Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 55.2 in August 2025. 

This indicates an expansion in manufacturing activities, albeit at a slower rate compared to the previous month. 

Meanwhile, Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) recorded an index value of 68.9 in August 2025, indicating a further expansion in services activities, following a similar trend observed in the same period last year.

Business activities continued to expand in August 2025, supported by the improvements observed across many sectors.

According to the Central Bank of Sri Lanka, all sub-indices remained above the neutral threshold during the month.

The expansions in New Orders and Production sub-indices during the month were largely attributable to the performance of the food and beverages manufacturing sector. 

The Stock of Purchases sub-index also recorded an expansion, in line with the New Orders and Production activities. 

Employment sub-index remained in the positive territory during August, indicating favourable Employment conditions. 

Meanwhile, the Suppliers’ Delivery Time continued to lengthen during the month, with some respondents reporting delays in international shipping.

Expectations for manufacturing activities over the next three months remain positive, largely underpinned by the anticipated seasonal demand towards the year-end. (Newswire)

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Traditionally heavily reliant on foreign suppliers for defence equipment, India has significantly reduced its dependence on defence imports over the last 14 years, marking a major shift in its defence strategy and policy.

According to a report by Kotak Mutual Fund, India, which in 2010 was the largest importer of defence equipment, slipped to fourth place in 2024. In 2010, India accounted for 11 per cent of the world’s total defence imports, making it the top importer globally. Pakistan, with 9 per cent, Australia, at 6 per cent, and South Korea, at 5 per cent, followed suit. Countries like Saudi Arabia, the United States, Singapore, and China each had a 4 per cent share, while Algeria and Portugal accounted for 3 per cent each. The remaining 47 per cent was shared among other countries.

The report stated that this decline is the result of India’s focus on indigenisation and strengthening domestic defence manufacturing. As per the 2024 data, Ukraine has become the world’s largest importer of defence equipment accounting for 18 per cent of the global imports. This sharp rise has been attributed to the ongoing Russia-Ukraine war, which has pushed Ukraine’s demand for military equipment. Poland has emerged as the second-largest importer, with a 5 per cent share of global imports, followed by the United States in third place, with a 4 per cent share.

India now shares the fourth position along with Qatar, Saudi Arabia, South Korea, and Australia, each holding a 4 per cent share of global imports. Other countries, like Japan and Pakistan, each account for 3 per cent of the global imports. The “Others” category, which includes all remaining nations, remained unchanged at 47 per cent in both 2010 and 2024. This major change highlighted India’s defence manufacturing progress and reduced dependency on foreign arms.

The Kotak report also noted that the government’s push for domestic defence production has helped reduce imports and improved defence exports.India’s defence exports have seen strong growth in recent years, registering a compound annual growth rate (CAGR) of 41 per cent since 2017. The exports have increased from ₹15 billion in 2017 to ₹236 billion in 2024. The report concluded that India’s defence sector is becoming more self-reliant, contributing to both national security and economic growth. (ANI)

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Many supply chain leaders are diversifying their supply chains across global regions to reduce risk and increase flexibility in costs and lead times. 

International instability doesn’t help. 2024 presents many geopolitical headwinds, only exacerbating global tensions on supply chains. Based on research done by the Wall Street Journal, geopolitics is directly increasing supply chain costs. As a result, many companies are anticipating additional shockwaves as tensions mount in critical markets.

For supply chain leaders, this means exploring emerging global supply chain regions for diversification. India is one of those promising new regions. According to International Monetary Fund estimates, India will be the world’s third-largest economy by 2027, with a GDP of $5 trillion—bypassing Germany and Japan. Additionally, India has the second-largest English-speaking population globally and focuses on STEM education, with over 2 million graduates annually. This combination of an increasingly well-educated workforce and its strategic location near the Middle East, Europe, and West Africa, to SE Asia and E Asia, bolstered by well-established sea routes, make India an ideal place to do business.

India’s Emerging Role in the Global Supply Chain

According to the India Review, “India is emerging as a reliable alternate destination for manufacturers and supply chain diversification due to its large labor and consumer base, low operating costs, and linkages to important international markets.” India is also appealing because of its strong economy, relative ease of doing business, and an increasing number of sectors open to foreign investment. I believe that India is poised to be a significant center of commerce moving forward. 

Indian Government Incentives That Support Manufacturing

Companies like FedExFedEx 0.0%, Foxconn, AppleApple 0.0%, and many well-known electronics, aerospace, and medical device companies are scaling up India operations. Part of the reason is likely the incentives. The National Policy on Electronics (NPE), established in 2019 to position India as a global hub for electronics, encouraged the development of core components like semiconductor chips, graphics chips, motherboard chipsets, and other computing devices. This led to improved competitiveness globally for the electronics industry. Next, the Production Linked Incentive (PLI) program for large-scale electronics manufacturing offered a financial incentive to boost domestic manufacturing and attract significant investments in electronic components and semiconductor packaging. These incentives have now expanded to include 14 additional industries.

