India accounts for 1.8% of the world’s manufacturing output. That’s not too much, and the numbers have been slipping.
For private manufacturing companies, growth in sales has been stagnant for the last two years. However net profit is rising since the last quarter of 2013-14, thanks to the improved efficiency of the companies. This is a positive sign for growth of the manufacturing sector in India.
The Index of Industrial Production (IIP), however, suggests that the industrial sector is recovering slowly with a 2.1% growth in April-December 2014. This growth is primarily led by mining as manufacturing continues to be lukewarm.
Basic and capital goods seem to be on the way to recovery and intermediate goods are yet to emerge out of difficulties. Consumer goods, primarily consumer durables, continue to slip.
Here is the progress report for the big sectors you should worry about:
The 100% foreign direct investment policy in most sectors and /activities seems to work, and is investor-friendly. Currently up to 49% is currently allowed in the defense industry.
Between During April and November 2014-2015, total foreign investment FDI inflows stand at $ 27.4 billion. FDI equity inflows are $ 18.9 billion.
Services, construction, telecommunications, computer software and hardware, drugs and pharmaceuticals, automobile industry, chemicals, and power have attracted a proportionately higher share of foreign investment.
Telecom
The telecom sector is growing.
Between April and November of 2015, 31.2 million new telephone connections were added. That’s more that the 12.13 million in the same period of 2013-14.
Urban infrastructure has increased from 27.78% in 2001 to 31.18% in 2011.
According to Census 2011, as many as thirty-five cities in India had a million plus population. At current rates of growth, urban population in India is projected to reach 575 million by 2030.
Eight Core Industries
The overall growth in the eight core industries between April 2014 and December 2015 during April-December 2014-15 has improved marginally to 4.4%.
Electricity grew at 9.7%, coal at 9.1% and cement at 7.9%. This has boosted overall performance, while natural gas at -5.1%, fertilizers at -1.4%, crude oil at -0.9%, refinery products at 0.2%, and steel at 1.6% account for moderate growth.
The improved performance in electricity is due to high growth in thermal generation, and from more coal mining by Coal India Ltd. Domestic steel production is affected by the slowdown in domestic demand and cheaper imports.
Corporate Sector performance
Corporate sector performance of listed manufacturing companies in the private sector had a turnaround in terms of growth of sales and net profit appeared to turn around in Q1 of 2014-15. However, performance in Q2 of 2014-15 has dampened.
New Government Schemes
New initiatives like Make in India and Digital India, the creation of the National Industrial Corridors Authority, and labour reforms are helping manufacturing in overcoming critical constraints in acquiring land. Action has been taken to remove regulatory uncertainty by passing law to streamline land acquisition.
Image credit: Indiatimes