Mumbai: As per JLL’s latest report, “India Manufacturing Reimagined: Now & Beyond’, India now stands at the pedestal of a new growth curve of industrialisation, driven by technological prowess, inventive disruptions and some welcome policy changes. As such 2021 marks the beginning of deeper penetration of manufacturing. The years beyond 2021 are expected to see robust growth in manufacturing. Irrespective of several short-term challenges, increased demand from consumer and large enterprises, will support the growth of industrialisation driven by strong fundamentals.

Given the several advantages, built manufacturing spaces offer, a very healthy growth in the space if expected in in the coming 2 – 3 years.

The changing dynamic of manufacturing and distribution supply chain, catalysed by the pandemic in 2020, has created a significant window of opportunity for India to emerge as a global manufacturing hub. According to an estimate by Government of India, manufacturing has an opportunity to reach approximately 25% of its GDP, compared to 15% in 2019.

“Built manufacturing spaces for leasing offers several advantages (including but not limited) to faster entry in high-end / globally comparable specifications, CapEx to OpEx conversion, easy approvals for many sectors, etc. Additionally, incentives are available under several buckets for manufacturing in such built space. In near to medium term, outlook for such flexi, fast and customised (BTS) options in manufacturing are expected to be very strong.” said Yogesh Shevade, Head – Industrial Services, India, JLL.

Manufacturing – ‘Double Engine’ Nitro Boost

While regionalisation of supply chain triggered the transformation of the manufacturing sector, India further delved to strengthen its core by the ‘Atmanirbhar Bharat’ or ‘Self-reliant India’ initiative (launched in May 2020). With an objective of reducing dependence on imports and focusing on existing strengths, Atmanirbhar Bharat, has put India on a ‘Double Engine Growth Path’ with the engines being- Make in India 2.0 & Atmanirbhar Bharat.

In the manufacturing space, India’s primary vision is about building manufacturing competitiveness through economies of scale, reducing imports, increasing exports and boosting domestic demand.

• Economies of Scale – Creating ecosystem and enabling environment for industrial sectoral growth not only for the larger manufacturing units but also for their ancillary and vendors. 
• Reduce Imports – Conscious efforts to selectively choose sectors with high potential for domestic manufacturing and promotion of those in order to reduce imports. 
• Increase Exports – Make necessary policy changes to make India globally competitive manufacturing destination boosting exports
• Boost Demand – Boost domestic demand by restructuring sourcing norms/ guidance and remove policy bottlenecks

Leased Manufacturing Spaces Absorption is Gaining Strength

Interestingly, demand for leased manufacturing spaces has gained strength in the country in 2020 with Gross Absorption of 6.6 million sq. ft. in top eight cities. Notably, Chennai, Pune and Delhi NCR have been in the pole positions in 2020, with nearly 3/4^th of the total leased manufacturing absorption. Chennai and surrounding areas topped the chart with over 36% of absorption driven by pro-active governance, developed manufacturing ecosystem, proximity to multiple seaports, etc. Pune stood second with around 20% of manufacturing-built lease supported by strong ecosystem, organised supply and a large immediate catchment of urban conurbation of Pune and Mumbai. Delhi NCR emerged a close third with 18% of such absorption in 2020 backed by strong manufacturing demand from sectors including but not limited to electronics & mobile manufacturing, electrical equipment, white goods, packaging. Ahmedabad, Bengaluru, Mumbai & Hyderabad have also shown strong growth trends driven by sector specific requirements.

Table: India Leased Manufacturing Absorption / Leases, 2020

Cities	Outlook	Key Regions / Submarkets of Significance
Chennai +	*****	Oragadam, Mannur, Marai Malai Nagar, Vallam, Tada / Sricity (AP)
Pune	****	Chakan, Talegaon, Nagar Road – Ranjangaon, Bhosari
Delhi NCR	****	Noida, Greater Noida, Manesar, Sonipat, Faridabad
Ahmedabad	****	Changodar, Bavla, Kheda, Vitthalapur – Becharaji, Kalol
Bengaluru	****	Hoskote, Dabaspete – Nelamangala, Bommasandra, Attibele
Mumbai	****	Taloja, Thane vicinity, JNPT Vicinity
Hyderabad	***	Patancheru, Shamirpet, Medchal, Shamshabad – Kothur
Kolkata	**	Sankrail – Dhulagarh – Uluberia, NH 02 Dankuni Vicinity
India	****	6.6 million sq. ft. of Gross Absorption.

Source: JLL Industrial Services. ***** = Strongest future outlook, * = Weakest future outlook. Gross Absorption = Net Absorption + Churning + Renewals

Note: Chennai + = Chennai and its surrounding area including Tada, Sricity, etc. Interestingly, there are multiple regions/ sub-markets in addition to the key locations mentioned below which together contributed to the manufacturing absorptions and in many cases, they are beyond the major corridors 

India Manufacturing Greenfield FDI Performance, 2020

In the regionalisation battle to attract manufacturing investments, India stands out in 2020. Deeper look into announced greenfield manufacturing FDI projects in 2020, reveals that India leads the pack among MITI-V countries (Malaysia, India, Thailand, Indonesia and Vietnam) with the largest number of projects announced as well as investment committed in 2020. 

The ‘Double Engine’ Nitro Boost from Make in India 2.0 and Atmanirbhar Bharat can truly be seen from a plethora of investment announcements, MoU signed and commissioned plants in India in 2020. Investments are proposed across all major sectors of focus i.e. Electronics, Renewable Energy, Auto, EV and Batteries, Electricals, Pharma, Food processing, Defense Manufacturing, Steel & Metallurgy etc.