3one4 Capital Launches 'The Future of Production Report – 2025'

India stands on the brink of a profound industrial transformation. As global supply chains reconfigure and economies seek resilient, diversified production hubs, India’s manufacturing sector is preparing to lead the next chapter of growth. Supported by strong macro tailwinds, visionary policy frameworks, and a surge in advanced manufacturing capabilities, the country is set to emerge as a defining force in the global production ecosystem.

From semiconductor fabs and EV supply chains to high-value chemicals and precision manufacturing, a new industrial backbone is taking shape, driven by structural policy tailwinds, rapidly advancing infrastructure, and a vibrant ecosystem of deeptech innovators and scale-hungry entrepreneurs.

At 3one4 Capital, we believe this moment marks the beginning of a long-term shift, from cost-led execution to IP-led, globally competitive manufacturing. This isn’t a cyclical surge; it’s a systemic reinvention.

Our latest report, The Future of Production – 2025, decodes how India’s industrial engine is being reimagined, powered by policy, accelerated by innovation, and built by startups redefining infrastructure, automation, and supply chains for the next decade of growth.

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A Systemic Reset in Motion

India’s GDP is expected to cross $5 trillion by 2028. At the core of that trajectory is a manufacturing engine that is scaling in both complexity and contribution. The country’s manufacturing gross value added is projected to grow from approximately $459 billion today to $1.6 trillion by FY34, driven by an expanding skilled workforce, a growing export footprint, and deepening sectoral resilience.

The transition underway is multi-dimensional. Structural enablers such as the Production-Linked Incentive (PLI) schemes, Make in India, and Atmanirbhar Bharat have redefined the contours of domestic capability and investor confidence. Simultaneously, the rapid adoption of Industry 4.0 technologies, AI, IoT, predictive analytics, and blockchain, is embedding intelligence and transparency into the production layer.

Crucially, these developments are not unfolding in isolation. They’re converging across sectors and states, creating industrial clusters that specialise in capital goods, high-precision components, and clean manufacturing systems. From Tamil Nadu and Karnataka to Gujarat and Uttar Pradesh, the geographic spread of India's manufacturing prowess is widening, unlocking regional strengths and compressing logistical inefficiencies.

A Shift in Value Creation

The fundamental shift underway is not just about what India produces, but how. The manufacturing economy is moving away from pure scale and into high-value complexity, an evolution best understood across three archetypes: process-led manufacturing, IP-led innovation, and hybrid models that blend operational rigour with proprietary technologies.

Process-led players are optimising workflows, leveraging automation, and bringing just-in-time delivery into sharper focus. Meanwhile, IP-led manufacturers, especially in sectors like semiconductors, specialty chemicals, aerospace, and biotech, are building defensible moats around R&D and design innovation. It is in the intersection between these two that some of the most dynamic companies are emerging: those that embed tech into the heart of execution.

This transition is reflected in India’s manufacturing GVA distribution, where high-growth segments such as electronics, automotive, pharmaceuticals, chemicals, and apparel now collectively drive over a third of total output. These are not legacy sectors, they are innovation playgrounds where startups and incumbents alike are reimagining scale through digital infrastructure and intelligent manufacturing.

Policy Meets Execution

India’s policy approach to industrial expansion has shifted from broad incentives to targeted interventions. The PLI scheme, with an outlay of ₹2.5 trillion across 14 sectors, has already catalysed over $17 billion in investments, unlocked $47 billion in exports, and generated more than 950,000 jobs. This is translating into tangible capacity: semiconductor fabs, EV battery ecosystems, solar PV manufacturing, and electronics clusters that serve both domestic and global markets.

Complementing this are initiatives like PM GatiShakti and the National Logistics Policy, which are resolving long-standing friction in multimodal connectivity and infrastructure planning. With 81 large-scale logistics projects underway, the warehousing, port, and transport infrastructure needed for just-in-time manufacturing is beginning to materialise at scale.

More importantly, India’s industrial tax regime is among the most competitive in Asia. A 15% corporate tax for new manufacturing firms, combined with low-cost industrial power and a maturing regulatory environment, reinforces India’s standing as a cost-effective and compliant global manufacturing destination.

From Founders to Factories: The Startup Role in India’s Industrial Story

India’s manufacturing resurgence is not being driven solely by policy; it’s being built, bottom-up, by a generation of entrepreneurs who are rewriting the rules of industrial production. Startups like Scimplify are modernising the specialty chemicals industry through full-stack digital platforms that streamline R&D and compliance. Companies like Thimblerr are enabling zero-MOQ, sustainable fashion manufacturing at scale.

In semiconductors, AGNIT is pioneering GaN-based chipsets for power and defence applications, building foundational infrastructure for India’s deeptech ambitions. Exponent Energy and Yulu are defining new benchmarks in EV charging and electric mobility, while Dozee and Fermbox Bio are leading the charge in biomanufacturing and digitised healthcare. Unbox Robotics and ZestIoT are shaping the future of warehouse automation and smart industrial visibility.

Together, these companies represent the next wave of manufacturing leadership, where product, platform, and process converge.

The Global Opportunity

India’s role in global manufacturing is expanding rapidly. The country’s merchandise exports are expected to double their share of global trade, from 1.7% in 2021 to 3.5% by 2031. With 46 free trade agreements at various stages of negotiation or implementation, and $800 billion in incremental export opportunity, India is becoming a critical node in global value chains. Strategic location, cost advantages, and a large, young workforce are obvious tailwinds. But the real edge lies in India’s evolving identity: from an assembly hub to an innovation-driven manufacturing economy that can design, build, and deliver world-class solutions at scale.

Manufacturing's Ascent in India's Public Markets

India's public markets have shown a clear and growing appetite for equity issuances, underlining strong IPO acceptance and capital market depth. Between FY14-FY19, 73.95 trillion ($46.5 billion) was raised through IPOs, OFS, FPOs, and QIPs-this has jumped to 76.85 trillion ($80.6 billion) in the FY20-FY25YTD period, reflecting a significant uptick in public participation and institutional confidence.

3one4 Capital’s Perspective

At 3one4 Capital, we see India’s industrial resurgence not as a series of sectoral trends but as a generational opportunity to build enduring, globally competitive enterprises. Our investments span industrial automation, connected infrastructure, EV platforms, semiconductors, biotech, and materials innovation, all of which sit at the convergence of policy, technology, and market demand.

We’re backing founders who are not only building factories, but re-architecting the future of production. As India prepares to lead the next chapter of the global industrial order, 3one4 Capital remains committed to supporting the systems, technologies, and teams that will define it.