Manufacturing industry trends to look forward to in 2023
The Indian manufacturing industry continues to outperform forecasts from prior years despite supply constraints, a manpower deficit, and an unstable economic climate. Turning challenges into opportunities is the overarching theme for the manufacturing sector going into 2023. The sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity. India is making slow but steady progress toward Industry 4.0 thanks to government initiatives like the National Manufacturing Policy, which aims to raise manufacturing's GDP share to 25 percent by 2025 as per IBEF, and the PLI scheme for Manufacturing, which was introduced in 2022 and aims to bring India's core manufacturing sector up to par with international manufacturing standards.
With digital technologies, implementing strategies for the future of work, and promote supply chain resilience in order to sustain this growth, our 2023 perspective looks at a few trends in the manufacturing sector mentioned down below that might help businesses capitalise on growth and turn risks into benefits.
India is making slow but steady progress toward Industry 4.0 thanks to government initiatives like the National Manufacturing Policy, which aims to raise manufacturing's GDP share to 25 percent by 2025
Tackling Supply Chain Disruptions
Despite being a major trend we'd all prefer to put to rest in 2022, supply chain disruption seems to be here to stay. The current outlook is less than positive due to factors like rising inflation (and consequently higher freight costs), driver and labour shortages, logistics problems brought on by factory closures, geopolitical conflicts in key sourcing regions, and changing weather patterns due to climate change that jeopardise viable shipments. Manufacturers are, nevertheless, keen to make the best of a poor position, starting with in sourcing, as we have observed.
Some manufacturers opt to cut out the middleman by buying logistics firms or creating their own internal logistics operations rather than relying on third-party logistics companies to handle fulfillment. Due to more efficient logistics networks, this strategy enables better supply chain visibility, superior quality control, and decreases in shipping costs and time.
D2C Model gets more Prominence
Manufacturers are also switching to a direct to consumer sales approach in place of the conventional multi tiered channel sales model, in which product flowed from manufacturer via wholesaler or distributor to end customer. Similar to in sourcing this strategy cuts out the middleman giving source manufacturers greater control over their pricing and brand image while also allowing them to forge stronger bonds with their original equipment manufacturer clients. Some businesses have even used this strategy when dealing directly with their suppliers rather than going through a middleman, resulting in a more integrated supply chain.
Reshoring & Insourcing
Reshoring, or bringing imported products or components to domestic production, was already well on its way to becoming a standard procedure among US-based manufacturers prior to 2022. Along with this renewed attempt at reshoring, manufacturers also have been reevaluating their sourcing. The disruption of the global supply chain has made it difficult for manufacturers to obtain components from other nations. Many manufacturers have responded to this by near sourcing or looking for alternative countries or geographies as strategy to diversify their sources of supply. In manufacturing, near sourcing, often referred to as local sourcing, is the process by which a company moves activities closer to the market for its finished product. Typically, it means obtaining raw materials from domestic suppliers.
Reducing Dependency on China
As a result of its poor product quality, trade conflicts, and border issues, India is currently in an excellent position to benefit from the Chinese deteriorating competitiveness. Additionally, India is changing its trading approach to benefit from the growingly popular China plus one model. This is simply a strategy in which enterprises avoid investing just in China and spread their activities to alternative places. A prohibition on the importing of Chinese goods has opened up enormous potential for Indian businesses. The Indian manufacturing industry may contribute more than $500 billion annually to the global economy by 2030. India's ease of doing business ranking increased dramatically from 142 in 2014 to 63 in 2020.
India is a desirable location for foreign manufacturing ventures. Numerous companies, including those from the luxury, automobile, and mobile phone industries, have already established or are planning to do so in the nation. The Samarth Advanced Manufacturing and Rapid Transformation Hubs programme is one of the ministry for Heavy Industries & Public Enterprises of the Government of India's initiatives. This should improve the manufacturing industry's ability to compete in the market for capital goods. The Government seeks to ensure the overall growth of the country by placing emphasis on the development of industrial corridors and smart cities. The corridors will also support advanced manufacturing practises by integrating, monitoring, and creating an environment that is conducive to industrial development.
India is currently ranked as one of the most popular manufacturing area in the world. The growth of India's manufacturing sector is being fueled by the creation of industrial clusters, the automatic route's allowing of FDI up to 100 percent, the availability of bank loans, and other reasons. Indian manufacturers must focus on developing cutting-edge products, exploiting export opportunities, focusing on productivity & efficiency through technology implementation target global volumes to gain global cost competitiveness, and more to grow at an exponential rate.