India was the center of one of the earliest civilizations on earth, thriving throughout the second and third millennia B.C. Various cultures rose and fell during the intervening centuries until invaders from Europe arrived in the 16th century. By the 19th century, India became the “jewel in the crown” of the British Empire. Mahatma Gandhi led a non-violent resistance to British rule, and India became an independent nation in 1947. Following the economic reforms of 1991, India became both a regional and global power.
Located in Southern Asia between Burma and Pakistan, India borders the Arabian Sea and the Bay of Bengal. It is the eighth-largest country in the world at about one-third the size of the United States.
Manufacturing in India
India has a robust manufacturing sector, with typical products including textiles, chemicals, food, steel, transportation equipment, cement, mining, petrochemicals, machinery, software and pharmaceuticals.
With its GDP of $9.474 trillion as of 2017, India is the third-largest economy in the world, behind China and the US. However, its growth rate of 6.7% per year puts it at 27th in terms of overall economic growth. Industry makes up about 27% of India’s GDP, and the industrial growth rate of 5.5% puts it in 47th place for worldwide Industrial growth.
Other Important Industries
Financial services, travel and tourism, consulting, telecommunications, real estate, and media and entertainment are also important industries in India. Service industries make up 61.5% of the country’s GDP and employ 31% of the workforce.
Agriculture in India makes up 15.5% of the GDP. Key agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, lentils, onions, potatoes, dairy products, sheep, goats, poultry and fish.
Supply Chain Infrastructure for Manufacturing
Communication pathways are strong in India, with 91% of the population having access to cellular services. The infrastructure includes significant fiber-optic and satellite installations, which help form the backbone of global communications.
Transportation is equally robust. India has more than 4 million km of roadways, including 96,000 km of national highways. India’s roadways put it at number 3 worldwide for its extensive ground transportation system.
India has 253 airports with paved runways and most are able to support cargo traffic. In addition, it has 45 heliports. Coupled with its favorable location in Asia, the strong air support makes shipping products in or out of India easy.
Transportation of goods within India is also well supported by rail and water shipping capabilities. India has 1,731 vessels in its merchant marine, including bulk carriers, container ships, general cargo ships and oil tankers.
The country has more than 65,000 km of railroad track and 14,500 km of inland waterways. Both numbers put them in the top 10 worldwide, so regardless of how you choose to ship products, cargo transportation is readily accessible.
India’s workforce is about 522 million people, and its unemployment rate stands at 8.5% as of 2017. Nearly 22% of India’s population lives below the poverty line despite the robust GDP and growth. Agriculture employs 47% of the workforce, while the remaining 53% is almost evenly distributed between the industry and services sectors.
More than one-third of India’s population lives in urban areas, with roughly 30 million people in the capital city of New Delhi, 20 million in Mumbai, 15 million in Kolkata, 8 million in Bangalore, 11 million in Chennai and 10 million in Hyderabad.
About 74% of India’s population can read and write, although the percentage is higher (82.4%) for males than females (65.8%). Most Indian people complete 12 years of education.
Although India’s economy is large and robust, it faces some headwinds in terms of economic growth. India’s inefficient power generation and distribution systems, lack of intellectual property rights enforcement, clogged civil justice system, limited non-agricultural employment opportunities, and a poorly educated workforce all make it difficult for India’s economy.
In 2017, India exported $304.1 billion, mainly to the US, UAE, Hong Kong and China. Primary export commodities include petroleum products, precious gems, vehicles, machinery, iron, steel, chemicals, pharmaceutical products, cereals and apparel.
Imports were $452.2 billion for the same period. Import commodities included crude oil, precious stones, machinery, chemicals, fertilizer, plastics, iron and steel. Its primary import partners include China, the US, UAE, Saudi Arabia and Switzerland.
The Republic of India is a federal parliamentary republic consisting of 28 states and eight union territories. Its most recent constitution became effective in January of 1950, and its most recent amendments were in 2019. The country follows English common law, although there are separate legal systems that apply to Muslims, Christians and Hindus.
The president serves a five-year term, with President Ram Nath Kovind assuming office in July of 2017. Narendra Modi is the current Prime Minister of India since 2014. Elections to the Council of States were rescheduled in 2020 due to the Coronavirus pandemic.
Taxes equal 9.2% of India’s GDP, but the total tax and contribution rate is 49.7% of profits. Tax on profit is 21.6% and labor and contribution taxes are 20.2%. The balance is miscellaneous taxes on profit. India requires 12 tax payments per year, and on average, companies spend 254 hours on tax preparation per year.
Getting Down to Business
Doing business in India has its own sets of advantages and challenges. Indian manufacturing is an important part of the economy. QAD Adaptive Manufacturing ERP can assist by providing real-time insight into operations and enabling rapid adoption of innovative new processes. Furthermore, QAD is able to adapt to any style of manufacturing and to the needs of all geographic locations.
How would you describe the state of Manufacturing in India.? Learn more about manufacturing and doing business in other great countries around the world.