India's Industrial Structure and Economic Overview
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India's Industrial Structure and Economic Overview

In terms of 2019 data, India is the world's 10th largest machine tool producer and the world's 8th largest machine tool consumer. The Indian government has set a target for India’s manufacturing output value to account for 25% of GDP by 2025. Together with the prime minister’s active promotion of "Made in India", it will bring a huge boost to the demand for machine tools in India. The Indian machine tool market still has considerable development potential, and the Indian manufacturing market is rising rapidly.
Published: Jul 05, 2021
India's Industrial Structure and Economic Overview
Overview of the Indian machine tool market under the shift of the supply chain after the epidemic

From January to November 2020, India’s global imports of machine tools amounted to 1.169 billion U.S. dollars, and Taiwan was India’s fourth-largest source of imports. Among them, integrated processing machines (33.42%) were the first, followed by forging machines (including forging machines (Press) (8.22%), numerical control horizontal lathes (6.38%), and electric discharge machining machine tools (3.28%).

70% to 80% of the Indian machinery and equipment industry is of the SME type and scattered throughout the country. The development of the machine tool industry in India is closely related to the automobile and motorcycle industry. According to statistics from the Society of Indian Automobile Manufacturers (SIAM), India’s new car sales in 2017 were approximately 4.01 million units, a 10% increase from the previous year, surpassing Germany’s with 3.44 million vehicles. It has become the world’s fourth-largest auto market; motorcycle sales surpassed China and ranked first in the world, with approximately 17.7 million vehicles. The automobile and motorcycle industry is the most important customer of the machine tool industry in India. The vigorous development of the automobile and motorcycle industry indirectly drives the growth of the machine tool industry.

Overview of India Industry:

With a population of more than 1.37 billion, India is the second-most populous country in the world, after China. India’s population structure is very young, with a median age of less than 28, and the number of people under 25 accounting for half of the total population. The population under 35 years old is as high as 65%, and the labor force is abundant. Its land area is 3.27 million square kilometers, ranking seventh in the world. Its arable land area accounts for 10% of the world's total, and its food output ranks second in the world.

India is rich in natural resources, such as iron ore, manganese, chromium, titanium, aluminum, and other mineral resources, making it one of the top ten mineral deposits in the world. Among them, India's cloud production ranks first in the world, and about 60% of the world's mica is supplied by India. India’s gold production is relatively not so abundant, but Indians love to buy gold, and the demand is so high that it is second only to China, making it the world’s second-largest gold demand country. Because gold is closely related to Indian culture, most of India’s domestic gold supply relies on imports. Because of the geological structure, India's oil and natural gas and other energy sources are quite scarce, and rank among India’s top five imports.

The capital of India, New Delhi, is the political center and the second-largest city in India; the largest city is Mumbai, which is the industrial, commercial, and financial center of India. The largest port is also in Mumbai. However, Mumbai has the world’s largest slum, spreading more than ten kilometers in the city, which shows the gap between the rich and the poor in Indian society. India’s GDP in 2018 was 2.716 trillion US dollars and the per capita GDP was approximately 2,030 US dollars. It is the seventh-largest economy in the world and has maintained rapid economic growth in recent years. In 2014, the Indian government committed to promoting various economic policies such as “Made in India,” “Digital India,” “Green India,” “Clean India,” “Smart Cities,” and “Skills India.” It is one of the most popular emerging markets for investors.

Overview of India's foreign trade:

It can be observed from India’s GDP ratio than India’s domestic consumption ratio is high, about 60%, which means that India is a country dominated by domestic demand; investment accounts for about 30%; government spending is 10%; exports are about 21%. imports are 24%, and net exports are negative, which shows the dependence of the Indian market on imports.

In the early days, India tended to be self-sufficient. In recent years, it has become a developing country. Its economic growth has been promising. In addition, it is in the Indian Ocean, masters its transportation routes, and develops two-way sea and land transportation. China and the United States have also increased their bilateral trade with India. Therefore, in recent years the share of trade in GDP has increased rapidly. The top five countries India exports to are: the United States, the United Arab Emirates, Hong Kong, China, Singapore. The top five countries India imports from are: China, the United States, the United Arab Emirates, Saudi Arabia, and Switzerland. The top five exported products are: gasoline, diesel and naphtha, rough diamonds, silver products, pharmaceutical preparations, and passenger cars; the top five imported products are: crude oil, unprocessed gold and diamonds, communication equipment, bituminous coal, and natural gas.

