Target: Manufacturing destinations for investments in India

The COVID-19 has exacerbated the uncertainty in the supply chain, prompting manufacturers to reconsider their sourcing strategies. As a result, many companies are expected to eliminate dependence on a single source and establish a flexible and adaptable supply chain. South Asian countries are likely to benefit from this diversification.

Advantage India

India provides an excellent opportunity for manufacturing units because of its geographic location and domestic market with a large consumption base (18% of global consumers reside in India). The country’s government has taken several measures in the past two years to make India an attractive investment option – improvement in ease of doing business, tax advantage to new manufacturing units, the introduction of production linked incentives, to name a few.

Investments in the past 18 months

The government initiatives and reforms have become fundamental steppingstones to shape India as an efficient, equitable and resilient manufacturing hub. They have resulted in the country witnessing the highest greenfield manufacturing investment intentions among MITI-V countries (Malaysia, Indonesia, Thailand, India & Vietnam), with 64 projects and investments totalling USD 16.63 billion during Jan 2020 – July 2021. 

Fig: Greenfield Manufacturing FDI Investment Intentions / MoU (Jan 2020 – Jul 2021)

^{Source: Moody's Orbis Database}

Our solution accommodates the entire range of services an occupier/manufacturer seeks to ground its manufacturing investments in the country and provides a one-stop service that integrates all stakeholders and offers complete visibility of the entire process to the manufacturer.

In the six-part knowledge series, we take you through each milestone of these six stages and the key parameters that can impact the entire process from concept to operation. This is the first blog of the series focusing on the initial stage of the process.

Target

Location Selection: Destinations for investments

Destination selection is the first decision-making step that kick-starts the six-stage process of business entry. India has successfully attracted international and domestic investments across its geography and a vast spectrum of industrial sectors. Here is a snapshot of investment interests in the past 18 months. Investments in India have poured in from around the world with significant interest from China, France, Germany, Japan, Netherlands, South Korea, Taiwan (Chinese Taipei), UK and the US. Most of the manufacturers have plans to Make in India and Go Global from here.

Atmanirbhar Bharat: Domestic manufacturing intentions (Jan 2020 – July 2021)

Domestic or Indian companies have also displayed confidence in the evolving manufacturing sectors. After extensive research of domestic investment intentions by domestic/Indian companies, JLL estimates the investment figures to be more than USD ~60 billion in the past 18 months (Jan 2020 to July 2021). While core sectors such as steel and other metals have been the majority contributors, emerging sectors such as electric vehicles, solar and other renewables, defence, etc., have witnessed a sizeable investment – to the tune of 40% of the total.

Note: Investment intention includes Greenfield as well as Brownfield developments of these firms.

India is on the cusp of a transformational change in the manufacturing sector as the country has taken several measures to competitively position itself in the international market as well as policy initiatives to promote domestic manufacturing. Stay with us as we take you through a manufacturer’s journey and key learnings of setting up a plant in India.