Firms serving the broad manufacturing sector should expect a robust recovery in the sector by Q4 2021. In the short term, B2B companies with a diversified portfolio should focus their sales on resilient sectors in India, such as chemicals, pharmaceuticals, and construction goods. Over the medium term, B2B companies in India should capitalize on the substantial competitive advantages presented to them by the manufacturing incentives and government regulatory changes that support domestic manufacturing in specific sectors.


India’s manufacturing sector recovered to pre-pandemic levels quickly in Q3 2021 after being hit by the massive second wave of COVID-19. However, the recovery has been unequal across sectors. Production of construction goods, chemicals, and pharmaceuticals has been especially resilient, while production of automobiles remains weak.

Sectoral Index of Industrial Production, India's Manufacturing

Our View

Production of construction goods will likely continue its strong growth trajectory into 2022, driven by public investment focused on infrastructure projects. Additionally, we expect an uptick in the real estate construction segment after a prolonged slump due to the pandemic. Other strong performers, such as the chemicals and pharmaceutical sectors, have been supported by robust demand even during the second wave. Their medium-term growth will likely be supported by recent manufacturing incentives by the government meant for companies manufacturing locally. Changes to the government’s Make in India Public Procurement Preference regulation, which prohibits non-local suppliers of specific chemicals, electronics, and pharmaceuticals from public tenders will create opportunities for companies with a significant amount of local content creation. Consumer durables and non-durables production did not recover to pre-pandemic levels as of August 2021, but both are likely to witness an uptick as demand for these products spikes in Q4 2021 during the festive period.

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