India’s Manufacturing Ascent: Legal Framework and Economic Growth.

As global firms diversify their production, India's manufacturing sector is flourishing. India has recently backed initiatives like "Make in India," Atmanirbhar Bharat, and the Production-Linked Incentives (PLI) schemes in an effort to draw in foreign investment in the manufacturing sector. As a result, the economy is predicted to grow to $5 trillion by 2025, with corresponding increases in export and industrial targets. For instance, the government estimates that by 2030, India's exports will total $1 trillion USD. Companies like Siemens, GE, Philips, Samsung, PepsiCo, ABB, and Micron have established significant production facilities in India as a result of the sector's growth. The IMF estimates that India's GDP will grow by roughly 6.4% in 2025–2026, and the Purchasing Managers' Index (PMI) for manufacturing continuously remains in strong expansion territory. In addition to strong domestic demand (India's population  is ~1.4 billion) and improving productivity, this cements India’s status as a preferred manufacturing hub.

Legal and Regulatory Framework.

The legal environment in India has gradually improved for businesses. In recent years, the government has consolidated 29 labour laws into four contemporary labour codes (covering wages, industrial relations, social security, and occupational safety). Companies are incorporated under the Companies Act of 2013. The goal of these reforms is to safeguard employees while streamlining compliance. Incentives were significantly increased when the corporate tax rate for newly established manufacturing businesses (incorporated by March 2024) was drastically reduced from 22% to 15%. India simplified procedures with digital registrations and single-window clearance systems to make doing business easier. For example, many states have reduced red tape by allowing factories to receive approvals through "single-window" procedures.

Regulations for foreign investment are also lenient. Under the automatic route, the majority of sectors permit up to 100% FDI (no prior approval required). Government approval is only necessary in a few sensitive areas (defense, insurance, etc.). India received roughly US$17.96 billion in foreign direct investment (US$11.54 billion in equity) in FY2023–2024. The United States, Singapore, and Mauritius are prominent sources. The government has opened new sectors (such as raising FDI caps in telecom, insurance, etc.) and frequently updates the FDI Policy in an effort to draw in capital and technology. India has more than 42 bilateral and regional trade agreements that lower tariffs with ASEAN, Asia, and other markets. India is typically incorporated into international trade regulations through these agreements and World Trade Organization commitments, providing exporters with guaranteed market access.

Social and environmental regulations are also crucial. India's laws require sustainable practices and it is a signatory to important international treaties, such as the Paris Climate Change Agreement. Land use and industry emissions are governed by important environmental laws such as the Air and Water Acts, the Environment (Protection) Act 1986, and the wildlife/forestry statutes. India has made the noteworthy commitment to achieve net-zero carbon emissions by 2070. In order to do this, the government is promoting "green" manufacturing and rapidly growing renewable energy, with a goal of 500 GW of installed capacity by 2030. For instance, the National Green Hydrogen Mission (2023) and incentives for the production of solar and wind farm equipment are intended to balance sustainability and industrial growth. In keeping with India's commitment to sustainable development, policies now penalize excessive pollution and promote the use of clean energy in factories

Economic Growth and Manufacturing Trends

The economy of India is one of the fastest-growing in the world. Its manufacturing sector contributes about 17.2% of GDP (2024–25), which is higher than in previous decades but still less than the government's target of 25%. Record-breaking investments and capacity expansions were made during the most recent "golden era" of manufacturing. Total capital spending for central infrastructure increased by 11% in 2021–2024 alone, reaching approximately ₹11.1 lakh crore (US$133 billion), which reflects significant public investment in ports, roads, and power that benefits industry. Both manufacturing output and exports are increasing. In FY 2022–2023 exports reached US$776 billion, of which $450 billion came from manufactured goods. Due to increased global demand, exports are expected to reach $900 billion in 2024–2025.
Growth in important industries has been fueled by targeted incentives. Production and exports have already increased thanks to India's PLI schemes for electronics, pharmaceuticals, automobiles, textiles, etc. For instance, after businesses like Apple and Samsung moved assembly to India, mobile phone exports increased from almost zero in 2016 to $20.4 billion in 2024. Supply chains for pharmaceuticals and electric vehicles have also grown quickly. Investors point out that India is a top relocation option for the "China+1" strategy, as businesses are diversifying to India's sizable, affordable base due to growing costs and trade tensions in China.

