India Emerges as Key Player in Manufacturing Diversification

India is set to benefit from companies diversifying manufacturing hubs away from China, according to JLL. The Make in India 2.0 initiative has driven a 55% increase in FDI equity in manufacturing from 2014-2023, reaching $148.9 billion. Leasing for light manufacturing spaces surged, with projected growth continuing into 2024.

India is likely to be net beneficiaries from companies looking to diversify manufacturing hubs beyond China, real estate consultant JLL said.

''De-risking supply chains will push diversification of manufacturing hubs beyond China... Southeast Asia and India stand out to be net beneficiaries for companies keen to complement or diversify from their existing manufacturing bases in China,'' JLL said. The consultant noted that Make in India 2.0 continues its impressive trajectory, fuelled by 55 per cent increase in Foreign Direct Investment (FDI) equity inflow in the manufacturing sector from 2014-2023, reaching USD 148.9 billion, compared to USD 96 billion between 2005 and 2014.

JLL said there has been a 4.5-time increase in leasing activity for light manufacturing spaces in 2023, as compared with 2020, with projected year-on-year growth of about 25 per cent in 2024.

Over the past few years, companies have begun exploring the relocation of manufacturing outside of China.

''According to multiple sources, rising costs in China over the past decade have served as the primary accelerator of this shift towards diversification. Higher demand for industrial land, coupled with rising wages and material costs, has also pushed up land prices in China, which can be up to two times higher compared to some SEA countries and India,'' JLL added.