The 5 key areas of manufacturing that will grow in 2018
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The 5 key areas of manufacturing that will grow in 2018

  • Highlights

  • How Make in India is catalysing manufacturing growth

  • Know the manufacturing growth target for 2020

  • 5 manufacturing sectors that will grow in 2018

  • How small businesses can break into these sectors



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The Make in India initiative has proved to be a catalyst for the Indian manufacturing industry, which has grown from contributing 15% to the country’s GDP in the last 20 years to 17.1% in the last two years. The government’s goal is to encourage the manufacturing industry to contribute at least 25% to the GDP to create new jobs by 2020. Various incentives such as deductions for R&D and capital subsidies for industries like electronics with boost the sector’s growth in the next decade. As a small business owner you can look to maximizing growth in the following 5 manufacturing sectors in 2018:

Pharmaceuticals:

Estimated to grow at a CAGR of 20% in the next 3 years with revenues reaching $55 billion by 2020, this sector is on an upswing. The recent GST laws are also contributing to its rise, with a reduction in taxes between inter-state transactions. With tax credit on technology and investment, this is the right time to be associated with the pharma industry. A small business can find a lot of potential for growth by providing 3PL warehouse facilities with supply chain management and distribution services to the sector

Another business niche is to provide focuses recruitment services to the pharma industry.

Auto components:

With a market size of $115 billion by 2021, the domestic and export sales of the auto component sector have been recording tremendous growth. The automotive aftermarket is expected to grow at a CAGR of 10.5% by 2020 according to the Automotive Component Manufacturers Association of India. What’s more, India is set to be one of the three largest market automobiles in the near future. Two-wheeler production is set to boom in the next five years catering to the rural market, and both commercial light vehicle and passenger car production is on the path to massive growth. In this scenario, small businesses can find opportunity in manufacturing motorcycle batteries, producing or selling auto accessories, specializing in auto wiring, setting up spare parts warehouses or OEM plants for auto components.

Textiles:

One of the largest contributors to the country’s exports, the Indian textile industry is expected to reach US$ 230 billion by 2020. This growth is expected to be fuelled by the abundant availability of raw materials like jute, wool, silk, and cotton in India. Thanks to organized retail, favourable policies by the government and gradually rising income levels, there is a lot of scope in this sector, especially in the small-scale industries. Small businesses can invest in manufacturing khadi, starting handloom production or knitwear production and even starting e-commerce websites for niche segments. A business loan can be availed as a convenient source of finance for such ventures.

Electronics hardware:

With schemes like 25% capital subsidy, reimbursement of central and state duties, income tax exemptions and assistance in skill development, this sector is not only growing fast, but also all set to boom. It is expected to growth at a CAGR of 24% from this year to 2020, with anticipated market size growing to $400 billion in 2022. Experts forecast that the smart television and smartphone sectors will dominate the industry with smart home security and automation rounding up the top three. Small business owners can make the most of this opportunity by taking a machinery loan to set up businesses creating communications and broadband equipment, LED lights, solar photovoltaic systems, and product design firms for electronic manufacturing firms.

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Chemicals:

India is one of the world leaders when it comes to the production of chemicals, being the third largest in Asia and 12th largest in the world in terms of volume. With a growth rate of 10%, the chemicals manufacturing industry is predicted to reach $300 billion by 2025. The country’s cost competitiveness and availability of highly skilled and technically qualified workforce are the main drivers of growth.

Within this sector, small businesses can capitalize on manufacturing specialty chemicals like admixtures, sealants, adhesives,andwaterproofing for paints. The two other growing sub-sectors are polymer chemicals and agrochemicals. Small businesses can also provide associated services to the sector such as recruitment, distribution,andspecialized warehousing.

Whether you have a manufacturing business yourself or supply raw materials or logistics to these industries, now is the time to capitalize on their growth.

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