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Rise of India’s Contract Manufacturing Industry as the New Global Hub: how it Challenges China’s Dominance?

India’s contract manufacturing sector is experiencing a remarkable surge, poised to challenge China’s long-standing dominance in global manufacturing. The Indian contract manufacturing market is projected to grow from $19.63 billion in 2023 to $38.92 billion by 2028, representing a robust 14.67% compound annual growth rate (CAGR). This rapid expansion is being driven by a confluence of factors, including favorable government policies, technological advancements, and shifting global supply chain dynamics.

High-Profile Investments and Strategic Partnerships:

India’s potential as a manufacturing hub has not gone unnoticed. Tech giants like Apple and Cisco have already announced plans to expand their manufacturing operations in the country, with Apple aiming to produce 25% of its products in India eventually. Additionally, Indian conglomerate Vedanta Group has signed agreements with 20 South Korean display glass companies to create a manufacturing hub in the country. These high-profile investments, coupled with India’s large domestic market, skilled workforce, and favorable government policies, have made the country an increasingly attractive destination for contract manufacturing.

Government Policies and Technological Advancements:

Favorable government policies have played a crucial role in propelling India’s contract manufacturing sector. Initiatives such as the Make in India campaign, production-linked incentives (PLI) schemes, and infrastructure development projects have created a conducive environment for manufacturing growth. Technological advancements in automation, artificial intelligence, and IoT are further enhancing India’s manufacturing capabilities, making it a competitive alternative to China.

Shifting Global Supply Chain Dynamics:

The COVID-19 pandemic and subsequent global supply chain disruptions have prompted companies to reassess their manufacturing strategies. As Hanish Bhatia, an associate director at Counterpoint Research, explains, “What has happened during the pandemic is companies, now, have started looking at alternate places just to hedge their risk. They have started looking at more places. India has an advantage over other countries because of the large domestic market itself.” This shift in global supply chain dynamics is driving more companies to explore India as a viable manufacturing destination.

The Future of India's Contract Manufacturing Industry

The future of India’s contract manufacturing industry looks exceptionally bright. With the sector’s blend of global collaborations, support from government initiatives, technological advancements, and strategic market maneuvers, India is poised to emerge as a formidable challenger to China’s long-standing dominance in global manufacturing. By leveraging its strengths in raw materials, manufacturing expertise, and a burgeoning domestic market, India is well-positioned to capture a larger share of the global manufacturing landscape, potentially reshaping the dynamics of the industry in the years to come.

As the world continues to grapple with supply chain disruptions and geopolitical uncertainties, India’s contract manufacturing industry stands as a beacon of stability and growth. The country’s rapid expansion in this sector, fueled by favorable policies, strategic investments, and technological advancements, positions it as a significant player on the global stage. India’s contract manufacturing sector not only challenges China’s dominance but also offers a promising alternative in the evolving global manufacturing landscape.


Sriram Parthiban

Business Analyst, Srushty Global Solutions

Meet Sriram, a visionary business analyst in India’s dynamic contract manufacturing sector, dedicated to serving discerning clients throughout the USA. With strategic expertise and a sharp focus on optimizing supply chains, Sriram is driven to elevate India’s manufacturing prowess on the global stage. His goal is to position India not only as a leading manufacturer for the world but also as a pioneer in setting new benchmarks for quality and innovation, shaping a revolutionary industry landscape.