As India aspires to become a $ 30 trillion economy by 2047, manufacturing will need to serve as a critical engine of growth, employment and competitiveness. However, achieving the national vision of a $7.5 trillion manufacturing sector contributing 25 per cent of GDP will require the industry to fundamentally rethink how work is done, organisations are designed and talent is deployed.

KPMG in India’s latest report, India’s Trillion-Dollar Manufacturing Ambition Requires a Workforce Productivity Revolution, argues that workforce productivity is India’s most underleveraged growth lever and a critical enabler of the country’s manufacturing ambitions.

The report is based on research across 130+ large Indian manufacturing companies and demonstrates the relationship between workforce productivity, profitability and enterprise value creation. The findings reveal that while India has made significant progress in manufacturing growth, current productivity levels remain insufficient to bridge the gap between today’s manufacturing output and the scale required to meet the country’s 2047 aspirations.

At the current trajectory, Indian manufacturing is expected to reach only about $ 2.7 trillion by 2047, leaving a substantial gap against the $7.5 trillion target. The report identifies workforce productivity as the lever with the greatest potential to create sustained competitive advantage, as productivity gains become permanently embedded within organisations, improving output, profitability and resilience year after year.

The report also highlights what it calls the “productivity illusion” facing many manufacturing organisations, where high levels of activity are often mistaken for high performance. Hidden inefficiencies, including excessive management layers, fragmented roles, weak supervisory capability, dependence on tribal knowledge, contract workforce capability gaps and reporting overload, continue to erode throughput, quality, margins and capital returns despite significant effort across operations.

As manufacturing leaders contend with margin pressures, geopolitical uncertainty, evolving competitive dynamics and the growing influence of AI, the report introduces the Productivity Triad, a practical framework that enables organisations to unlock productivity gains by simultaneously reimagining work, redesigning organisations and remodelling the workforce, amplified through digital technologies, AI, performance management and organisational culture.

Sunit Sinha, Partner and Head, Human Capital Advisory Solutions (HCAS), KPMG in India, said, “Workforce productivity is India’s most underleveraged growth lever. The next era of manufacturing competitiveness will not be won only by adding more people or assets, but by fundamentally redesigning how work gets done. Organisations that act now can unlock significant value, accelerate growth, strengthen profitability and help power the next chapter of India’s manufacturing journey.”

Sharad Maloo, Partner, Human Capital Advisory Solutions (HCAS), KPMG in India, said, “Many organisations continue to face a productivity illusion, where high levels of activity disguise underlying inefficiencies. Sustainable productivity gains will require businesses to simplify structures, strengthen frontline capability, codify critical knowledge and build workforce models that can adapt to changing business needs. Organisations that take a systematic approach to productivity transformation will be better positioned to improve performance and competitiveness.”

Key findings from the report include:

• India’s manufacturing sector will need to expand nearly 15 times, from approximately $ 0.5 trillion today to $ 7.5 trillion by 2047, requiring around 13 per cent annual growth, significantly above the current trajectory.
• Research across 130+ large manufacturing companies demonstrates a strong positive relationship between workforce productivity and enterprise value creation, with over 90 per cent of companies falling within a productivity-value zone.
• Organisations leading on productivity achieved 50 per cent+ higher profitability growth and nearly 2x market capitalisation growth compared to peers over a ten-year period.
• Productivity variance across manufacturing companies can range from 300 per cent to 1000 per cent, making workforce productivity one of the sector’s most significant untapped growth opportunities.
• A sustained 30 per cent productivity gain could drive nearly 35 per cent of future manufacturing output, creating long-term advantages in competitiveness, margins and growth.
• The report identifies seven recurring productivity barriers across manufacturing organisations, including organisational structure inefficiencies, process and system weaknesses, capability gaps, shift productivity differences and indirect headcount bloat.
• The Productivity Triad framework suggests manufacturing organisations can unlock 15-30 per cent productivity gains through reimagining work, redesigning the organisation and remodelling the workforce.
• AI is emerging as a major productivity catalyst across manufacturing value chains, with growing impact across functions including production, quality, finance, HR, procurement, engineering and customer service.

Together, these findings reinforce that the next era of manufacturing competitiveness will not be won simply by adding more people or assets, but by fundamentally redesigning how work is performed. Organisations that act now to unlock workforce productivity, build future-ready capabilities and embed AI-enabled operating models can accelerate growth, strengthen profitability and help power the next chapter of India’s manufacturing journey.