufacturing, research, and innovation hub. This transition does have its own implications on India’s economic trajectory, but reshapes how global businesses plan their supply chain strategies and technology investments for the future.Today, global companies are no longer looking at India merely for cost advantages. Instead, the country is being evaluated in terms of its ability to contribute towards actual long-term resilience, innovation, and value creation. At the heart of this shift lies structural, policy-driven, and capability-led changes that now position India as a credible and competitive alternative to traditional manufacturing bases.

Structural drivers & policy support

One of the pivotal enablers of this transformation has been the concerted policy push through the Indian Government’s “Make in India” initiative. The aspirational goal to raise the manufacturing sector’s contribution to GDP from the current 17% to 25% by 2047 calls for a sustained focus on infrastructure, skilling, innovation, and sustainability. According to a report from NITI Aayog, achieving this target requires the manufacturing sector to grow at an annual average of 15%, a challenge that would demand consistent efforts from the government alongside the private sector. Policy regimes such as Production Linked Incentive (PLI) schemes have managed to attract both domestic and global players in electronics, pharmaceuticals, automotive components, and textiles. These schemes are beginning to translate into tangible investments across the country.

Skilled manpower & the competitive edge

India’s engineering and technical talent pool is one of the largest in the world, with approximately 1.5 million engineers graduating every year. What distinguishes this workforce is not just its scale, but its increasing exposure toward skills in emerging technologies such as robotics, IoT, AI, and 5G-enabled automation. With the Fourth Industrial Revolution transforming manufacturing, this demographic advantage counts much. Companies setting up operations in India do not only seek labour advantage but are also finding a robust ecosystem of engineers, technicians, and digital professionals capable of contributing to high-value innovation.

Vocational training and digital skilling programs offered by public and private institutions are working to address earlier concerns around employability. As a result, the workforce is evolving into one that is future-ready, digitally capable and aligned with global quality standards.

Geopolitics & the shift towards supply chain resilience

Recent events at the global level, from the COVID-19 pandemic to ongoing trade disruptions, have exposed how much of a risk geographic concentration is for supply chains. This is where India offers an opportunity. With its fairly central position in the Indo-Pacific region alongside a stable democratic political structure and improving ease of doing business, it provides an attractive mix for global firms looking to diversify their manufacturing footprints.

India is no longer being seen merely as a site for assembly or processing. There is an increasing tendency on the part of global companies to develop complete value chains in India for product designing and prototyping, to full-scale manufacturing and exports. Multimodal logistics parks, dedicated freight corridors, and modernization of ports will add greater strength to India’s integrated manufacturing hub.

Industrialisation beyond metros

One of the notable features of India’s recent manufacturing story is the emergence of smaller towns and semi-urban regions as centres of industrial activity. Cities like Morinda in Punjab, Sanand in Gujarat, and Sriperumbudur in Tamil Nadu are gaining popularity due to their competitive real estate costs, favourable local policies, and better connectivity.

These emerging centres, in turn, reduce the pressure on metro cities and enable a decentralised approach to economic development. Local governments become more responsive to investor needs with under-the-radar clearance processes and infrastructure-targeted investments. For the manufacturers, this means reduced overheads, access to untapped talent pools, and assurance of business continuity.

Sectoral strengths & emerging areas

Manufacturing base in India is experiencing global competitiveness concerning automobile healthcare, electronics, high-performance textiles, and specialty chemicals sectors. For instance, India has become the fourth-largest automotive market in the world, and with its ramping capacity in battery manufacturing, testing infrastructure, and EV component design, it is all set to take the lead in the electric vehicle space.

Similarly, India’s mobile-led electronics manufacturing boom has given the country a growing competitive stance against global incumbents. Induced by policy incentives, booming domestic consumption, and ever-rising export competitiveness, these sectors are growing.

Freudenberg’s recent investment in the manufacturing facility in Morinda is one such testimony toward confidence in the long-term potential of India. Beyond adding capacity, this plant also serves as a centre of innovation and technical excellence, reflecting the company’s integrated approach of developing in India for global markets.

Technology & sustainability as strategic enablers

India would have its manufacturing future largely dependent on how well it embraces Industry 4.0 technologies. Several industries are currently in the process of adopting AI, robotization, predictive maintenance, and digital twin technologies. Especially interesting is the flexibility adaptation of Indian firms, whether large or small, in incorporating these tools into their operations.

Some of the greatest changes that are speeding up this evolution are the government’s efforts towards digital skilling and the academic-industry tie-ups. Indian engineers are being increasingly trained to interface with smart factories, automated workflows, and sensor-based systems, thereby contributing to the establishment of intelligent production environments.

Sustainability is another key concern. Global supply chains today require transparency in production processes, zero-defect production, and reduction in carbon footprints. Indian manufacturers have now come into the spotlight. Newer facilities are being designed with energy efficiency, zero-waste operations, and water conservation in mind.

At Freudenberg, sustainability is not an afterthought; it is ingrained in the very core of the manufacturing processes. The Morinda facility incorporates advanced digital quality assurance systems and follows stringent environmental protocols, ensuring alignment with both Indian and global benchmarks.

India’s competitive edge

The convergence of skilled talent, supportive policy frameworks, advanced technology adoption, and favourable geopolitical positioning provides India with a distinctive edge in the global manufacturing landscape. Apart from large-scale industrial manufacturing capability, India provides much-needed strategic depth based on an innovation-driven mindset aided by a growing digital infrastructure and increased emphasis on sustainability.

As India increasingly embeds itself into global value chains, through new free trade agreements and improved multimodal logistics networks, its export potential has also increased. For international companies, India is evolving from being a manufacturing destination to becoming a long-term strategic partner that can deliver on efficiency, compliance, and resilience amidst an increasingly complex global environment.

The road ahead

To be a global powerhouse in manufacturing is more than just being about numbers or targets, it is about making an ecosystem that is resilient, inclusive, and forward-looking. For companies investing today, the dividends go beyond cost advantage. They gain access to a vibrant, young talent pool, strong policy support, robust infrastructure, and a market that understands both global expectations and local realities.

The transformation from ‘Make in India’ to ‘Innovate in India’ is very much underway. And for global businesses looking to de-risk and future-proof their operations, there is a compelling reason to be part of this journey. It is not just that India is ready for manufacturing; it is ready to lead this movement.

• Published On Aug 4, 2025 at 05:28 PM IST

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