An incomplete story of India’s manufacturing

  • April 9, 2025
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instead of becoming hub of production in manufacturing to the India economy to boost domestic factory production and capitalise on the global “China Plus One” strategy it has been declining, despite initiatives like the National Manufacturing Policy (NMP) and Make in India.

Attempts were also made to increase merchandise exports through various export-import (Exim) policies and special economic zones (SEZs), even though SEZs encompass both services and manufacturing.  

In fact, services exports have outperformed manufacturing in these zones. For instance, services exports through SEZs were over 50 per cent higher, at $25.4 billion for manufacturing during the first quarter of the current financial year.

The Make in India initiative, launched by Prime Minister Narendra Modi in September 2014, aimed to transform India into a global design and manufacturing hub. Its core objective, encourage innovation, and develop world class infrastructure.

The initiative, covering 14 manufacturing and 12 services sectors, is supported by major programmers like the Production-Liked Incentive (PLI) scheme, PM GatiShakti, the National Logistics Policy, and tax reforms such as the goods and services tax (GST). However, this share has been declining over the past 14 years.

The non corporate or micro, small, and medium enterprises (MSME) segments of manufacturing are still to recover fully.

The income of the lower middle class has grown at a slow pace, which has affected manufacturing; the lower middle class consumes a higher proportion of manufacturing goods than services, while it is the reverse for the upper classes. This reflects changes in income distribution over the past decade. 

The manufacturing sector had grown significantly until 2007-08. But after 2008-09, its pace never showed strong growth.

The Make in India program is mainly focused on low-skill and low-value manufacturing, while India is facing increasing competition from countries like Indonesia, Taiwan, Thailand, Vietnam and Mexico.