Companies across the world are looking at new locations to set up their new manufacturing hubs or moving their manufacturing hubs away from China, thanks to several geopolitical and economic compulsions and constraints. And India and Southeast Asia seem to gain the most out of such moves by global companies to de-risk their supply chains. Consider what Chandranath Dey, Head (Operations &
Business Development), Logistics & Industrial, India, JLL, has to say about this new trend.
“The Make in India initiative, Industrial Corridor Development Program, Production-Linked Incentives (PLI), India Semiconductor Mission, and National Logistics Policy are a few policies and initiatives that have helped propel the India story globally today. Not just that, the country’s demographic dividend and its being one of the largest consumer markets in the world make India an attractive proposition over other SEA countries.
Manufacturing companies are exploring innovative transaction structures to complement their timeline targets and funding strategies in India,” said Dey. In fact, over the past few years, companies have begun exploring the relocation of manufacturing outside of China.
According to JLL analysis, the impact has been mostly felt in the destination country, especially in Southeast Asia and India. As a result, governments are supporting these opportunities and implementing more policies that aim to boost their local economies. manufacturing industries, placing a premium on land availability and access to capital sources. Interestingly, the driving force behind this trend is not only the need for supply chain diversification but also to capitalize on the strong economic fundamentals of this region, including a large population and labor pool, favorable costs, and various incentives. From a manufacturing investment perspective, these factors position SEA and India as major manufacturing hubs for global markets. Significantly,
“Make in India 2.0′ continues its impressive trajectory, fueled by a remarkable 55 percent increase in foreign direct investment (FDI) equity inflow in the manufacturing sector from 2014 to 2023, reaching a substantial $148.9 billion, compared to $96 billion between 2005 and 2014. This robust growth is further evidenced by a notable 4.5-fold increase in leasing activity for light manufacturing spaces in 2023, as compared to 2020, with projected year-on-year growth of nearly 25 percent in 2024.
India’s growth story unfolds with remarkable contributions from the engineering, automotive, electronics, and white goods sectors, driving the growing demand for light manufacturing. “These thriving industries require spaces with advanced specifications, leading to a substantial 35 percent of manufacturing leasing being garnered through built-to-suit transactions. The remaining 65 percent is dominated by ready-built transactions, underscoring the eagerness of manufacturing companies to swiftly occupy readily available stock. Pune, Chennai, and NCR Delhi have emerged as prime destinations, luring manufacturing companies with their robust manufacturing ecosystems and well-developed infrastructure,” said Dey.
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