By Prashanth Prakash
In 2014, India had just two mobile phone factories. Today, we have over 200. Last year, smartphone exports surged to $24.1 billion, making them India’s single largest export category—surpassing even oil and gems. This isn’t just a policy win or a supply chain shift. It’s a signal. The world is waking up to India's potential not just as a consumer of global products, but as a producer—of IP, precision, and scale.
As the fastest-growing major economy in the world, India must now chase its next economic identity. It’s time we earned the tag of global manufacturing powerhouse. The building blocks are already in place—and advanced manufacturing is the lever that will get us there.
The Winds Are Finally at Our Back
India’s manufacturing output reached $471 billion in FY24. By FY30, it is expected to nearly triple to $1.3 trillion, growing at an impressive 18% CAGR. Our share of global goods exports is projected to rise from 1.7% today to nearly 3% by the end of the decade. But the real story isn’t just in the topline—it’s in what’s driving it: not cheap labor, but original R&D, automation, and system-level innovation.
Geopolitics is helping. As China’s dominance softens, the world is de-risking its supply chains. India’s share of U.S. imports rose from 2.3% in 2019 to 2.8% in 2022, while China’s dropped from 18.1% to 13.4% in the same period. Apple, Samsung, Foxconn, Micron, and dozens more are shifting production to Indian soil.
Meanwhile, the government is doing its part—most notably with $25 billion+ in
Production-Linked Incentives (PLIs) across nine sectors. Strategic missions in semiconductors, battery storage, green hydrogen, and defense procurement are reinforcing the signal: India is open for industrial reinvention.
And we have the people—but not without caveats. India produces over 1.5 million engineers a year, more than any other country. Our median age is just 28, and English proficiency is high, especially in technical roles. But quantity has long outpaced quality. Many graduates still lack hands-on skills or industry alignment. Advanced manufacturing talent—in R&D, systems integration, or automation—is particularly scarce.
That said, the tide is turning. State-led skilling missions, industry-backed programs, and a new wave of build-first engineering culture are starting to close the gap. And when the alignment clicks, the outcomes are world-class. India’s engineering bench strength, once fully activated, will be our deepest competitive moat.
What I am Seeing as an Early-Stage Investor
From where I sit, the change is palpable. Today’s manufacturing startups don’t look like factories. They look like deep-tech companies in disguise. They’re not assembling—they’re architecting.
We find it useful to think of advanced manufacturing in three archetypes:
* Process innovators—startups that use software, chemistry, or AI to radically improve how things are made. Think cleanroom molding, real-time sensor feedback, or waste-free continuous flow chemistry.
* Equipment-led innovators—those building proprietary machines or raw materials that unlock new capabilities. Whether it's high-yield actuators or next-gen automation platforms, these startups are creating the picks and shovels of modern industry.
* Product-led innovators—companies pushing the boundaries of what finished goods can be. New form factors, embedded firmware, or India-specific durability layers—without overhauling the production kit.
Across our portfolio, we’re seeing these archetypes in action. From Scimplify to ElementRe to Unmand, Indian startups are solving non-trivial, system-level problems that require original IP—and in many cases, they’re leapfrogging legacy players.
Five Bets Where India Will Win
Looking ahead, I’m most bullish on five sectors where India can compete globally:
1. Electronics & Electricals: Projected to triple from $200 billion to over $600 billion by 2030, driven by mobile manufacturing, defense localization, and rising exports. PLI incentives have already catalyzed ₹14 lakh crore in output.
2. Aerospace & Defense: Make-in-India mandates and dual-use applications (like drones, anti-drone systems, and simulators) are unlocking a $16T+ pipeline. Companies like Zen Technologies and Solar Industries are now posting 70%+ gross margins.
3. Automotive: EV componentry, embedded software, and precision mechatronics are redefining India’s auto exports. Firms like Minda are building IP-led systems for next-gen vehicles—not just parts.
4. Chemicals: Players like Deepak Nitrite are deploying process innovation (e.g., continuous flow reactors) to serve high-purity verticals in electronics and pharma—earning them premium multiples.
5. Medical Devices: With cleanroom automation and micro-molding, startups are making surgical-grade products at global standards. Poly Medicure, for instance, boasts a 67% gross margin.
These aren’t commodity plays. They’re defensible, high-margin, and IP-driven businesses where India has both a domestic need and global demand.
The Decade Is Ours to Claim
This is more than a manufacturing moment—it’s an industrial pivot. With the right capital, talent, and policy alignment, India can move from back office to backbone. We’ve already proven ourselves in software and services. Now we have a chance to prove that India can build—not just digitally, but physically.
If we get this right, we won’t just participate in global manufacturing—we’ll shape it.
(Prashanth Prakash, Partner at Accel, a leading global VC firm.)
Views are personal and do not represent the stand of this publication.
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