weighted score 5.7 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
India
Labour cost competitiveness, pharmaceutical and IT supply base, trade access progress, and innovation scores for India as a sourcing destination.
Labour cost competitiveness
7
India offers highly competitive labour costs for manufacturing and services. Minimum wages vary by state and sector — effective manufacturing wages broadly USD 150–250/month. IT and engineering services wages are higher but still significantly below OECD.
Supply base depth
6
Strong in IT services, pharmaceuticals, textiles, and automotive components. Steel and chemicals industrial base is well-developed. Electronics manufacturing supply chain is thinner than China — improving under PLI scheme incentives.
Logistics & infrastructure
5
Infrastructure is improving rapidly but gaps persist. Dedicated freight corridors (Eastern and Western) are under construction. Port infrastructure at JNPT (Nhava Sheva), Mundra, and Chennai is good. Last-mile logistics and road quality vary significantly by state.
Workforce skills
7
World's largest English-speaking technical workforce. IIT and IIM graduates are globally competitive. Large pool of engineers, doctors, pharmacists, and IT professionals. Skills distribution is uneven — high-end talent is world-class; mid-tier vocational training lags.
Scalability
5
India's potential scale is enormous — 1.4 billion population, large working-age cohort. Practical scalability constrained by infrastructure bottlenecks, state-level regulatory variance, and power supply reliability. PLI scheme is accelerating electronics and pharmaceuticals scaling.
Ease of doing business
4
India's rank in World Bank Ease of Doing Business improved significantly (from 130+ to 63 by 2020) before the index was discontinued. In practice, regulatory complexity, inter-state compliance requirements, land acquisition challenges, and labour law complexity remain significant. GST simplified indirect taxation.
Trade access & tariffs
6
India-UAE CEPA (2022), India-Australia ECTA (interim FTA, 2022) are recent FTA milestones. UK-India FTA negotiations ongoing. India-EU FTA negotiations relaunched in 2022 — progress is gradual. India's tariff structure has historically been protectionist; recent tariff reductions in electronics and defence are notable.
Sustainability baseline
4
India is the world's third-largest emitter. Coal remains dominant in the energy mix (70%+). Net zero commitment is for 2070. Factory ESG standards vary greatly — large multinationals (Tata, Mahindra, Reliance) have sophisticated programmes; SME supply base lags significantly. Textile sector water and chemical management is an ongoing issue.
Innovation & IP
8
India is a top-5 global patent filer. IIT ecosystem produces world-class research. Strong in software, pharmaceuticals, biotech, and fintech. IP protection framework has improved — India joined WIPO Internet Treaties, UPOV, and has strengthened patent enforcement. Pharmaceutical reverse engineering tradition creates specific IP complexity for drug patents.
Quality standards
5
Tier-1 suppliers to major multinationals operate to international quality standards. Tier-2 and below are variable. Bureau of Indian Standards (BIS) certification is improving. Food safety (FSSAI) standards have strengthened. Pharmaceutical GMP compliance is generally strong at major API manufacturers.
Labour & Cost Competitiveness
Labour & Cost Competitiveness
- Wage competitiveness
- India's manufacturing wages are among the most competitive in Asia for the skill level available. State minimum wages are set at the state level — effective manufacturing wages broadly range from USD 150–250/month depending on sector and location. IT and engineering services command a premium but remain well below OECD equivalents.
- The India services advantage
- India's primary global competitive advantage is knowledge services — IT outsourcing, BPO, R&D services, pharmaceutical research. These sectors pay above manufacturing wages but remain globally competitive. Supply chain buyers increasingly source business processes and technical services from India alongside physical goods.
- PLI scheme impact
- Production-Linked Incentive schemes (PLI) across 14 sectors — including mobile phones, pharmaceuticals, automotive components, food processing, and textiles — provide direct cash incentives to manufacturers meeting incremental production targets. This has attracted global manufacturers (Apple through Foxconn and Wistron, Samsung) to expand India manufacturing.
