The evolution of Indian manufacturing as an investment theme
₹6,200 crore from ₹4,645 crore in 2023-24 (budget estimate). Similarly, the allocation for the Modified Programme for Development of Semiconductors and display manufacturing ecosystem was more than doubled to ₹6,903 crore for 2024-25 (BE) from ₹3,000 crore in 2023-24 (BE).
Other schemes such as solar power (grid) and national green hydrogen mission also received significantly higher budgetary allocations. A focus on policy continuity following the general election in April-May would bolster economic and business sentiment and buttress a much-anticipated recovery in private capital expenditure on infrastructure and manufacturing, say experts.
Besides, the industry also expects further progress in supply-side reforms, including clean energy transition, increased focus on local manufacturing, and targeted policies for youth, the poor, women, and farmers. “During a potential third term for (Prime Minister Narendra) Modi, we would expect further progress towards digitalisation and continued policy push toward manufacturing/exports, given India's increasing footprint in global value chains," analysts of UBS Securities India said in a report dated 18 March.
All said, manufacturing relies heavily on well-functioning infrastructure, and to ramp up activity in the sector India will need to focus on increasing productivity by scaling up infrastructure, ensuring fewer power outages, and avoiding below-par transport infrastructure. “This (poor infrastructure) has kept the size of the manufacturing firms small, making it difficult to exploit economies of scale," Bhowar pointed out.
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