In recent years, under the strong promotion of trade liberalization by the Indian government, many international trade agreements have been signed and entered into force, including the South Asia Free Trade Agreement (SAFTA), Asia-Pacific Trade Agreement (APTA), India-Africa Trade Agreement, etc., and bilateral trade agreements between many countries.

Economic overview of India:

As one of the fastest-growing emerging countries, India itself has a huge domestic demand market. The geographical environment, coupled with the industrial foundation established since the British colonial period, has affected India’s industrial development towards diversification.

Judging from the current industrial structure, high-tech and modern service industries have the highest output value. About half of the GDP output value comes from the service industry. Traditional agriculture accounts for only about 17% of GDP, but employs more than half of the employed population in India. Direct and indirect agricultural activities combined account for up to 2/3 of the total population. Output value from industry, including manufacturing, accounts for about 32% of GDP. The growth has been more obvious in recent years because the Indian government is committed to promoting Indian manufacturing. To invigorate the manufacturing industry and promote economic development, to attract foreign companies to invest in India through economic reform and opening, and to develop the manufacturing industry in combination with local customs and a large labor pool, India hopes to build itself into a global manufacturing center.

Service industry of India

India is the world's 15th largest tertiary/service industry country. In the world's service industry, 23% of employees come from India. Moreover, the proportion of India's GDP derived from the service industry has grown extremely fast, soaring from 15% in 1950 to 60% in recent years, making it the top GDP contributor. However, the service industry covers a wide range, from handymen and excrement cleaners at the bottom, to those in industrial, financial or technological fields at the top. Among them, the category of "commercial services" has been the fastest-growing since 2000, and currently contributes 1/3 of the output value of the overall domestic service industry.

Business services include financial services, information technology, such as software design and related services, and outsourcing. The reason why they can grow so fast is due to many highly educated, low-cost skilled workers with high technical content, high professionalism, and fluent "English" speaking. In addition, the "80 degrees east longitude line" that passes through the very center of the India is directly opposite the "100 degrees west longitude line” of the high-tech industrial area of the Texas-Silicon Plain. California’s Silicon Valley. This allows companies to conveniently maintain 24-hour operations. For these reasons, India undertakes nearly half of the business volume of the global service outsourcing market every year.

For example, India is a major overseas outsourcing country for global software development services. Many large multinational companies outsource "logistics services" such as customer service or technical support to Indian companies, making it the country with the largest customer service outsourcing business volume in the world.

Agriculture of India

India is the second-most populous country in the world. Its huge population and geographical conditions have boosted the demand for agricultural production, and it has become the world's second-largest agricultural producer. The production of various items is abundant. For example, the annual output of "rice" is about 107 million tons, ranking second in the world, after China. The annual output of "mango" is about 22 million tons, accounting for 50% of the world's total. The annual output of "sucrose" is about 29 million tons, accounting for 14% of the world's output, and the annual output of "cashew nuts" is about 750,000 tons, accounting for 36% of the world's output.

However, we just mentioned that India’s agriculture accounts for only about 17% of domestic GDP, but it accounts for more than half of the employed population in India. The agricultural sector alone affects the livelihoods of more than 700 million people. This data directly shows the efficiency of agricultural production in India is not high, which is why the abnormal changes in the rainy season have a significant impact on the Indian stock market.

There are many reasons for poor efficiency. For example, although India has about 160 million hectares of arable land, which accounts for 10% of the world’s arable land, only about 36% of it is irrigated farmland, which represents a serious shortage of water conservancy facilities in India. Most farmers who have not benefited from the irrigation system are actually "reliant on the weather for food" and are very dependent on climate and rainfall. In recent years, due to climate change and extreme weather, if floods or drought occur, they will directly affect India's agricultural output and GDP. Coupled with the weak foundation of agricultural modernization in India, except for the rural areas outside the metropolitan area, the infrastructure is very inadequate. The poor road conditions and underdeveloped logistics, storage, and transportation make it difficult to transport agricultural products. The food processing industry is not developed enough to extend the shelf life of agricultural products. Therefore, when there is no equipment to store the perishable agricultural products in hot weather, the loss in the process of transporting them from rural to urban areas is very great. These reasons have caused India to still need to import many agricultural products every year, and the inefficient production mode directly affects the long-term low income of farmers, causing the gap between urban and rural areas and the rich and the poor to further widen.

Manufacturing industry of India:

India has the world’s fastest population growth rate and a huge labor base, but the domestic unemployment problem is quite serious. In 2018, the unemployment rate was as high as 6.1%. Therefore, the government has proposed various economic reforms and plans to solve the unemployment problem. Among them, "Made in India", which has received the most global attention, helped to foster domestic manufacturing industries, attract foreign investment to India, and build India into a global manufacturing center, thereby creating huge job opportunities to meet domestic labor demand.

