Why invest in the Manufacturing Sector now?
Strong GDP growth rate
We expect the push by the government to stimulate the investment cycle which
will drive a cyclical economic recovery with average GDP growth of 7% over the
next 5 years.
Improving Domestic Macros
On the domestic front we have seen significant improvement in major macro
parameters – inflation, interest rates, CAD, fiscal deficit and foreign currency
reserves providing comfort to investors about the medium to long-term
investment trend in Indian equities.
Election 2014 - The Game Changer
India’s first majority government in 30 years has led to a surge in investor
optimism and confidence over the future of India’s economy and equity markets.
Thrust on Manufacturing
The Modi-led BJP government’s priority is the revival of the manufacturing sector.
As per the National Manufacturing Policy (NMP), it plans to ramp up the share of
manufacturing in the country’s GDP from 15% to 25% and create 100 million jobs
by 2022 in the sector.
Easing interest rate environment
With interest rates expected to come down, manufacturing companies are likely to
have a major leg up for profitability and growth.
Direct play on growth
Markets sense and factor growth ahead of time. As growth becomes visible on the
ground level, the sector does better than all other major themes. This is because
manufacturing is a direct play on growth whereas others derived themes on growth.
FII and FDI flows
India has received $312 Billion in FDI flows over the past10 years
(FY2004-FY2014). India continues to enjoy a major share in fund flows and
portfolio flows are expected to double in coming periods. Countries like U.S,
China and Japan have committed $180 Billion to India over the next 3 years.
Happy Investing
Strong GDP growth rate
We expect the push by the government to stimulate the investment cycle which
will drive a cyclical economic recovery with average GDP growth of 7% over the
next 5 years.
Improving Domestic Macros
On the domestic front we have seen significant improvement in major macro
parameters – inflation, interest rates, CAD, fiscal deficit and foreign currency
reserves providing comfort to investors about the medium to long-term
investment trend in Indian equities.
Election 2014 - The Game Changer
India’s first majority government in 30 years has led to a surge in investor
optimism and confidence over the future of India’s economy and equity markets.
Thrust on Manufacturing
The Modi-led BJP government’s priority is the revival of the manufacturing sector.
As per the National Manufacturing Policy (NMP), it plans to ramp up the share of
manufacturing in the country’s GDP from 15% to 25% and create 100 million jobs
by 2022 in the sector.
Easing interest rate environment
With interest rates expected to come down, manufacturing companies are likely to
have a major leg up for profitability and growth.
Direct play on growth
Markets sense and factor growth ahead of time. As growth becomes visible on the
ground level, the sector does better than all other major themes. This is because
manufacturing is a direct play on growth whereas others derived themes on growth.
FII and FDI flows
India has received $312 Billion in FDI flows over the past10 years
(FY2004-FY2014). India continues to enjoy a major share in fund flows and
portfolio flows are expected to double in coming periods. Countries like U.S,
China and Japan have committed $180 Billion to India over the next 3 years.
The government is intent on fast tracking reforms, implementing key policies to make India an easier place for doing business.
- Labour Reforms enabling flexibility & skill development.
- GST Implementation likely by FY 2016 to boost trade & commerce.
- Amendment of the Land Acquisition bill to fast track the process for acquiring land.
- FDI in sectors like Defence, Insurance, Railways and Construction.
- Focus on building 100 smart cities.
- Coal block auctioning & coal output enhancement plan to reduce dependency on imports.
- Single window & time-bound clearance system to reduce project delays.
- Ease in environmental approval.
- Self-attestation.
The Indian Manufacturing Advantage
- Low-cost labour force - India’s manufacturing wages are among the lowest worldwide, averaging $1.5 per hour.
- Demographic dividend - Around 64% of India’s population is expected to be in the age bracket of 15–59 years by 2025 making India a destination for English speaking, young, skilled and cost-efficient workforce.
- Growing domestic market - India’s consumer spending is set to grow 4x by 2020 making it a nation with rapid economic growth providing a large domestic market for manufacturers.
- Free trade agreements - One of more than 10 free trade agreements India is signatory to, the ASEAN-India Free Trade Area provides companies access to one of the world’s largest FTAs giving manufacturers an opportunity to reach out to other global markets.
- Abundant Natural resources - India’s vast reservoirs from coal to bauxite, gas to iron ore, have made it self-reliant in terms of terms of resources needed to become a manufacturing powerhouse.
- Favourable currency - The rupee’s falling value against the dollar makes Indian exports increasingly competitive.
Advantage India
Natural resources. Fuel. Human capital. All forces are aligned to give India’s
manufacturing sector the boost it needs.
- The world’s 4th largest Coal reserves
- 5th largest Power Generation portfolio
- 800 MMT proven Oil reserves
- 47 Trillion cubic feet Natural Gas reserves
- 5th largest Wind Energy producer
- 5th Iron Ore reserves
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