It is said that “when all the stars align, magic happens”. The probability of a successful outcome is far higher  when stars are aligned. COVID coupled with domestic reforms has aligned all the stars for India’s  Manufacturing Renaissance in times to come for reasons outlined herein. 

“No country is ever successful in the long term… without a really strong and vibrant manufacturing base.”  Alan Mulally, Former President & CEO of Ford Motor Company. 

Countries with a lower manufacturing contribution are extremely vulnerable to external shocks – e.g. Sri  Lanka as it stands today, India in 1991, Greece post the 2008 financial crisis, to name a few. India opened manufacturing post the crisis and saw a good progress in the 90s but again lost focus largely due to  abundant cheap imports from China. But this time, if India is aspiring to be a USD 5 tn economy and to lift  the living standards of her vast population, it is very risky and hard to do without any manufacturing  prowess. Thus, it is very critical that India promote, develop, and build local capacity and capabilities. 

Every crisis brings some “SHIFT”. TAdditionally, the Pandemic brought 2 major structural SHIFTs in the  sectors of Manufacturing and IT. Carnelian Asset Advisors believe this time India’s manufacturing sector will thrive and create generational wealth.  

Let us examine the enablers and outcome of the trillion-dollar mega opportunity: 


  • 4Ds: A Combination of the 4D’s is a big factor in the equation for the manufacturing eco system to flourish. India with its 4Ds (Demand, Demographics, Democracy & Domestic markets) has a clear edge over other geographies. 
  • Cost competitiveness: It is now well established that India’s cost competitiveness has increased over the years due to rising costs in China. India’s labour cost is 1/3rd of China (USD 800 in China vs USD 250 in India), power costs are similar, taxation is lowest (lowest globally) – this provides India a competitive  edge to increase its share in global manufacturing. India lags in terms of economies of scale where  China has a distinct advantage.  
  • Atma Nirbhar Bharat initiative (including PLI & Non-Tariff Barriers): To make Indian economy self reliant, the Indian Govt. introduced the Atma Nirbhar Bharat Abhiyaan with an outlay of INR 20 lakh  crores – equivalent to 10% of India’s GDP. The scheme is designed to reduce the dependence of India on  imports in critical sectors such as semi-conductors, defense, APIs, chemicals, auto and auto ancillaries,  energy needs, data centres, etc. 
  • Capital availability, Capex & Credit growth: Banks are well capitalized now than ever before with Tier 1 capital at its best and leverage at its lowest.
  • Revival of Capex cycle: Government’s capital expenditure as a % of GDP has been on a constant rise, with highest ever amount at INR 7.5tn in the last budget. We expect revival in private capex soon with capacity utilisation inching up. 


When a long-term trend starts, it is initially met with scepticism, but if one focuses on understanding the  underlying drivers/enablers, one can build conviction. We believe that these enablers and the government’s  push to create India as a manufacturing hub will have a multiplier effect on the overall economy (The  Lollapalooza Effect), with a potential to create wealth to the tune of USD 0.8 – 1tn over next 5-7 years. 

India can well increase its share of manufacturing from 16% to 20% of GDP over the next 5 years – thereby  more than doubling India’s manufacturing GDP from USD 450bn to USD 1tn by 2027 – this massive shift,  besides creating jobs, will provide a huge wealth creation opportunity across sectors. The PLI scheme alone  is expected to create 6mn jobs besides helping reduce the CAD. If we assume a 10% salary/wage pay out, on  incremental USD 500 bn manufacturing GDP, the incremental pay-out will be USD 50bn, which is 5x of  MNREGA. Further, this will lead to a multiplier effect in the economy as for every 1 job in formal sector 3  additional jobs get created in ancillary services. We expect it to create a virtuous circle of investment cycle  and higher domestic demand which can provide a big wealth creation opportunity for financial investors. 

Let the Magic Begin!

Carnelian Shift Strategy (PMS) & Carnelian Structural Shift Fund (AIF) have been specifically designed to  participate in above wealth creation opportunity.