India’s Manufacturing Surge: Top States Leading the Way for Global Investors

Key Indian Regions Driving Manufacturing Expansion

India's manufacturing sector has rapidly advanced beyond its traditional expertise in artisanal textiles, jewelry production, cutting-edge software development, and Computer Numerical Control (CNC) machinery. Today, it stands as a global leader in manufacturing, with a Gross Value Added (GVA) of approx. USD 331 billion ( INR 27,88,056 crore) in FY 2023-24, contributing around 17% to the nation’s GDP. Forecasted to grow at an impressive 8.21% annually, this sector offers a dynamic landscape for international investors.

This article by Invest India highlights some of the leading regions in India for manufacturing. Growth in the petrochemicals, automotive, steel, metal fabrication, and shipbuilding sectors has positioned the country as a burgeoning powerhouse for production and industry expansion.

India’s Premier Manufacturing Destinations

Maharashtra As India's top choice for global investment, Maharashtra boasts a Gross State Domestic Product (GSDP) of approx USD 465.5 billion (INR 38.79 lakh crore) in FY 2023-24 and led the nation with an FDI inflow of USD 15.1 billion in FY23. The state attracts businesses with favorable policies, substantial incentives, cutting-edge infrastructure, and a highly skilled workforce. Mumbai, its capital, stands as India’s commercial heart, hosting prominent banks, financial institutions, and the Jawaharlal Nehru Port—the largest container port in India, facilitating exports like pharmaceuticals, gold, and precious stones. Aurangabad is emerging with seven SEZs, and the Pune-Khed-Chakan-Talegaon corridor is thriving with automotive and IT industries, cementing Maharashtra’s role as an industrial powerhouse.

Delhi and the National Capital Region (NCR) Delhi has rapidly developed as a prominent manufacturing hub, achieving a GSDP of approx USD 133 billion (INR 11.07 lakh crore)  in FY 2023-24. Despite being landlocked, Delhi excels in manufacturing and exporting with its 26 planned industrial estates and warehouse capacity of 19,646 metric tons annually. NCR, which includes parts of Haryana and Uttar Pradesh, stands out for its automotive and ESDM industries. This strategic region is an ideal destination for international manufacturers looking to tap into India's domestic and global markets.

Karnataka Karnataka has positioned itself as a manufacturing and innovation leader in southern India. Known as India's top software exporter, the state is also a key player in heavy electrical and special-purpose machinery. Bengaluru, the state capital, is home to major sectors including IT, aerospace, and biotechnology, and hosts national giants like ISRO and Hindustan Aeronautics Limited. With single-window clearances, robust infrastructure, and a highly skilled talent pool, Karnataka is a natural choice for investors.

Tamil Nadu With three major ports, Tamil Nadu serves as a leading hub for manufacturing and exports. The state has thriving industries in automotive, textiles, engineering, and software services, with Chennai and the Tirupati-Nellore-Chittoor corridor driving growth. In FY 2023-24, Tamil Nadu’s GSDP reached INR 28 lakh crore, with merchandise exports of USD 35.17 billion in FY22. Its abundant SEZs, business-friendly policies, and top-notch educational institutions make Tamil Nadu a sought-after manufacturing base.

Gujarat Gujarat is set to become a USD 1 trillion manufacturing hub by 2025-26, with its manufacturing sector contributing 45% to the state's economy in FY 2022-23. Competitive land prices, streamlined policies, and last-mile connectivity are among the factors attracting investments here. Ahmedabad, Gujarat’s commercial center, is a hub for industries like textiles, chemicals, food processing, and pharmaceuticals. With a projected GSDP of approx USD 334 billion (INR 27.9 lakh crore)  for 2024-25, Gujarat is a prime choice for companies entering India.

Why Manufacture in India?

India offers a wealth of advantages to manufacturers, including a consumer base set to become the world’s fifth-largest by 2025. With a coastline spanning 7,500 km and 200+ ports, India’s logistics infrastructure is rapidly growing, projected to reach over 3,300 MTPA by 2025. India's alignment with global IP standards, arbitration reforms, reduced corporate taxes and boosted FDI further enhance the appeal of manufacturing in India.

From ease of business to a vast young workforce, India provides the ideal landscape for manufacturing success.

