India has demonstrated notable progress in enhancing the attractiveness of its manufacturing sector to global investors, according to a study released by S&P Global on Monday. The study, titled 'India Forward: Transformative Perspectives' by S&P Global India Research Chapter, further suggests that the ongoing shifts in international trade policy are poised to benefit India's manufacturing growth and its integration into global supply chains over the long term.
The S&P Global study highlights that as economies worldwide adapt to evolving trade dynamics and tariff challenges, India stands to capitalise on this momentum to achieve accelerated growth in its manufacturing sector and foster greater integration within global supply chains.
The report notes that a strategic pivot towards increased local sourcing, prioritising proximity to end-markets, and enhancing regional integration are key factors that should attract additional investment into the sector. This influx of investment is expected to accelerate India's technological advancement, bolster its manufacturing competitiveness, and generate a greater number of high-quality manufacturing jobs.
The study emphasises that "beyond the near term, changes in global trade policy would catalyse supply-chain diversification, to the benefit of India." It further underscores that India has made "notable progress" in enhancing its overall competitiveness and specifically in making its manufacturing sector "more attractive to global investors".
Despite experiencing a slowdown in real GDP growth in fiscal year 2024-25, India continues to hold its position as the world's fastest-growing large economy.
The S&P Global study also points out that India's moderate dependence on external trade for its economic growth provides a degree of insulation from the ongoing shifts in global trade and tariff policies, although the nation is not entirely immune to the increasing trend of trade protectionism worldwide.
While the value added by manufacturing currently accounts for a modest 17.2% of the country's real GDP, the Indian government has proactively implemented targeted policy interventions aimed at building robust domestic manufacturing capacity and strengthening India's pivotal role within global supply chains.
The study also notes the resilience of India's domestic manufacturing sector in the face of recent global headwinds, stating, "High-frequency HSBC Purchasing Managers' Index (PMI) data ... highlights the domestic manufacturing sector's resilience to recent global headwinds compared with other major economies."
(With inputs from PTI)
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