Fulfilling the promise of India’s manufacturing sector

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McKinsey Quarterly

Rajat Dhawan, Gautam Swaroop, Adil Zainulbhai

India’s product makers have a golden opportunity to join the global big leagues. They should seize it.

India’s manufacturers have a golden chance to emerge from the shadow of the country’s services sector and seize more of the global market. McKinsey analysis finds that rising demand in India, together with the multinationals’ desire to diversify their production to include low-cost plants in countries other than China, could together help India’s manufacturing sector to grow sixfold by 2025, to $1 trillion, while creating up to 90 million domestic jobs.

Capturing this opportunity will require India’s manufacturers to improve their productivity dramatically—in some cases, by up to five times current levels. The country’s central and state governments can help by dismantling barriers in markets for land, labor, infrastructure, and some products. But the lion’s share of the improvement must come from India’s manufacturers themselves.