Over the last decade, India has quietly built one of the fastest-growing export manufacturing ecosystems in the world.
Engineered goods exports have doubled from $55B in 2014 to $116B in 2025.
It has a simple goal: increase manufacturing’s contribution to India’s GDP and turn India into a global export hub
In the process, India has materially expanded its export manufacturing capacity and attracted sustained foreign capital.
But the real question is: how does it actually change my landed cost models, supplier diversification strategy or my long-term capacity planning?
1. Manufacturing scale has increased – and that changes competitive leverage
There is a production linked incentive (PLI) scheme that was introduced in 2020, which directly ties incentives to incremental production and exports.
This is driving capacity expansion with suppliers investing more in automation, new equipment & infrastructure to support exports.
There are reduced corporate taxes for new manufacturing entities, making it a more attractive place to start a business in India.
Why this matters for sourcing leaders – suppliers expanding capacity with government backed incentives have more pricing flexibility and are actively seeking export programs
2. Foreign direct investment is deepening supplier ecosystems
With this initiative, India significantly relaxed the foreign ownership caps, allowing foreign companies to fully own subsidiaries and fewer mandatory JVs.
And it has paid dividends. Japanese automakers (Suzuki, Toyota, Honda) invested $11 billion combined, Korean automakers (Hyundai, Kia) invested $5 billion. US companies like Ford ($370 million), Stellantis (240 million) are also putting down their footprint.
Why this matters for sourcing leaders – it is showing a track record now to win & deliver critical projects with an aligned, stable government that companies can trust
3. Industrial Corridors & Infrastructure improvements have improved reliability
There were 11 industrial corridors designed to connect manufacturing clusters to ports, highways & freight networks.
Cargo capacity at ports has increased by 87% since 2014. The number of airports has more than doubled since 2014 to over 160 airports now.
There are 276 special economic zones, which are mainly around manufacturing clusters with built-in infrastructure, tax benefits & export incentives for manufacturers.
Why this matters for sourcing leaders – infrastructure expansion improves inland freight reliability and increases confidence when scaling multi-year sourcing programs
4. Supplier Depth has expanded
There were 25 sectors which were identified specifically with 2-3 regions for each sector that would focus on building out a “hub” model for different industries, materials & manufacturing processes.
In the process, they’ve built large automotive ecosystem, strong tier 1 & 2 supplier networks, tool and die capabilities, & export-focused SME manufacturers.
Why this matters for sourcing leaders – deeper supplier ecosystems increase competitive density, which improves pricing pressure and reduces concentration risk
5. Ease of Doing Business Reforms Have Structurally Improved
There are reforms like unified goods & services tax (GST) and consolidated labor codes to make processing & day-to-day operations easier. They also reduced tax fragmentation, simplified compliance & legal ambiguity issues.
Many regulatory processes have gone from paper based to digital systems, improving speed and transparency.
Why this matters for sourcing leaders – reduced tax complexity, improved contract enforcement, and digitized compliance lowers systematic operational risk
Takeaway
India does not need to replace your current supplier base.
But it absolutely should pressure it.
If India is not part of your RFQ and benchmarking strategy in relevant categories, you are voluntarily limiting competitive leverage.
The combination of scale expansion, sustained capital inflows, infrastructure upgrades & supplier ecosystem depth makes India one of the most strategically relevant supply bases to evaluate over the next decade.
Global sourcing leaders who embed India into their benchmarking and RFQ strategy will increase competitive leverage, reduce concentration risk, and strengthen long-term capacity planning.
MESH Works helps you discover qualified Indian suppliers, compare multi-country RFQs, and benchmark landed costs in one structured workflow.
Book a demo to evaluate India confidently in your next sourcing cycle.
