India moving beyond low-cost manufacturing to global competitiveness: Report
New Delhi, July 13
India is moving beyond low‑cost manufacturing toward building globally competitive capabilities, and a confluence of currency depreciation, expanded trade access and record public capex could accelerate a structural shift in the sector, a report said on Monday.
The report from Carnelian Asset Management and Advisors said India's first manufacturing-focused fund has delivered over 32 per cent CAGR since its inception in 2020.
Manufacturing 2.0 is unfolding in real time and the next phase of growth will be driven by multiple accelerants acting together, the report noted.
The firm pointed to huge opportunities in electronics manufacturing services, defence exports, pharma and CDMO exports, auto ancillaries, and textiles and apparel.
The report highlighted accelerants driving growth in the segment such as real depreciation of the rupee and improved trade access.
In every major Indian real effective exchange rate (REER) depreciation of the last three decades, exports have responded, the report said, adding that the REER fell about 16 per cent from December 2024 to April 2026, the steepest sustained decline since the early 1990s.
India's trade access has expanded rapidly, giving preferential access to roughly $9 trillion of global imports.
Further, public capital expenditure in the Union Budget 2026-27 was raised to Rs 12.2 lakh crore, marking a four-fold increase from a decade ago.
"The biggest wealth creation opportunities often emerge when structural shifts are still underappreciated by the market," it added.
India's mobile phone production has crossed roughly $56 billion, iPhone exports have crossed nearly $17 billion, and Apple now assembles over 20 per cent of its global iPhone volumes in the country.
Favourable government policies, global supply-chain diversification, rising domestic demand, infrastructure investments and improving competitiveness are collectively creating a powerful manufacturing upcycle.
While execution risks remain, the firm said India is entering a multi-year phase of industrial expansion with significant investment opportunities.
— IANS
Reader Comments
The REER depreciation point is interesting. A weaker rupee definitely helps exports, but it pinches the common man with higher import costs for things like electronics and oil. We need a balanced approach – not just cheering currency fall. Also, $12.2 lakh crore capex is huge, but have we seen similar impact on ground in the last decade? 🤔
This is the kind of news we need more of. The manufacturing fund delivering 32% CAGR since 2020 shows disciplined execution. However, the report mentions 'execution risks remain' – that's the polite way of saying we still face red tape, power supply issues, and skill shortages. Let's see if the next budget addresses these. But yes, cautiously optimistic! 🇮🇳
Auto ancillaries and pharma exports have always been India's strengths, but finally electronics and defence are catching up! The mobile phone production crossing $56 billion is mind-blowing. But I hope this growth isn't just concentrated in a few big players – MSMEs need access to these global supply chains too. Also, textile sector still lags behind Bangladesh in competitiveness.
A measured report from an asset management firm – they have skin in the game, so they'll be optimistic. But the data on trade access to $9 trillion of global imports is staggering. However, what about the human side? Are we creating enough high-skill jobs, or are these just assembly-line positions that could move elsewhere if labour costs rise? We need investment in R&D too.
A Arun Y 'Manufacturing 2.0 We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.