India could be entering a new phase of industrial growth, with a combination of an established manufacturing base, a large domestic market and growing global demand for an alternative supply chain creating opportunities across emerging industries, brokerage Jefferies said in a recent equity strategy report.
The brokerage, in its report titled “India’s New Industrial Revolution”, identified six sectors — space, semiconductors, data centres, electronics, solar manufacturing and aerospace, that it believes could play a key role in India’s next industrial growth cycle.
The opportunity is being supported by government incentives and policy measures, including schemes for semiconductors, electronics and solar manufacturing, as well as the opening up of sectors such as space to private companies.
India’s advantage, according to the broader thesis highlighted alongside the Jefferies report, is that three factors are arriving at the same time.
First, the country already has a manufacturing base operating at global scale. Second, its large domestic market can provide demand while new industries build scale and become competitive. Third, global companies are increasingly looking for a second major manufacturing and supply-chain base.
Together, these factors could allow India to build new industries domestically and eventually serve global markets.
Jefferies said the government’s policy support is also helping accelerate this transition through measures such as opening the space sector to private participation, tax incentives for data centres, production-linked incentive schemes for semiconductors, electronics and solar, localisation requirements and purchases of GPUs.
India’s space sector is moving from being largely government-led to one where private companies are playing an increasingly important role.
Jefferies said India is among a handful of spacefaring nations with globally competitive capabilities and noted that the government opened the sector to private participation in 2020.
The government is targeting roughly a fivefold expansion of the space economy between 2023 and 2030, taking it to around $40–45 billion.
Companies such as Skyroot, Pixxel, Agnikul and Digantara are already working across areas including orbital launches, earth-observation satellites, rocket engines and surveillance satellites.
India’s semiconductor ambitions are also moving from policy announcements towards execution, according to Jefferies.
The brokerage estimates around $20 billion of semiconductor investment is already in the pipeline, including a chip fabrication unit under construction and several outsourced semiconductor assembly and testing (OSAT) projects starting production.
A new incentive plan worth around $13 billion, Jefferies said, could further expand the ecosystem and encourage greater value addition, including chip design.
The brokerage believes supply chains, talent and global competition remain challenges, but said India is building the foundations of a credible semiconductor ecosystem.
India’s data-centre industry is emerging as a strategic digital infrastructure segment, driven by cloud adoption, digitisation and rising data localisation requirements.
Jefferies said colocation capacity has expanded fivefold over the past five years to around 2GW and expects another fivefold increase to around 10GW over the next five years.
The brokerage estimates this expansion could create a $9 billion revenue opportunity for data-centre operators and a $45 billion investment opportunity across power, cooling, construction and network infrastructure.
India’s electronics industry is entering what Jefferies sees as its next phase of growth, with greater emphasis on domestic value addition and component manufacturing rather than just assembly.
The brokerage expects the Electronics Components Manufacturing Scheme (ECMS) to cover around 50% of the mobile component value chain over the next six to seven years.
Schemes such as ECMS and the Modified Programme for Development of Semiconductors and Display Manufacturing (MPMS) are aimed at deepening backward integration and reducing dependence on imports.
India has emerged as the world’s second-largest solar PV manufacturer, with around 35GW of solar cell capacity already operational and another roughly 100GW under construction, Jefferies said.
Government measures including the Approved List of Models and Manufacturers, domestic content requirements and production-linked incentives are encouraging greater local manufacturing of solar cells, wafers and ingots.
Jefferies expects around 90% of the solar manufacturing value chain to be localised by 2030.
India is also gaining from the global demand-supply imbalance in aerospace, with its cost-competitive manufacturing capabilities and engineering talent creating opportunities to become a larger supplier to global aircraft manufacturers.
Indian exports to Boeing and Airbus are already rising, with the sector generating around $1.4-1.6 billion annually, according to Jefferies.
Indian companies such as BHFL, DYTC, Rane, Motherson and Sansera have emerged as suppliers to global original equipment manufacturers and Tier-1 suppliers and are expanding their presence in the sector.
The Jefferies thesis extends beyond individual companies in these six sectors. The growth of new industries is expected to create demand for the infrastructure and services needed to support them — from power and construction to cooling, engineering, logistics and networks.
That is particularly evident in data centres, where the brokerage sees a large investment opportunity beyond the operators themselves.
The combination of domestic demand, policy support, an existing industrial base and global supply-chain diversification could therefore give India an opportunity to build capabilities in industries that go well beyond traditional manufacturing.
For Jefferies, that is what makes the current cycle different: India is not simply adding more factories, but building new industrial ecosystems in sectors that could serve both the domestic economy and global markets.