India set to boost manufacturing share to 3% of global trade in five years: Accel

India’s manufacturing sector is expected to contribute approximately 3% to the global trade. India's domestic manufacturing sector is poised for significant expansion, with projections estimating it will reach $1.3 trillion by FY30, growing at a CAGR of 18%, according to a recent report on advanced manufacturing. Currently valued at $471 billion, a large portion of this projected growth is expected to come from the advanced manufacturing segment.

Recent data supports this optimistic outlook. An HSBC survey published earlier this month revealed that India's manufacturing sector growth hit a 16-month high in July, with the Purchasing Managers’ Index (PMI) rising to 59.1. The surge was driven by increased new orders and output amid strong demand conditions. Additionally, an S&P Global study from May noted India’s “notable progress” in improving manufacturing competitiveness and attractiveness to global investors.

Venture capital firm Accel, which has invested in 18 manufacturing companies so far, identified multiple tailwinds supporting India’s growth. The report argues that geopolitical shifts particularly US-China tensions are prompting countries and companies to diversify supply chains away from China.

“US-China tariffs impacted over $550 billion in bilateral trade,” the Accel report notes, pointing to legislative efforts such as the US CHIPS Act and the Inflation Reduction Act, which are incentivising domestic and allied-nation manufacturing. Similarly, the EU and Japan are pushing for friend-shoring strategies to reduce reliance on authoritarian regimes.

India’s demographic and talent landscape is also seen as a key advantage. With a median age of 28, India is significantly younger than China (39), Japan (49), and South Korea (44). The report highlights India's growing pool of engineers, English-speaking workforce, and lower talent costs as key factors attracting global manufacturing investments.