Make in India, Measured Against Wrong Decade

Syllabus: GS3/Indian Economy; Industrial Policy and Economic Development

Context

• In 2026, when the Make in India initiative reaches its 12th year, evaluations of its effects on manufacturing, exports and employment are once again fueling discussion regarding India’s industrial transformation.

About Make in India and Its 12 Years of Performance

• The Make in India initiative seeks to turn India into a global manufacturing centre by drawing in investment, encouraging innovation, improving the ease of doing business, and creating employment.
• Its objectives include:
  • Raising the proportion that manufacturing contributes to GDP.
  • Boosting exports and global competitiveness.
  • Setting up jobs and improving industrial skills.
  • Lowering our reliance on imports and boosting domestic production.
• Achievements of Make in India in Past 12 Years:
  • The level of manufacturing growth rose from 2.4% in 2014 to 3% in 2025.
  • The PLI schemes have drawn in about ₹2.4 lakh crore in investment.
  • In the 2025–26 period, the value of electronics exports was $47.96 billion.
  • The capacity for manufacturing solar modules rose from 2.3 GW in 2014 to about 192 GW.
  • The production of Penicillin G at home has been picked up again, which is lowering the need to import it from China.
• However, the contribution of manufacturing to GDP is still below the long-standing government aim of 25%, and domestic value addition together with employment generation are still uneven.

India’s Manufacturing Performance

• Rising Manufacturing Contribution: The contribution of manufacturing increased from 2022–23, when its share of Gross Value Added (GVA) at constant prices was 14.7 per cent, to 16.1 per cent in 2025–26.
• Investment & Industrial Expansion: The amount of foreign direct investment going into manufacturing rose from 48% to 55%.
  • The PLI schemes have been aimed at key sectors such as electronics, pharmaceuticals, automobiles, solar modules and specialty steel.
• Formalisation of Employment: The number of workers recorded by the Annual Survey of Industries in registered factories in 2024–25 was about 2.10 crore, which is 14 lakh more than the previous year.
  • The total number of people employed in manufacturing has stayed fairly steady while it shows an increase in formal industrial employment.

Global Context: Why Comparisons Matter?

• Different Growth Conditions: Merchandise exports worldwide increased from $6.2 trillion in 2002 to $18.8 trillion in 2013, which is a tripling, and they rose by less than 40% over the period from 2014 to 2025, reaching $26.3 trillion.
• Global Disruptions: The COVID-19 pandemic, disagreements between nations over tariffs and problems with the supply chains caused a weakening of international trade.
• Chinese Competition: In terms of competition, China’s manufacturing value added amounted to about $4.8 trillion (that is roughly nine times that of India), thereby increasing the pressure from competition due to its large-scale production and the exports at lower prices.
• Comparative Performance: India’s manufacturing value added increased by 73% in dollar terms from 2014 to 2025, as opposed to an increase of 51% in the case of China and 36% on a global scale.

Structural Reforms Supporting Industrialisation

• Several reforms have strengthened the manufacturing ecosystem:
  • The Goods and Services Tax (GST) helped to create a more integrated domestic market.
  • The Insolvency and Bankruptcy Code (IBC) has improved the framework for dealing with businesses that are experiencing difficulties.
  • In 2019 the corporate tax rate was reduced in order to decrease the tax burden on companies.
  • The Jan Vishwas Act removed a large number of minor offences related to business.
  • Labour Codes aim to make labour rules simpler and help businesses grow.
  • The costs relating to logistics are estimated to have dropped from 13 to 14% to about 8% of GDP.
• Moreover, the PLI schemes show a move towards strategic industrial policy since the major economies are now providing subsidies for domestic manufacturing.

Persistent Challenges and Issues

• Low Domestic value Addition: The domestic value added is still about 18 to 23 per cent, which shows that the country continues to rely on imported components.
• Employment Deficit: The employment shortfall is that manufacturing which is capital-intensive has not produced the number of jobs needed.
• Weak Labour-intensive Exports: Investment in textile PLI measures has not met expectations, and China still holds a leading position in a number of labour-intensive export sectors.
• Uneven Industrial Development: The development of industry is uneven since manufacturing abilities and investments are still concentrated in certain sectors and areas.
• Trade & Cost Pressures: High input costs, import competition, changes in oil prices, and uncertain global demand make private investment less appealing.
• Implementation Gaps: Gaps in implementation include problems relating to land acquisition, regulatory complexity, a shortage of skilled workers, and limited research and development activities.

Way Forward

• Deepen Domestic Value Addition: Promote domestic value addition by strengthening component manufacturing, the semiconductor ecosystems, and industrial research and technology transfer.
• Promote Labour-intensive Sectors: Encourage the development of labour-intensive industries by focusing on textiles, footwear, leather, food processing, and furniture in order to create large numbers of jobs.
• Improve Business Environment: Improve the business environment by making it easier to acquire land, obtain permits, and meet regulatory requirements while at the same time ensuring that the policies are predictable.
• Enhance Trade Competitiveness: Improve trade competitiveness by reducing inverted duties and streamlining the tariffs applied to intermediate goods, components and capital equipment.
• Integrate With Global Value Chains: Join global value chains by using trade agreements to draw in investment, broaden exports and obtain vital inputs.
• Strengthen MSMEs: Strengthen MSMEs by improving access to affordable credit, modern technology, skilled labour, and export markets.
• Measure Outcomes: Measure the outcomes by keeping track of domestic value addition, productivity, formal employment, export diversification and innovation together with investment commitments.

Conclusion

• The 12-year period of the Make in India initiative has seen real advances in manufacturing capacity, investment, and strategic production, but the benefits have been uneven. 
• The next stage should shift its focus from rewarding production to establishing manufacturing that is globally competitive, employment-intensive and technologically advanced. 
• Whether India will be able to achieve its ambition of becoming a major manufacturing power will depend on sustained reforms, export integration and stronger domestic capabilities.

Source: BL