Home / Industry / Manufacturing /  India – A 1 trillion manufacturing export market by 2030

Exports have seen tremendous growth over the last two years. India has reached $418 billion of manufacturing exports in the fiscal year 2022 (FY22) with rapid growth over the last 2 years. Though India contributes 3.1% of GDP, our export contribution to the world has been a mere 1.6% only and looking at the current opportunities, it has immense scope, potential and triggers to grow. By 2028, it is expected that India will reach 1 trillion of manufacturing exports. Manufacturing’s share of GDP in India is estimated to increase from 15.6% currently to 21% by 2031—and, in the process, double India’s export market share. The government also launched an interest equalisation scheme to make credit available for cheaper exporters in India.

Merchandise Exports: - Over the last nine years, merchandise exports from India have hovered around $260-330 billion, with the highest ever being $330 billion in 2018-19. The government has set up a target of $1 trillion in 2027-28 for merchandise exports and $500 billion in exports in the next two years.

Indian exports majorly included: Pearls, precious and semi-precious stones and jewellery (16 per cent of total shipments); mineral fuels, oils and waxes and bituminous substances (12 per cent); vehicles, parts and accessories (5 per cent); nuclear reactors, boilers, machinery and mechanical appliances (5 per cent); pharmaceutical products (5 per cent); and organic chemicals (4 per cent). India’s main export partners are: the United States (15 per cent of the total exports), United Arab Emirates (11 per cent), Hong Kong (5 per cent), China (4 per cent), Singapore (4 per cent) and the United Kingdom (3 per cent).

The prominent factors that are driving and supporting this growth are as follows: -

1. PLI scheme - India is all set to emerge as the fastest-growing economy in the world backed by the success of the government’s Production-Linked Incentive (PLI) Scheme. The Scheme involves incentives of Rs. 1.97 lakh crore over a period of five years and covers 13 sectors such as telecom, electronics, auto parts, advanced batteries, pharmaceutical drugs, and solar energy components. It was also in tune with the government’s Aatmanirbhar Bharat campaign, as it is expected that the PLI Scheme will improve local manufacturing. The PLI scheme is expected to bring in incremental investment of Rs. 7,920 crores, incremental production worth 1,68,000 crores, exports worth Rs. 64,400 crores, and earn direct and indirect revenues of Rs. 49,300 crores. Proposals worth nearly Rs. 6,000 crores are already with the government. Simultaneously, it is expected to boost India’s export sector.

2. Acquisitions abroad: - Joint venture undertakings are established abroad by Indian entrepreneurs for building up an export potential for their products manufactured through foreign collaboration in developing countries where there is a favourable political climate and a demand for Indian products.

3. Foreign Direct Investment (FDI): -India reported its highest-ever annual FDI Inflow of US$ 81.97 billion last fiscal. A total of 863 Investment Projects are under active consideration with an investment of $121 Billion including 272 soon-to-take-off proposals worth $41 Bn. The government has taken various steps to boost domestic and foreign investments in India. These include reduction in Corporate Tax Rates, easing liquidity problems of NBFCs and Banks, improving Ease of Doing Business, FDI Policy reforms, Reduction in Compliance Burden, policy measures to boost domestic manufacturing through Public Procurement Orders, Phased Manufacturing Programme (PMP), Schemes for Production Linked Incentives (PLI) of various Ministries.

4. Knowledge based and trust protected sectoral growth: - India has sectoral advantages in Pharma, Chemicals, Industrial Machinery, Electronics, Automobile, and Textiles sectors. India is among the top four destinations for the relocation of American companies.

5. Sourcing diversification away from China: - Rampant global consumer goods demand and an acceleration in sourcing shifts away from China during the COVID-19 pandemic has boosted trade between India and other countries to record highs. The upswing was driven in large part by US imports from India, which accounted for about two-thirds of the 1.16 million TEU transported between the two countries in the first half. China continues to be the world’s largest production hub, but tariff conflicts, stop-and-start economic pressures from Beijing’s zero-COVID policy, and soaring labour costs are slowly chipping away at the country’s dominant market position. Improvements in industrial productivity thanks to automation and worker training have also helped bring down manufacturing costs in India, particularly for “labour-intensive" consumer products.

