With services taking a hit in the post COVID-19 scenario, the resurgence of the manufacturing sector is now opening new avenues of growth for entrepreneurs and business ventures in 2022.
Manufacturing sector in India
The manufacturing sector is one of the important constituents of the Indian economy. According to the World Bank Estimates, the size of the Indian economy is around $3.1 trillion with the manufacturing sector contributing around 30 percent of the total GDP. This underscores the importance of manufacturing and given the huge push that the manufacturing sector in India has started receiving from policymakers, it is the best time for entrepreneurs and new business ventures to foray into the sector.
Advantages of manufacturing in India
India is home to the second-largest population in the world after China. We are inching towards the 1.4 billion mark and although having such a large population comes with its own set of challenges, it is equally enticing in terms of presenting a humongous consumer market for manufacturing organisations.
There are numerous advantages associated with starting a business in the manufacturing sector in India. In addition to getting subsidies and government support, the production organisations can be immensely benefited from the huge market potential of the target market.
Best 8 manufacturing ideas in country
There is a wide variety of manufacturing ideas that you can choose from although the following are the top 8 fields where the prospects of manufacturing are comparatively brighter than other categories:
1) Ready to Eat/Cook Foods: The revenue outlook for Ready to Eat/Cook foods in 2022 is around $55.60 billion with the category projected to grow at a CAGR of 10.21 percent between 2022-2027. These encouraging numbers are stemming from the lifestyle changes that the Indian society is going through - especially in the metropolitan areas and Tier-II cities of the country, consumers don’t have enough time to prepare the food and hence, their reliance on quick and convenient food products is growing. This change in lifestyle has come across as an attractive opportunity for the manufacturing businesses which can leverage the trend and make decent money by bridging the need by producing quality packaged food products.
2) Biodegradable packaging products: Sustainability has taken the centre stage today with clamour to save the environment rising steadily to its crescendo. Plastic, being one of the major culprits in environmental degradation, is at the centre of the fury. While some plastic manufacturing companies are cribbing about the trend, others are converting this into a business opportunity by starting manufacturing biodegradable packaging products. Take, for instance, pulp packaging category which is projected to grow at 12.1 percent CAGR between 2020-2028 with a total size estimate of $600 million by 2028. Further, the demand for other sustainable packaging products is also expected to pick up pace in the future, a cue for new ventures to capitalise on the growing demand and start manufacturing biodegradable packaging products in the country.
3) Chemical-free cosmetics: The use of harsh chemicals, preservatives, colourants, and artificial fragrances has long been a practice in the cosmetic industry. However, with rising consumer awareness and many herbal brands launching their products in the market, the trend is now shifting towards the use of organic ingredients in personal care products.
4) Pet Food: Gone are the days when people used to feed their pets generic food. Nowadays, pets are getting specialised attention and right from their veterinary care to eating choices, everything has been fully taken care of by their owners. The category is expected to grow at a CAGR of 4.7 percent between 2022-27 and this presents an attractive opportunity for businesses to explore this fast-expanding niche segment.
5) Agro Chemicals: With policymakers striving hard to expand the contribution of agriculture in the economy from existing 15 percent to 20-25 percent, the use of agro chemical to enhance the yield of crops has been witnessing a steady rise over the years. It’s an interesting manufacturing area where companies can choose to produce a range of products including pesticides, nematicides, herbicides, and fungicides among others.
6) Biodegradable Products: The idea of producing biodegradable products which get easily decomposed in the environment makes a decent business sense, especially in the wake of rising consumer awareness and heightened environmental activism. The hospitality industry has been promoting these sustainable products in a big manner and the total volume of the market is expected to reach 295 billion units by 2026. This huge potential can be tapped by manufacturers involved in the production of biodegradable bags, cups, straws, plates, trays, and so on.
7) Electronic products: India has the potential to become a manufacturing hub for electronic products with the country expected to produce electronic goods worth $300 billion by 2026. The manufacturing of electronics is also important for India to become a $5 trillion economy. To realise this dream, the government has come up with various incentive schemes to promote the manufacturing of electronic products in the country. Another key attractor to starting manufacturing electronic products is the wide range of choices that one can choose to manufacture. From semiconductors to mobile phones and from consumer durables to Television sets, anything can be produced and sold by the manufacturing firm in the market. In addition, businesses can also choose to set up an ancillary unit to support the manufacturing of high ticket products in the country.
8) Pharmaceutical products: COVID-19 has resulted in unprecedented growth for the pharmaceutical industry. The pandemic has also brought into the picture the importance of a sufficient supply of medicines and a vibrant healthcare infrastructure for a country. For FY2022, the industry has grown by 13-15 percent domestically while in the emerging markets, the industry has registered a growth of 14-16 percent. In European business too, the Indian pharma industry has shown growth rate between 10 percent and 11 percent.
In order to make sure there won’t be any shortage of essential medicines, the government is encouraging companies to foray into the manufacturing of pharmaceutical products. In such a scenario, it will be beneficial for the new ventures to start producing pharma products and realise good returns on their investment while enjoying higher margins than other sectors.
Government support and policies
The time is absolutely right to start manufacturing in India as the sector is getting unprecedented support from the government and policymakers. The pandemic has brought the faultlines in the service sector to the fore and made the policymakers realise that over-reliance on the services might not be a good idea for the economy.
This prompted the government to start pushing the manufacturing sector even harder by offering a range of incentives and promotional schemes to entrepreneurs, startups, and business ventures. Some of the significant schemes under which new business ventures in the manufacturing sector can derive a range of benefits include the “Make in India” campaign (covering 25 sectors of Economy) and the Production-linked Incentive Scheme (4 percent to 6 percent incentives on incremental sales) with the latter founding mention in the Global Economic Prospects Report of World Bank released in the month of January earlier this year. No wonder, India witnessed a manufacturing growth of 210 percent in FY'22.
Besides, the ample availability of raw materials in India make the country a very attractive destination for manufacturing organisations. The low labour cost in the country, which is one-third to one-fifth in comparison to developed nations, further adds to the appeal of India.
The manufacturing sector in India continues to remain at the forefront of technology adoption in the country. Not only does it contribute significantly to the economy but also holds strategic importance from the perspective of Employment generation. Given the importance that policymakers attach to the manufacturing sector, new business ventures and organisations must explore the possibility of starting manufacturing in India.
If you are also planning to foray into the manufacturing industry, then you can register yourself with SolutionBuggy to get access to verified manufacturing consultants belonging to a wide range of domains and expertise in India. The platform has already completed more than 2,000 Consulting Projects across the country and is serving the topmost companies operating in the manufacturing sector of India.
(Guruprasad Bangle, Co-Founder & Chief Technology Officer, SolutionBuggy-online platform for manufacturing industry)