Benefits of FDI in India’s Manufacturing Sector

With policy reforms, infrastructure advancements, and a skilled workforce, India presents a compelling case for Foreign Direct Investment (FDI) in manufacturing. For India, FDI brings numerous advantages, including:

• Job Creation and Skill Development: FDI generates employment for both skilled and unskilled workers, fostering opportunities for upskilling and contributing to employment growth across sectors.
• Infrastructure Growth: Manufacturing requires robust infrastructure, and FDI plays a pivotal role in developing underdeveloped regions into thriving industrial hubs, which stimulates local economies and enhances social and industrial ecosystems.
• Exchange Rate Stability: Consistent FDI inflows help the Reserve Bank of India maintain strong foreign exchange reserves, contributing to more stable exchange rates and financial resilience.
• Boost to Exports: Increased manufacturing capacity from FDI boosts exports, as many products find global markets, enhancing India’s export revenue and economic growth.

Key Advantages for Foreign Investors in India’s Manufacturing Sector

• Expansive Market and Skilled Workforce: With a population exceeding 1.4 billion, India offers a vast consumer base for manufacturers. The country’s young, skilled workforce, fluent in English and highly adaptable, further strengthens its appeal. Additionally, India's strategic location and extensive network of ports make it an ideal hub for international trade and logistics.
• Robust Supply Chain Ecosystem: India boasts a resilient supply chain infrastructure across industries. As the world’s second-largest textile producer and a leading exporter, India also ranks high in steel production and iron ore reserves. With 23 operational oil refineries and expanding crude production, the country provides an integrated supply chain for sectors from textiles to oil and gas to pharmaceuticals, making it ideal for foreign manufacturers seeking secure and resource-rich environments.
• Attractive Tax Incentives: In the Union Budget 2024-25, India introduced a 15% concessional corporate tax rate for eligible new manufacturing firms, and the government now permits 100% FDI in satellite manufacturing. Further incentives under the Maritime Amrit Kaal Vision 2047 include tax holidays, reduced port fees, and other benefits designed to attract FDI and enhance infrastructure.
• Special Economic Zones (SEZs): India’s SEZs offer significant benefits for foreign investors, including tax exemptions, customs duty waivers, and reduced license fees. Recent reforms also simplify compliance in SEZs by amending the IFSCA Act, eliminating dual regulations under the SEZ Act, and enhancing the ease of doing business for foreign investors.

These advantages position India as a compelling destination for global investors looking to establish a manufacturing footprint in one of the world’s fastest-growing economies.

From Make in India to Made in India: The Rise of a Manufacturing Giant

India’s strong domestic demand and vibrant export potential have solidified its standing as one of the world’s most promising manufacturing hubs. At the forefront of this transformation is the Make in India initiative, launched in 2014. In synergy with the Atmanirbhar Bharat Abhiyan and the Production-Linked Incentive (PLI) scheme, this initiative has been pivotal in establishing India’s position as a global manufacturing force.

While Atmanirbhar Bharat focuses on self-reliance, the PLI scheme, with a substantial allocation of approx USD 26 billion (INR 1.97 lakh crore), is designed to spur domestic production across 14 key sectors.

Under the leadership of the Prime Minister of India, the Make in India movement has set India on a path toward becoming a hub for manufacturing, design, and innovation across 27 sectors, including defense, electronics manufacturing, and textiles.

A few examples illustrate this progress: a wholly owned subsidiary of a pioneer in India's electronics manufacturing sector is setting up the nation’s first semiconductor fabrication unit in Dholera, Gujarat, with a significant USD 11 billion investment. Meanwhile, A big Mobile Phone Manufacturing Company has soared to USD 14 billion, showcasing the success of Make in India for the global market.  In the defense sector, the initiative has driven exports up by approximately 32% in FY 2023-24, surpassing the approx USD 2.6 billion ( INR 21,000-crore ) milestone.

Multiple cities across India are evolving as growth corridors, specializing in sectors like automobiles, petrochemicals, and pharmaceuticals, while the central government actively nurtures a production-oriented mindset nationwide.

Supporting policies that focus on tax reform, sustainable practices, and future-ready infrastructure have created a conducive environment for both foreign investments and local manufacturing. As India’s manufacturing sector continues on its growth trajectory, it is on track to surpass its projected growth rate of over 8%.

In this evolving landscape, initiatives fostering foreign investment and aiding indigenous manufacturers are ensuring that India’s journey toward global economic prominence remains grounded in innovation, sustainability, and resilience.