6. Capex cycle: - Bank loan growth at over 17 per cent is at its highest since 2013; IIP data suggested that capital goods are growing strongly at 16.8 per cent, crossing pre-COVID levels. Private sector Capex has seen an uptick in FY22 and is expected to be elevated in FY23 and FY24. Increased demand visibility diversifying global supply chains, foray into newer products and healthier balance sheets are some of the key factors that are encouraging various domestic industries to add newer capacities. The estimated total Capex from FY22 to FY24 amounts to approximately 10 lakh crore, the highest in any 3 years stretch so far. Growth and high-capacity utilisations, projected next five years CAPEX is six times higher than last five years.

7. MAKE IN INDIA: - Make in India’ was launched on September 25, 2014, to facilitate investment, foster innovation, building best in class infrastructure, and making India a hub for manufacturing, design, and innovation. It was one of the first 'Vocal for Local' initiatives that exposed India's manufacturing domain to the world. The sector has the potential to not only take economic growth to a higher trajectory but also to provide employment to a large pool of our young labour force.

Top Sectors contributing to India`s Exports market 

Engineering goods registered a 50 per cent growth in exports, at $101 bn in FY22. This is mainly due to the benefits that the sector enjoys due to various trade agreements India has with other countries. It is expected to continue its rise in steel, auto components and medical devices and India's push for Make in India. Currently, all pumps, tools, carbides, air compressors, engines, and generators manufacturing MNC companies in India are trading at all-time highs with increased prospects of shifting increased production to India. High energy prices and labour costs In Europe can trigger this further. Also, many MNC groups have taken over some of the Indian companies and promoter change with a cash-rich and global footprint can make these companies into global giants in the coming decade. Specifically, auto components, power tools, energy, and tractors to name a few. 

Petroleum Products: - Contributed in a major way to India's exports, with crude oil prices rising due to the pandemic and made worse by geopolitical tensions due to the Ukraine war. India exports $55.5 bn worth of petroleum products, a massive rise of 150 per cent over last year. 

Jewellery: - Made up $35.3 billion of India's exports in FY22. With the reduction of import duty on cut and polished diamonds in this year's budget, this is only going to rise. The Emergency Credit Line Guarantee Scheme (ECLGS) launched by the government as a response to Covid-19 for MSMEs will also help businesses in this sector. Ninety per cent of the gems and jewellery sector comprises of the MSMEs. Our largest exports are to the USA, China and UAE followed by UK, Germany, Singapore, Netherlands and many more.

Agriculture exports were buoyed by the government's push to meet global demand for food amid the pandemic. India exports rice worth $9.65 bn, the highest among agricultural commodities. Wheat exports also saw a 288 per cent rise, while dairy products.

Textile and apparels: - India’s textile and apparel exports (including handicrafts) stood at US$ 44.4 billion in FY22, a 41% increase on a YoY basis. Exports of readymade garments including cotton accessories stood at US$ 6.19 billion in FY22. Cotton production in India is projected to reach 7.2 million tonnes (~43 million bales of 170 kg each) by 2030. Production-linked Incentive (PLI) Scheme worth Rs. 10,683 crore (US$ 1.44 billion) have been announced for manmade fibre and technical textiles over a five-year period. 

The government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme. India’s textile and apparel exports to the US, its single largest market, stood at 27% of the total export value in FY22. Exports of readymade garments including cotton accessories stood at US$ 6.19 billion in FY22. 


Image Courtesy: IBEF.ORG

Amazon India signed an MoU with the Manipur Handloom & Handicrafts Development Corporation Limited (MHHDCL). Sustainable Textiles for Sustainable Development (SusTex) project by the United Nations Climate Change will increase artisans’ engagement from Asia and especially India in the coming decade. Rs. 1,000 crores have been spent by the Government on R&D of technical textiles. Overall Indian textiles market is expected to be worth more than US$ 209 billion by 2029.


Machinery/Engineering goods registered a 50 per cent growth in exports, at $101 bn in FY22. This is mainly due to the benefits that the sector enjoys due to various trade agreements India has with other countries. the incentive provided by the government to the auto sector is nearly Rs. 26,000 crores. These incentives will help domestic as well as foreign investors to expand their manufacturing capacity inside the country. The Rs. 26,000 crores approved for the auto sector mainly focuses on electrical vehicle segments.