- Inflationary trajectory
- India's wage trajectory is upward — driven by GDP growth (6–7% annually), urbanisation, and the PLI-driven demand for manufacturing workers. Cost advantage will persist relative to middle-income peers for at least a decade, but buyers entering now are at a higher entry point than early movers.
Supply Base & Infrastructure
Supply Base & Infrastructure
- Pharmaceuticals
- India is the world's largest generic pharmaceuticals exporter — supplying approximately 20% of global generic drug volumes and 60% of global vaccine volumes. Hyderabad, Ahmedabad, and Pune are the primary pharma cluster cities. US FDA-approved API manufacturing facilities number in the hundreds. This is India's most developed global supply base.
- Textiles and apparel
- India is the world's second-largest textile and apparel producer. Strength in cotton (world's largest cotton producer), technical textiles, and handloom. Major cluster states include Tamil Nadu, Gujarat, Maharashtra, and Uttar Pradesh.
- Electronics — building phase
- Electronics manufacturing is scaling rapidly under PLI. India is now the second-largest iPhone manufacturing location after China (Foxconn Sriperumbudur, Wistron Narasapura). Samsung has expanded Galaxy manufacturing in Noida. However, component supply chains (PCBs, semiconductors, displays) remain heavily import-dependent.
- Infrastructure gap
- Road connectivity, power reliability, and port capacity are improving but uneven. Dedicated freight corridors (Eastern and Western) will transform inland logistics when complete. States vary enormously — Tamil Nadu and Gujarat are ranked as most business-ready; BIMARU states (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh) have significant infrastructure deficits.
Trade Access & Business Environment
Trade Access & Business Environment
- Recent FTA progress
- India-UAE CEPA (entered into force May 2022) is India's first modern FTA covering goods, services, and investment. India-Australia ECTA (interim agreement, 2022) provides preferential tariffs on a broad range of goods. These mark a significant shift from India's historically protectionist trade posture.
- UK-India FTA
- Negotiations have been ongoing since January 2022 — covering goods, services, investment, and IP. Agreement would be significant for both sides: UK gains access to India's 1.4 billion consumer market; India gains improved access for textiles, pharmaceuticals, and services. Agreement not yet concluded as of May 2025.
- India-EU FTA
- Negotiations relaunched in 2022 after a decade-long hiatus. Progress is gradual — the EU seeks stronger IP protection and non-tariff barrier reduction; India seeks services liberalisation and mobility for professionals. An EU-India FTA remains a medium-term rather than near-term prospect.
- Regulatory complexity
- The Ease of Doing Business ranking improvement masked continued real-world complexity in: land acquisition (multiple state laws), labour law (four labour codes replacing 29 laws — yet to be fully implemented), inter-state tax compliance, and customs clearance. Significant state-to-state variance means site selection is a material investment decision.
Innovation, IP & Quality
Innovation, IP & Quality
- IIT ecosystem
- The 23 IITs produce approximately 10,000 BTech graduates annually in engineering. IIT alumni networks are among the most influential in global technology — disproportionately represented in Silicon Valley, pharmaceutical leadership, and global manufacturing management. This talent pipeline is a genuine structural advantage for sourcing innovation-intensive activities.
- Pharmaceutical IP complexity
- India's Patents Act Section 3(d) restricts patentability of new forms of known compounds unless they demonstrate significantly enhanced efficacy. This has been used to deny patent extensions for blockbuster drugs. For pharmaceutical buyers, this means India's generics ecosystem is highly dynamic — buyers can access quality generics more rapidly than in countries with stronger evergreening protections.
- Digital and fintech innovation
- India's Unified Payments Interface (UPI) is a globally recognised fintech innovation. India's digital public infrastructure (Aadhaar, UPI, DigiLocker) represents a capability that is being exported to other countries. The IT services sector — Infosys, TCS, Wipro, HCL — generates deep supply chain digitisation capability that buyers can leverage.
- Quality standards maturity
- BIS (Bureau of Indian Standards) issues IS standards; NABL accredits testing laboratories. FSSAI governs food safety. Quality standards compliance for export-oriented manufacturers is generally high — driven by US FDA, EU, and UK market requirements. Domestic supply chain quality is more variable and requires buyer audit investment.