India’s growing manufacturing sector props up industrial automation equipment demand
Despite a worldwide slowdown in the growth of the industrial automation equipment (IAE) market, the strong expansion of India’s manufacturing sector is allowing the global IAE industry to remain on an expansion trajectory in 2019.
The annual IAE market revenue growth will decrease to 3.2 percent in 2019, down from 4.7 percent worldwide in 2018. Globally, the IAE demand growth is being diminished by weakening conditions both in the manufacturing industry and in the economy at large.
In contrast, India is experiencing a robust rise in its industrial sector, driving demand for automation in factories.
“Even as IAE growth decelerates throughout most of the world, India’s market is experiencing growth as it’s the economy and industrial market continues to generate strong growth,” said Nitin Sharma, analyst, manufacturing technology, at IHS Markit.
“Despite challenges, including poor infrastructure, difficulties in land acquisition, complex taxation laws and supply chain inefficiencies, India is becoming an increasingly attractive location for manufacturing. Moreover, the Indian government’s initiatives like the ‘Make in India’ program and incentives for various manufacturing companies are creating an environment conducive to accelerating manufacturing sector growth.”
India’s manufacturing boom
India’s real gross domestic product (GDP) is projected to increase by 6.6 percent in the fiscal year 2019, which started April 1. Another 6.8 percent increase is expected in the fiscal year 2020.
In May, the Nikkei India Manufacturing PMI rebounded to 52.7, up 0.9 points from April. The rise in PMI was driven by the expansion in consumer goods industries.
Manufacturing output, total new orders, export orders, and employment also have accelerated. With India’s economy and manufacturing sector on the rise, demand for more industrial automation equipment is set to increase as well.
Government boosts Indian manufacturing
The Indian government’s measures to improve industrial policies are fueling growth in 25 key industrial sectors, including electronic systems, electrical machinery, automotive, aviation, defense, and pharmaceuticals. These measures include increasing foreign direct investment (FDI) limits, simplifying labor laws, promoting skill development and easing the process of doing business.
India’s mobile phone manufacturing industry is a good example of these efforts.
Under the government’s “Make in India” program, various initiatives have been undertaken to establish a robust mobile phone manufacturing ecosystem in India. The Phased Manufacturing Programme (PMP) is one such initiative wherein indigenous mobile manufacturing is promoted via fiscal and financial incentives.
Recently, companies like Foxconn and Samsung have established major manufacturing facilities in the country. By 2018, imports of the electronic devices in the country had been reduced to less than half of total domestic consumption and India had become the world’s second-largest mobile phone manufacturer after China, replacing Vietnam.
The government’s “Make in India” initiative is also supporting expansion and localization efforts for several established car manufacturers. IHS Markit forecasts light vehicle production will reach more than 4.8 million units in 2019, up 8 percent from 2018.
Automation suppliers target Indian market
With a growing manufacturing sector backed by key government initiatives, India has become an important market for automation suppliers.
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