India exports inorganic and organic chemicals, tanning and dyes, agrochemicals, plastics, synthetic rubber, filaments, etc. In FY 2022-23 (until August 2022), exports of chemicals and petroleum products stood at US$ 8.24 billion. In FY 2021-22, India’s total chemicals products exports were valued at US$ 24,313.88 million, an increase of 38.67% YoY. The export growth of chemicals has been achieved because of a surge in shipments of organic, inorganic chemicals, agrochemicals, dyes and dye intermediates and specialty chemicals. In September 2022, the organic and inorganic chemical exports of the country were valued at US$ 2,332.92 million. China is a major importer of dyes, dye intermediates and organic chemicals from India. USA remained the largest importer of essential oils, inorganic chemicals while Brazil was the top importer of agrochemicals from India

Pharmaceuticals: - It is the largest provider of generic medicines globally. The country has a share of 20% in the global supply volume and contributes to around 60% of the global vaccines. Key segments of the Indian pharmaceutical industry are OTC medicines, Generics, APIs, Vaccines, Biosimilars, and Custom Research Manufacturing (CRM). Formulations and Biologics constituted the major portion of India’s exports with a share of 73.31% followed by drug intermediates and bulk drugs. During 2021-22, the country exported pharma products worth US$ 24.62 billion. The USA, the UK and Russia are among the largest importers from India at a share of 29%, 3% and 2.4%, respectively during 2021-22. The Strengthening of Pharmaceutical Industry (SPI) scheme focuses on bolstering the existing infrastructure facility, with a total financial outlay of Rs. 500 crore (US$ 64.5 million).

Iron and steel 

As of April 2022, India was the world's second-largest producer of crude steel, with an output of 10.14 MT. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels. The capacity for producing steel has grown concurrently, and the rise has been largely organic. In FY22, exports and imports of finished steel stood at 13.49 MT and 4.67 MT, respectively. In FY22, India's export rose by 25.1% YoY, compared with 2021. In FY21, India exported 9.49 MT of finished steel. In July 2022 exports of finished steel stood at 3.80 lakh MT.  

Electronics Value  

NPE 2019 targets for electronics production in 2025-26 at US$ 300 billion appear to be more realistic considering the disruption on account of COVID-19. Continuing on the path of import substitution, India’s domestic electronics market is estimated to reach at best US$ 150-180 billion from the current US$65 billion over the next 4-5 years. The hearables and wearables market are estimated to have overall production of ~US$ 8 billion by 2024, if large scale hearables manufacturing could be aimed to address 10% of the Global market by 2024. Average contribution of PCBA to the Bill of Materials (BoM) is at around 40% and presents a US$600 billion global PCBA market. India’s prominent listed players can make difference in each such segment’s exports. India is seen as Country that respects patents, designs IP rights and ODM practices. Aim and mission is US$ 120 billion Electronics Exports by 2026 with Electronics as top3 Category. As per Union Budget economy survey of 2019 Assemble in India for the world into Make in India, India can raise its export market share to about 3.5 per cent by 2025 and 6 per cent by 2030. This looks highly feasible.

Estimated exports segment wise:

Image Courtesy: pib.gov.in statistics


At present, our exports are about 20 per cent of the GDP. Considering the size of our economy, our potential, and the base of our manufacturing and service industry, it has the potential to grow a lot. India needs to have a seamless and high-quality supply chain and low-cost logistics to boost exports. Gatishakti and logistic parks can play a huge role in this along with railway transformations in our view.

Challenges are still there and in 2023 we may see slower growth as the base is high in 2022. More than 45% of the manufacturing output is obtained from the MSME sector in India. Hence more connectivity of MSME to the globe is extremely need of hour. Bonded warehouses were one such initiative by CBIC.  New fields like space and exports can increase the Indian share of the global exports pie by 2026. Estimates have suggested annual defence exports of 35,000 crore by the end of FY 2025. 

The key reasons for stellar export performance are sharp recovery in key markets, increased consumer spending, accumulated savings and disposable income due to the announcement of fiscal stimulus by major economies, global commodity price rise, and an aggressive export push by the government. The United States of America (USA) remained the top export destination, followed by United Arab Emirates (UAE) and China. 

As investors, we should focus on individual robust companies in these categories which will reap most of benefits of efficiently managing their margins during such megatrends. 

Author: Mr. Pritam Deuskar, Founder, Wealthyvia.com.


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