India focuses on 25 industrial fields including automobile parts and components, automobiles, machine tools, construction, electric motors, electronic system design and manufacturing, information and communications, and textiles. The largest of these is the automobile industry, which accounts for up to 7% of the country's GDP. India is the world's fourth-largest automobile market and the fifth largest automobile producer. Approximately 97.3 million vehicles were produced worldwide in 2017, of which 4.78 million were produced in India. Well-known domestic automakers include "Tata Motors" and "Mahindra", and many internationally renowned automobile manufacturers use India as an important production base, including Toyota in Japan, Ford and General Motors in the United States, and BMW, and Mercedes in Europe.

The growth of the automobile industry has also driven the surrounding related industries, such as automobile parts and components, creating an annual output value of about 40 billion U.S. dollars, and accounting for about 2.3% of GDP. In addition to the production of automobiles, India also has a considerable output value of locomotives and scooters. It is also the world's largest locomotive market and second in global locomotive production. In 2017, a total of 20.1 million two-wheeled vehicles were sold. Therefore, the annual output value of India's domestic automobile and motorcycle-related manufacturing industry accounts for more than 10% of GDP, making the automobile and motorcycle industry an important part of India's manufacturing sector.

Biotechnology and pharmaceutical industry of India:

From 2005 to 2016, the compound annual growth rate of the Indian pharmaceutical market was 17.46%, and the market size increased significantly from US$6 billion to US$36.7 billion. The number of domestically manufactured drugs is the second most FDA-certified country in the world. Second, only to the United States, its products are sold all over the world, and developed countries such as Europe, the United States, and Australia, as well as Africa and Latin America, are also the main markets for Indian pharmaceutical exports. India is also a major exporter of global vaccines and a major clinical trial country. Domestic generic drugs are developing rapidly. Nearly 20% of generic drugs in the world are manufactured in India, and the annual output value is growing at a rate of nearly 10%. Expanding, it is the world's largest exporter of generic drugs.

India's domestic market has a huge demand for biotechnology and medical care, and in this country with the second-highest population in the world, nearly 90% of its domestic demand is self-sufficient. One of the reasons why India’s biopharmaceuticals are booming is its cheap but highly professional human resources. The production cost of medicines in India is only half of that of European countries, which has attracted many foreign pharmaceutical companies to outsource R&D to the pharmaceutical industry in India. But more important, to ensure that low-income people can afford medicines, the Indian government amended the patent law in 1970 and granted patents on “processes” to food and medicines, thereby supporting and protecting local pharmaceutical factories. The product itself is not patented, so local pharmaceutical companies in India can use different manufacturing processes to manufacture similar drugs. Therefore, the Indian generic drug market is booming. However, India revised its patent law under pressure from the WTO in 2005 to allow "product patents", which greatly increased the incentives for foreign pharmaceutical companies to bring patented drugs into India, and encouraged local pharmaceutical companies to transform from generic drugs into the field of developing new drugs. The growth potential of the biotechnology medicine market is very considerable.

Diamond processing industry of India:

Rough diamonds are one of India’s top three imports, and diamonds are one of the top three exports, which shows the development of India’s diamond processing industry. About 90% of the small diamonds in the world are cut, polished, and processed through the Indian market. In 2018, India imported approximately US$19 billion worth of rough diamonds. After processing, the total value of processed diamonds exported was as high as US$24 billion. The output value of diamond-related industries directly accounts for 6 to 7% of India's GDP and has an important economic position in India. India has even launched diamond futures.

Many top diamond and jewelry companies in the world have gradually entered the Indian market. India has also begun to establish joint ventures in some African countries that produce diamonds, assist in the construction of infrastructure, and diamond mining, etc., to obtain more and better prototype diamonds. India's domestic labor-intensive diamond processing industry has gradually transformed into a diamond design industry with higher added value to gain greater market value.

India’s economic sources are very diverse, and India’s huge domestic demand market is a major feature. Over the past decade, India’s population growth has accumulated many technical talents, and coupled with the increase in productivity, India has always maintained a stable GDP growth. India is one of the countries with the most growth potential in Asia and one of the emerging markets in the world.

Published: Jul 05, 2021 Source :stockfeel, Source :taiwantrade

  • Asia / Pacific
  • Market Economy
  • Market Opportunities
  • Market Insight
  • Manufacturing Market

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