Industry Focus Areas for India Manufacturing

India’s manufacturing sector has witnessed significant growth and diversification in recent years, with various industries playing a pivotal role in the country’s economic development. From aerospace and defense to medical devices, automobiles, electronics, and space technology, India’s manufacturing ecosystem is as diverse as it is dynamic.

Aerospace: India is an ideal location for manufacturing aircraft, spacecraft, and related components. Its aerospace manufacturing sector has steadily grown, focusing on military and commercial applications. The industry benefits from a skilled workforce, technological advancements, and government initiatives to promote aerospace manufacturing. India’s aerospace manufacturing capabilities are increasingly gaining recognition on the global stage, with collaborations and partnerships with international aerospace companies contributing to this sector’s growth.

Medical Technology: The medical technology (MedTech) sector is growing rapidly. For example, after opening its first facility in Gurugram in 2016, Boston ScientificBoston Scientific 0.0%, a US-based company, launched its second R&D center in Pune in 2023. India is home to the company’s second-largest R&D centers outside of the United States of America. India’s medical device manufacturing sector has also increased, with companies such as Trivitron Healthcare and Opto Circuits India Ltd. producing a wide range of medical equipment and devices for healthcare providers worldwide.

Automotive: India is becoming a significant player in the global automotive industry, with companies like Tata Motors, Mahindra & Mahindra, and Maruti Suzuki manufacturing a diverse range of vehicles, from cars and motorcycles to commercial trucks and buses.

But this is just the beginning. India is also focusing on developing a robust series of plans to strengthen international commerce, one of which is the “Make in India” initiative.

Make in India Program

In 2014, Indian Prime Minister Narendra Modi started the “Make in India” program to strengthen the case for India globally. The stated purpose of the campaign is to facilitate investment, foster innovation, enhance skill development, protect intellectual property, and build a best-in-class manufacturing infrastructure. The resulting job creation and increase in foreign investment directly impact 25 identified sectors, including railways, defense, insurance, and medical devices.

Why Businesses Relocate to India

This webinar provided helpful information on “Why India is the Next Manufacturing Hub,” focusing on incentives that make India an appealing choice for foreign businesses seeking global commerce. Key insights include:

1. Indian government—Panelists agreed that both the central and state governments are doing all they can to incentivize growth in manufacturing. If anything, states are competing to win foreign investment.
2. Focus on manufacturing—Panelists also agreed that the focus on manufacturing has ‘left the station’ and that the next government will continue to invest here.
3. Investment in Infrastructure—India is already investing heavily in infrastructure, which will continue to accelerate.
4. Targeted investments in critical areas—Some industries have special economic zones, particularly around semiconductors and fabrication plants.
5. Bureaucracy or pro-business—There continue to be tensions between old bureaucracy (very slow) and ‘Invest India,’ which focuses on increasing the ease of doing business in India.
6. Indian Education—The top-tier schools produce employment-ready talent, but there is a huge gap between the next tier of schools. On the other hand, there is a high degree of cooperation between industry and universities to bridge this gap.

Shifting Consumer Demand

Part of India’s manufacturing expansion (especially for electronics) is driven by shifting consumer demand. Customers want higher-quality products with more advanced features and functionality at the best price point. India offers more options (particularly for electronics) with savings that pass through to the consumer. But aerospace is uniquely positioned to win in India. With a well-established aerospace infrastructure, manufacturing partnerships (it’s the relationships, right?), and significant incentives, well-known companies are investing heavily in India.

Lower Tariffs and Landed Cost

Lower tariffs are one reason companies choose India (3% versus 30% in China), but India’s lower landed cost is another attractive feature for international businesses considering putting operations in the region. India offers lower labor costs than many other countries, with a strategic location for trade across Southeast Asia, the Middle East, and Europe. Additionally, India has multiple trade agreements that reduce tariffs and facilitate smoother and less expensive import and export processes. Finally, logistics efficiency and lower transportation costs further lower the total landed cost for businesses operating in the region.

Key Takeaways

India is quickly becoming a key player in global manufacturing, and according to the Business Standard, that role will only grow in the next few years. With lower tariffs, lower landed costs, and special incentives for many industries, India is a solid option to diversify your global supply chain. When I talk to supply chain leaders, it’s clear that success looks like operating with agility—often across borders—in a changing global economy. India is a great place to start. (Forbes)

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Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 62.5 in March 2024, indicating an expansion in manufacturing activities. 

According to the Central Bank of Sri Lanka (CBSL), this marks the highest PMI-Manufacturing that was recorded in three years. 

All the sub-indices expanded on a month-on-month basis contributing to this increase, mainly driven by the seasonal demand.

The increase in New Orders and Production was mainly attributable to the manufacture of food & beverages and textiles & apparel sectors.

Most of the manufacturers, especially in the food & beverage sector, were optimistic about the upcoming festive season, the bank said in a statement.

The CBSL further said that Employment and Stock of Purchases increased during the month in line with the New Orders and Production. 

Stating that a decline in price levels was also evident, the CBSL added that Suppliers’ Delivery Time remained lengthened, yet at a slower rate in March. 

Full report: https://shorturl.at/bdjDX (Newswire)

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