Projects such as the JK Textile Park in Kathua (Jammu & Kashmir) demonstrate India's investment in infrastructure and industrial parks. Plug-and-play amenities, tax benefits, and top-notch utilities are provided by this and other special zones (for chemicals, electronics, and cars). India is becoming more connected to Southeast Asia and beyond thanks to new port terminals and the PM Gati Shakti program (multi-modal logistics planning), which is reducing transit times. Indeed, studies point out that India is ideally situated to cater to Asia's expanding middle classes due to its advantageous geographic position and trade connections (such as the ASEAN Free Trade Agreement). India has established itself as a key player in regional supply chains by signing free trade agreements with more than 20 nations by 2023, in addition to preferential agreements with other nations.

Competitive Advantages: Labour, Market and Location

The labour pool in India is a big draw. India's workforce is young and trainable, with over 500 million people of working age and a median age of about 28. India's average manufacturing worker made about $59 a month in 2023, far less than China's average of $286. Wages are still relatively low. Low-cost labour, along with English proficiency and skill development (e.g., through government skilling programs), draws labour-intensive industries like electronics, textiles, clothing, and auto components. In terms of demographics, India's consumer base is expanding quickly. With a population of hundreds of millions, the middle class provides a sizable domestic market for manufacturers by driving demand for consumer goods, automobiles, and services.

In addition to labour, India's stability and legal predictability are advantages. As the biggest democracy in the world, it protects contractual rights and the rule of law (for example, through courts and arbitration). WTO-compliant intellectual property regulations have promoted technology transfers in industries like biotechnology and IT hardware. International commitments also increase confidence: India is a signatory to important trade and investment treaties and a member of the WTO. Regarding sustainability, it has endorsed the UN Sustainable Development Goals and the Paris Climate Agreement, which serve as the foundation for its environmental and energy policies. International businesses are increasingly taking these pledges into consideration when choosing locations, favoring countries that encourage green manufacturing, an area in which India is leading the way (see below).

The location is strategically important as well. In comparison to China, India offers shorter shipping routes to the Middle East, Africa, and Europe due to its location between East and West Asia. It serves as an anchor for land corridors and sea lanes that link South and Southeast Asia. India's logistics networks are becoming more integrated thanks to projects like the modernization of the Sagarmala port and connections to the Trans-Asian Railway (North-South Corridor). All of this implies that companies can quickly access markets in Asia-Pacific and obtain inexpensive inputs from India.

Sustainability and International Commitments

India has pledged to be more sustainable as its manufacturing sector grows. India will attain net-zero carbon emissions by 2070, according to Prime Minister Modi, who is spearheading new "green" policies. Cleaner fuels and equipment are being promoted (and in some cases required) for factories. To cut emissions, for instance, the big polluters, the steel and cement industries, are spending money on carbon capture and substitute materials. Manufacturing plays a role in the drive toward renewable energy. As of 2025, India has 209 GW of renewable capacity (solar, wind, etc.), and its domestic production of solar panels and wind turbines is growing quickly. Another area of focus is the production of electric vehicles; EV adoption targets guarantee a green market, and the government's PLI schemes strongly encourage the production of EV components.

In conclusion, India combines a robust manufacturing growth momentum with a supportive legal framework (such as simplified approvals, tax incentives, and contract law). It provides a sizable market, inexpensive labour, and developing infrastructure within global frameworks. Even though there are still obstacles to overcome, particularly in the areas of improving worker skills and infrastructure, India's path is obvious. India wants to become a global production powerhouse and increase manufacturing to 25% of GDP with consistent reforms and investment.

By: Md Irshad Ahmad, B.Tech(Mechanical), LLB. Advocate, Supreme Court of India