Bharat Manufacturing Sector: A Strong Investment Opportunity For Long-Term Wealth Creation

In response to growing confidence and rising demand among customers, PNB MetLife has introduced its new fund – the PNB MetLife Bharat Manufacturing Fund. This fund provides an opportunity for customers to participate in the growth of the manufacturing sector and create long-term wealth. It is an actively managed equity fund that allows the fund manager to leverage their experience and analyse macro-level trends to outperform a benchmark or index returns.

The fund is available through PNB MetLife Unit Linked Insurance Plans (ULIPs) that offers triple benefits:

• Life cover to secure your family’s future and big dreams
• Long-term wealth creation opportunity
• Tax-free returns

PNB MetLife is known for high investment repute and strong performance, exemplified by the performance of PNB MetLife equity funds which have consistently beaten the benchmark returns in the past. 99% of their equity funds are rated 4 or 5 star by Morning Star, a reputed global rating agency.

India’s manufacturing sector holds strong potential which can be seen from the impressive growth of the NIFTY India Manufacturing Index, delivering returns of 25.31% compared to the NIFTY 50’s 15.29% over the past five years (as of 30th June). Even the recent budget allocations have further supported growth, with investments in infrastructure, ease of doing business, and policy reforms driving expansion.

Manufacturing Sector is an enabler for India’s $30 trillion economy

Economic Growth Driver: As per a conservative estimate, the Finance Minister stated that India will be at least a $30 trillion economy by 2047. India’s manufacturing sector holds significant potential for growth, with projections indicating an 18-fold increase over the next 24 years. Despite the sector’s current contribution of approximately 13% to India’s GDP in 2022, it remains underdeveloped compared to other Asian economies. For instance, manufacturing accounts for 18.67% of Indonesia’s GDP and 23.88% of Vietnam’s GDP. This disparity underscores the opportunity for substantial expansion in India’s manufacturing sector, which could significantly enhance its contribution to the country’s GDP and overall economic growth.

Sector-Specific Growth: McKinsey projects that eleven key sectors could contribute to an incremental ~80% increase in gross value added, including chemicals, basic materials, capital goods, automotive, and pharmaceuticals. These sectors make up about 90% of the Nifty Manufacturing Index, underscoring their importance in driving industrial growth. Additionally, a report from another leading global management consulting firm -Bain estimates that India’s exports could reach a trillion dollars by 2028, reflecting the sector’s high growth potential.

Economic Stability and Labor Advantage: India’s macroeconomic stability, coupled with a large pool of skilled and semi-skilled labour, positions it uniquely among developing economies. The country’s significant domestic consumption base offers a captive market for producers.

Infrastructure Development: The government is committed to maintaining strong fiscal support for infrastructure development over the next five years, with an allocation of approximately ₹11 lakh crore. This investment aims to enhance infrastructure, including roads, railways, and airways, which are crucial for supporting the manufacturing sector. Notable achievements such as the expansion of the National Highway network, extensive electrification of railways, and the increase in operational airports are key drivers of this growth.

Import Substitution and Global Realignments: Government Initiatives like the Production Linked Incentive (PLI) schemes aim to increase domestic value addition and reduce dependence on imports. The shift in global supply chains, including the notable example of Apple’s increased production in India, highlights India’s growing role in global manufacturing.

Budget Boost to Manufacturing:

The recent budget has further invigorated the manufacturing sector through initiatives such as the Credit Guarantee Scheme for MSMEs, which improves access to finance, and mandatory onboarding in TReDS. The establishment of twelve new industrial parks, rental housing for industrial workers, and the Critical Minerals Mission will also drive growth. Strengthening tribunals to expedite insolvency resolution will enhance the business environment and competitiveness.

Investment Opportunity

PNB MetLife’s Bharat Manufacturing Fund is positioned to capitalize on these growth drivers and is one of the best NFOs to invest in 2024. Available through PNB MetLife’s ULIP plans like PNB MetLife Goal Ensuring Multiplier, PNB MetLife Wealth Plan and PNB MetLife Platinum Plus, it encourages disciplined savings and long-term wealth creation. Investors can participate in India’s vision of a ‘Viksit Bharat’ (Developed India) by 2047. The fund is available at a special ₹10 NAV from 1st to 15th August 2024, aligning with India’s growth story and aspirations.

In conclusion, India’s manufacturing sector presents a compelling investment opportunity, supported by robust economic fundamentals, policy support, and significant growth potential. The Bharat Manufacturing Fund offers a unique chance for investors to benefit from this promising landscape, ensuring long-term wealth creation and financial security.

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