New Delhi: India’s push to emerge as Asia’s next manufacturing hub has received a mixed response. The Asia Manufacturing Index 2026 has placed the country at sixth position among 11 major Asian economies. The ranking reflects a progress but also points to limits in the current system.
In the 2024 edition of the index, India had ranked fourth among eight countries. Last year, the country was ranked at sixth place. The report says that stronger infrastructure and simpler tax rules are essential if India wants to move closer to the top and attract large-scale global manufacturing.
China continues to hold the top position in Asia’s manufacturing ecosystem. Beijing is the first choice for global manufacturers due to scale, efficiency and supply chains.
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Malaysia has recorded a rise this year and has moved to second place, overtaking Vietnam – which now stands third, followed by Singapore at fourth and South Korea at fifth positions. Indonesia ranks seventh, while Thailand stands eighth.
The index has been prepared by Dezan Shira and Associates. It evaluates manufacturing strength using eight broad measures. These include the economy, political risk, business environment, international trade, tax policy, infrastructure, labour force and environmental, social and governance standards.
India shows strength in workforce availability and a growing domestic market. A large pool of labour continues to attract global attention. Government initiatives such as the production-linked incentive scheme have boosted investment in electronics and pharmaceuticals. These sectors have seen rising factory activity and foreign interest.
Weakness is visible in physical infrastructure. India lags behind countries such as China and Singapore on this front. Perceptions around corruption and institutional stability have also pulled scores down. High logistics costs and complex tax compliance continue to create pressure for manufacturers.
The report highlights corruption and political risk as areas of concern. India ranks behind several competing countries on transparency. Singapore is seen as the most stable and predictable environment in this category. Simplifying regulatory processes is seen as essential for the long-term success of domestic manufacturing initiatives.
India has set a goal of building a one trillion dollar manufacturing economy by the financial year 2026. The report suggests a shift beyond reliance on labour availability alone. Greater focus on skill development and digital infrastructure is seen as necessary for future growth.
Lower logistics costs could change India’s position in the coming years. Improved transport networks and faster clearances could allow India to challenge Vietnam and Malaysia more strongly. The path forward demands reforms, faster execution and sustained policy clarity.
