{"id":65548,"date":"2026-01-31T17:25:39","date_gmt":"2026-01-31T11:55:39","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=65548"},"modified":"2026-01-31T19:00:04","modified_gmt":"2026-01-31T13:30:04","slug":"manufacturing-revival-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/31-01-2026\/manufacturing-revival-india","title":{"rendered":"India\u2019s Manufacturing Revival: From Capacity Creation to Global Capability"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/26-12-2025\/manufacturing-sector-of-india\"><strong>India\u2019s manufacturing sector<\/strong><\/a> is regaining momentum amid geopolitical shifts that are reshaping global production networks and&nbsp; offers a solid foundation for the next phase of industrial growth.<\/li>\n\n\n\n<li>As the <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/30-01-2026\/economic-survey-2026-highlights\"><strong>Economic Survey<\/strong><\/a> notes, sustaining this revival will require stronger competitiveness and deeper integration into global value chains.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About <\/strong><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/26-12-2025\/manufacturing-sector-of-india\"><strong>India\u2019s Manufacturing Sector<\/strong><\/a><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s manufacturing industry is a <strong>critical pillar of the economy<\/strong>, contributing significantly to <strong>employment, exports, and overall growth.<\/strong>&nbsp;<\/li>\n\n\n\n<li>In recent years, the sector has regained momentum as global supply chains diversify and countries seek alternatives to concentrated production hubs.&nbsp;<\/li>\n\n\n\n<li>It has created <strong>an opportunity for India<\/strong> to position itself as a <strong>reliable and competitive manufacturing destination.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Sectoral Progress and Value Chain Upgrading<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Electronics and Semiconductors: Electronics manufacturing<\/strong> has expanded rapidly, with production increasing nearly six-fold and exports almost eight-fold over the past decade.<\/li>\n\n\n\n<li><strong>Pharmaceuticals and Medical Devices:<\/strong> It has established India as one of the world\u2019s largest suppliers of generic medicines and vaccines, combining scale with technology intensity, with India supplying over half of global vaccine demand and a large share of generic medicines.<\/li>\n\n\n\n<li><strong>Automobiles and Auto Components: <\/strong>India is a major producer of<strong> two-wheelers, passenger vehicles, and commercial vehicles<\/strong>, supported by a <strong>strong auto-component ecosystem.<\/strong>\n<ul class=\"wp-block-list\">\n<li>The sector is undergoing a transition towards electric mobility, advanced electronics, and cleaner technologies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Steel, Metals, and Heavy Industry: <\/strong>Steel and metals form the backbone of India\u2019s industrial base, supporting infrastructure, construction, and capital goods manufacturing.\n<ul class=\"wp-block-list\">\n<li>India ranks among the world\u2019s largest steel producers, benefiting from domestic demand and resource availability.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Textiles and Apparel: <\/strong>Textiles and apparel remain labour-intensive and export-oriented, providing employment to millions.\n<ul class=\"wp-block-list\">\n<li>India has strengths across the value chain, from fibre and yarn to finished garments.<\/li>\n\n\n\n<li>Recent policy support aims to improve scale, modernise production, and enhance competitiveness against low-cost global producers.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Renewable Energy and Emerging Technologies: <\/strong>Manufacturing linked to renewable energy, such as solar modules, wind components, and energy storage systems is gaining momentum as India expands its clean energy capacity.\n<ul class=\"wp-block-list\">\n<li>It aligns industrial growth with climate goals and offers opportunities for technology learning, scale, and export potential.&nbsp;<\/li>\n\n\n\n<li>Emerging areas such as <strong>green hydrogen equipment<\/strong> and <strong>advanced materials <\/strong>are beginning to attract investment.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>MSMEs Across Sectors: <\/strong>Micro, Small and Medium Enterprises (MSMEs) contribute substantially to employment and exports but <strong>face challenges<\/strong> related to <strong>finance, technology adoption, and skill development.&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li>Deeper integration of MSMEs into strategic value chains, as suppliers of components and specialised services will be essential for inclusive and sustainable industrial growth.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concerns &amp; Issues Around India\u2019s Manufacturing Sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Limited Share in GDP and Employment: <\/strong>Manufacturing\u2019s share in India\u2019s GDP has remained <strong>around 15\u201317% for years,<\/strong> lower than that of many industrialised and emerging economies.\n<ul class=\"wp-block-list\">\n<li>It has not generated employment at the scale needed to absorb India\u2019s growing workforce, raising concerns about jobless or low-quality job growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Incomplete Integration into Global Value Chains: <\/strong>India remains underrepresented in global manufacturing value chains, especially in high-technology and complex products.\n<ul class=\"wp-block-list\">\n<li>India still relies heavily on imported intermediates, limiting domestic value addition and reducing resilience to global supply disruptions while exports have grown in sectors such as pharmaceuticals and electronics.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Infrastructure and Logistics Bottlenecks: <\/strong>Although logistics efficiency has improved, costs remain high relative to some competitors.\n<ul class=\"wp-block-list\">\n<li>Road transport continues to dominate freight movement, while railways and coastal shipping, more efficient for long-distance and bulk transport, are underutilised.<\/li>\n\n\n\n<li>Congestion at ports, last-mile connectivity gaps, and uneven infrastructure quality across states add to operational inefficiencies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>High Cost of Doing Business at the Firm Level: <\/strong>Formal ease-of-doing-business (EODB) reforms have improved regulations on paper, but firms often face delays in land acquisition, utility connections, environmental clearances, and local approvals.\n<ul class=\"wp-block-list\">\n<li>Unpredictability in implementation and slow dispute resolution increase project timelines and discourage large-scale investments, particularly in capital-intensive manufacturing.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Weak R&amp;D and Technology Absorption: <\/strong>India\u2019s manufacturing sector suffers from relatively low investment in research and development.\n<ul class=\"wp-block-list\">\n<li>Industry\u2013academia linkages remain limited, and many firms struggle to absorb advanced technologies.