India's Manufacturing Advantage Shifts from Capacity to Ecosystem Integration

India's manufacturing story has long been focused on increasing capacity and output. However, as the country strives to become a globally competitive manufacturing base, it needs to shift its focus towards deeper integration of the industrial ecosystem.

The growth of India's manufacturing GDP is expected to rise at an average rate of 6.5% per year in the coming years, reaching ₹93.5 lakh crore in FY35, compared to an estimated ₹46.9 lakh crore in FY24.

Supply chain integration is crucial for manufacturers to remain competitive. The recent global disruptions have shown that manufacturing competitiveness cannot be measured solely by the capacity of the final assembly plant, but also depends on the strength of the upstream ecosystem that feeds it.

The localisation of critical inputs is becoming increasingly important. For instance, copper demand in India is expected to increase significantly as electrification continues to grow, and materials will intertwine sectors such as renewable power, electric mobility, grids, data centers, and industrial automation.

India needs to develop connections between raw materials, manufacturing, and application sectors. The next phase of manufacturing should focus on building capabilities around machines, including process integration, quality control, customisation, recycling systems, and the use of data across production.