Additional potential of $ 320 billion in 11 manufacturing value chains in India: McKinsey, US-based


High Potential Value Chains Can More Than Double India’s Manufacturing GDP

Scaling up 11 key manufacturing value chains in India could generate around $ 320 billion more in gross value added (GVA), thus boosting the country’s ability to operate in international markets, according to a McKinsey report Global Institute. In FY2020, the manufacturing industry generated 17.4% of the country’s GDP, slightly more than the 15.3% it contributed in 2000, the research arm of the firm said. American McKinsey management consultancy.

The report comes at a time when the country’s GDP or gross domestic product fell a record 23.9% between April and June and is set to record its worst annual contraction in four decades. The country’s GVA fell 22.8% in the quarter ended June 30.

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McKinsey identifies the following value chains in its report:

  • Vehicles and vehicle components
  • Equipment and machine tools
  • Medicines
  • Chemicals and related products
  • Agriculture and Food
  • Metals and basic materials
  • Clothing and textiles
  • Furniture, leather and rubber
  • Electronics and semiconductors
  • Aerospace and defense
  • Renewable energy

According to the report, around 80% of this potential is based on six value chains: chemicals and petrochemicals; agriculture and food processing; electronics and semiconductors; capital goods and machine tools; iron ore and steel, as well as automotive components and vehicles. However, he also stressed that the country’s manufacturing sector needs to specialize to become its engine of economic growth.

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Here are some other findings from the report:

  • Manufacturing growth in India has been slower than expected in the past
  • From 2005-06 to 2011-12, manufacturing GDP grew almost 9.5 percent year on year
  • Growth fell to 7.4% over the next six years
  • COVID-19 has exposed the vulnerability of global supply chains for food, energy, vehicles, drugs, telecommunications, electrical equipment, etc.
  • However, countries like India, which have yet to fulfill their potential manufacturing promise, may not be ready to take full advantage of dynamic global changes.
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With some relevant reforms and complementary actions from manufacturing companies, it is estimated that the identified manufacturing value chains can generate about $ 320 billion more in GVA over the next seven years, the McKinsey Global Institute said in its report.


High potential value chains can more than double the country’s manufacturing GDP and could become an engine of economic growth, boosting the employment sector, he added.