<\/li>\n\n\n\n<li>It constrains productivity growth and makes it difficult to compete in technology-intensive and precision manufacturing segments.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Skill Mismatches and Labour Constraints: <\/strong>While India has a large labour pool, skill mismatches persist.\n<ul class=\"wp-block-list\">\n<li>Many manufacturing firms face shortages of trained technicians, engineers, and shop-floor supervisors<\/li>\n\n\n\n<li>Existing skilling systems often lag behind industry needs, especially in advanced manufacturing, automation, and digital production technologies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Challenges Faced by Micro, Small and Medium Enterprises (MSMEs):<\/strong> Limited access to affordable credit, low technology adoption, inadequate quality infrastructure, and weak integration into large supply chains restrict their ability to scale and compete globally.<\/li>\n\n\n\n<li><strong>Fragmented Industrial Clusters: <\/strong>Industrial clusters in India are often small and fragmented, limiting agglomeration benefits such as shared infrastructure, supplier networks, and knowledge spillovers.\n<ul class=\"wp-block-list\">\n<li>Without scale and deeper integration, clusters struggle to deliver sustained productivity and capability gains.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Regulatory Uncertainty and State-Level Variations: <\/strong>Manufacturing outcomes are increasingly shaped by state and local governments.\n<ul class=\"wp-block-list\">\n<li>Differences in land policies, labour regulations, power tariffs, and compliance processes across states create uncertainty for investors.<\/li>\n\n\n\n<li>Frequent policy changes or inconsistent enforcement further raise risk perceptions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Quality and Standards Compliance: <\/strong>While <strong>Quality Control Orders (QCO)<\/strong> and standards enforcement can strengthen competitiveness, poorly calibrated implementation risks increasing compliance costs, especially for MSMEs.\n<ul class=\"wp-block-list\">\n<li>Inadequate testing and certification infrastructure can delay production and disrupt supply chains.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Policy Push &amp; Efforts in India\u2019s Manufacturing Sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Make in India: <\/strong>It sought to position India as a global manufacturing hub by encouraging domestic and foreign investment, improving ease of doing business, and identifying priority sectors.\n<ul class=\"wp-block-list\">\n<li>It helped raise manufacturing\u2019s visibility in policymaking and laid the groundwork for subsequent reforms and incentive-based schemes.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Production Linked Incentive (PLI) Schemes: <\/strong>These schemes provide incentives linked directly to incremental production and sales, encouraging firms to scale up manufacturing in India.\n<ul class=\"wp-block-list\">\n<li>PLI programmes cover sectors such as electronics, pharmaceuticals, automobiles, solar modules, textiles, and advanced chemistry cell batteries.&nbsp;<\/li>\n\n\n\n<li>PLIs aim to embed Indian firms more deeply into global value chains by rewarding scale, efficiency, and exports.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Infrastructure-Led Industrial Growth: <\/strong>Programmes such as <strong>PM Gati Shakti<\/strong> and <strong>National Logistics Policy <\/strong>focus on integrated planning across railways, roads, ports, airports, and logistics parks.\n<ul class=\"wp-block-list\">\n<li>Dedicated freight corridors, industrial corridors, and industrial parks are being developed to reduce logistics costs and improve connectivity between production centres and markets.<\/li>\n\n\n\n<li>India has made steady progress, with logistics costs declining to <strong>around 7.97% of GDP in FY 2023\u201324<\/strong>, comparable with global benchmarks.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Ease of Doing Business and Regulatory Reforms: <\/strong>These include simplification of company laws, rationalisation of labour codes, faster insolvency resolution, and digitisation of approvals and filings.\n<ul class=\"wp-block-list\">\n<li>Policy efforts are increasingly focused on implementation quality\u2014speed, predictability, and consistency at the state and local levels while formal regulations have improved.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Forward: Towards a Long-Term Manufacturing Strategy<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The proposed <strong>National Manufacturing Mission<\/strong> reflects an effort to align incentives, infrastructure, skilling, and innovation under a coherent long-term industrial strategy.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"d2dce5\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"747\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-134.png\" alt=\"\" class=\"not-transparent wp-image-65551\" style=\"--dominant-color: #d2dce5; aspect-ratio:1.3708340770584186;width:415px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-134.png 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-134-300x219.png 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-134-768x560.png 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li>The objective is not only to increase output, but to build deep technological capabilities, strengthen R&amp;D ecosystems, and develop globally competitive firms in strategically important sectors.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q]<\/strong> Discuss the role of industrial policy, technology adoption, infrastructure and logistics, and MSMEs in enabling India to move towards higher value-added and strategically important manufacturing sectors.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/indias-next-manufacturing-leap-is-about-what-it-produces-10504342\/lite\/\" target=\"_blank\" rel=\"noopener\">Source: IE<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/01\/Daily-Editorial-Analysis-31-01-2026.pdf\"><strong>Download PDF<\/strong><\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 31 January, 2026<\/p>\n<p>India\u2019s manufacturing sector is regaining momentum amid geopolitical shifts that are reshaping global production networks and\u00a0 offers a solid foundation for the next phase of industrial growth.<\/p>\n","protected":false},"author":4,"featured_media":65552,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-65548","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/Editorial-Analysis-900-600-5-1.webp","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/65548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=65548"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/65548\/revisions"}],"predecessor-version":[{"id":65596,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/65548\/revisions\/65596"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/65552"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=65548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=65548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=65548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}