March 14, 2024: With the growth of the Indian manufacturing sector driven by favourable government policies and initiatives, the leased factory spaces recorded 13.8 million square foot (msf) in 2023 compared to 3.2 msf in 2020, according to a JLL India report. The same is projected to reach around 16 msf by the end of 2024.
Real estate consultancy firm JLL India released the report titled ‘Make in India 2.0: Catalyst for Manufacturing Growth,’ on March 14, 2024, providing insights into the factors driving the growth of India’s manufacturing sector and the lucrative opportunities that await investors seeking to participate in country’s manufacturing success story.
Yogesh Shevade, Head of Logistics & Industrial, India, JLL, said, “Leased manufacturing spaces provide the fastest real estate entry routes to manufacturers in most non-polluting industries in India. Ready and built-to-suit leased factories also provide the ‘capex-light’ advantage to manufacturers as the cost of land and buildings is outsourced to developers, acting as a risk mitigation tool.”
The report stated that the growth is amply highlighted by the fact that the total leasing of manufacturing spaces has increased 4.5 times, from 3.2 msf in 2020 to 13.8 msf in 2023. Within the manufacturing segment, several industries are leading the leasing trend. Engineering, Automotive and Electric Vehicle sectors account for almost 70% of the leasing in 2023.
Electronics and White Goods manufacturing account for a significant share of leasing, at approximately 14%. Other sectors that have made a mark in leasing spaces include renewable energy, packaging, life sciences, consumer goods, FMCG and medical devices.
Shubhendu Kumar, Director, Miebach Consulting Group, said, “India has emerged as a significant alternative in the regionalisation of manufacturing supply chain in the world. Additionally, the huge consumer base of almost 18% of world’s population, makes India a favourable destination for most manufacturing companies.”
The report mentioned that India plans to become a USD 1 trillion export economy by 2030, which will be led by the manufacturing sector. In fiscal year 2023, manufacturing exports reached an all-time high of USD 447.46 billion. Investments are pouring in from both domestic and foreign sources. Following the Covid pandemic (April 2020 to March 2023), more than one fourth (26%) of all Foreign Direct Investments (FDI) were directed towards the manufacturing sector. Key sectors such as Electronics, Electric Vehicles, Renewables, and Life Sciences have been instrumental in driving this growth, along with high–focus sectors like Semiconductors. The Production-Linked Incentive (PLI) scheme has played a crucial role in accelerating project commencement and creating employment opportunities, leading to income growth. Smart factories of the future rely on advanced construction technology and monitoring systems guided by the principles of Industry 4.0.
Manufacturing projects now focus on transitioning from project to product, starting from the business plan stage and continuing through to the operations stage. The emphasis is on developing key skills to become a product project manager, focusing on the overall lifecycle of the product rather than specific project milestones.
Looking ahead, India aspires to become a truly self-reliant, developed nation by 2047, in celebration of 100 years of independence. The goal is to become the world’s second-largest economy with a GDP of USD 32 trillion, with the manufacturing sector contributing USD 6.2 trillion to the economy, the report said.
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Harini is a content management professional with over 12 years of experience. She has contributed articles for various domains, including real estate, finance, health and travel insurance and e-governance. She has in-depth experience in writing well-researched articles on property trends, infrastructure, taxation, real estate projects and related topics. A Bachelor of Science with Honours in Physics, Harini prefers reading motivational books and keeping abreast of the latest developments in the real estate sector.
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