Make in India

The “Make in India” initiative recently celebrated its 10th anniversary, marking a decade of efforts toward positioning India as a global manufacturing and design hub.

About Make in India

Aim & Date: Make in India was launched on September 25, 2014, to transform India into a global design and manufacturing hub under the motto ‘Vocal for Local’.
Objective: To achieve a 12-14% annual industrial growth rate, generate 100 million jobs, and increase the manufacturing sector’s share to 25% of GDP by 2025.
Four Pillars of Make in India: The initiative focuses on New Processes (Ease of Doing Business), New Infrastructure (industrial corridors and smart cities), New Sectors (FDI in key sectors like Defence, Railways, and Medical Devices), and a New Mindset (government as a facilitator, not a regulator).
Make in India 2.0: Launched in 2021, focusing on 27 sectors across Ministries, Departments, and state governments.

Make in India: Major Achievements

Business Environment Overhaul: With reforms such as the Insolvency and Bankruptcy Code (IBC), GST, and Jan Vishwas Act, India has streamlined business processes, propelling its rank in the World Bank’s Doing Business Report from 142^nd in 2014 to 63^rd in 2020.
Competitiveness and Regulatory Reforms: India has implemented significant reforms like lowering tax rates to the lowest in Asia, reducing over 40,000 compliance requirements, and decriminalising 3,800 provisions. The National Single Window System has simplified investor approvals, granting over 75,000 clearances.
Manufacturing Leadership: India has become the 4^thlargest renewable energy producer and manufactures 400 million toys annually. It is now the 2nd largest mobile manufacturer globally, producing 99% of smartphones domestically, thus reducing dependency on imports.
Surge in FDI Inflows: FDI has grown from $45 billion in 2015 to $85 billion in 2022, signalling strong global confidence in India’s manufacturing sector and its potential as a key player in the global economy.
Record Exports and Vaccine Leadership: India’s merchandise exports hit a record $437 billion in 2024, boosted by growth in sectors like pharmaceuticals. India now supplies nearly 60% of the world’s vaccines, establishing itself as a global leader in vaccine production.
Rising Defence Exports: India has successfully developed and exported advanced defence technologies, including platforms like the LCA Tejas, Dhanush Artillery Gun, and MBT Arjun, marking its growing presence as a global defence exporter.
Innovation and R&D Advancement: India ranks 39th in the Global Innovation Index, climbing 42 places since 2015, and is prioritising high-value manufacturing and research & development, positioning itself as a competitive global innovator.
Sustainable Growth Initiatives: The National Green Hydrogen Mission aims to create 600,000 jobs, reduce natural gas imports, and save ₹1 lakh crore, driving India’s commitment towards sustainable and green growth.

Challenges Faced by Make in India

Sluggish Manufacturing Growth: Despite efforts, the manufacturing sector’s contribution to GDP has stagnated at 17.7% in 2023, falling short of the 25% target. The real GVA growth has slowed from 8.1% (2012) to 5.5% (2023).
Limited Job Creation: The sector has not created enough jobs, with manufacturing employment declining from 51 million (2017) to 35 million (2023). Meanwhile, agriculture still absorbs a large share of the workforce, increasing from 42.5% in 2018-19 to 45.8% in 2022-23.
Weak Export Performance: India’s merchandise exports as a share of GDP have fallen from 25.2% (2013-14) to 22.7% (2023-24). Despite increasing exports in absolute terms, India’s contribution to global exports remains low, rising from 1% in 2005 to 1.8% by 2022-23.
Inadequate Infrastructure and Supply Chains: While some infrastructure projects have progressed, issues like logistics inefficiencies, poor connectivity, and high logistics costs (13-14% of GDP) still limit the sector’s competitiveness, compared to 8-9% in developed economies.
Overdependence on Imports: Critical sectors like electronics & semiconductors remain heavily dependent on imports, undermining the goal of self-reliance, & contributing to a growing trade imbalance.
Regulatory and Bureaucratic Challenges: Despite reforms, bureaucratic hurdles and delays in approvals continue to be significant barriers for businesses, especially in certain sectors.
Low R&D Investment: Research and Development spending remains under 1% of GDP, with insufficient investment in sunrise sectors and a brain drain of top talent to foreign markets.
Declining Gross Fixed Capital Formation (GFCF): GFCF has declined sharply from 4.5% in 2012-13 to just 0.3% in 2019-20, indicating reduced investment in infrastructure and industrial growth.

Way Forward

Strengthen R&D: Establish innovation hubs for semiconductors, clean energy, and EVs, while offering tax incentives for private R&D to foster indigenous technology development.
Enhance Skill Development: Expand skilling initiatives aligned with industry needs, emphasizing AI, machine learning, robotics, and other advanced technologies to prepare the workforce for Industry 4.0.
Promote Green Manufacturing: Encourage the adoption of renewable energy, energy-efficient technologies, and eco-friendly practices to align with global sustainability goals and reduce carbon footprints.
Empower SMEs: Facilitate financial aid, technological support, and seamless credit access to small and medium enterprises, helping them integrate into global supply chains and foster employment generation.
Build Domestic Value Chains: Strengthen backward linkages in critical sectors like electronics & automotive by promoting domestic production of components & raw materials to reduce import dependence.
Boost Innovation Ecosystem: Operationalise the Anusandhan National Research Foundation (ANRF) and foster academia-industry-government collaboration to transform ideas into market-ready solutions.
Improve Financing: Establish development finance institutions to provide affordable long-term credit and mitigate the risks associated with technological innovation and large-scale investments.
Encourage Entrepreneurship: Cultivate a start-up ecosystem by leveraging India’s pool of 2.2 million STEM graduates annually and fostering business-friendly policies.
Leverage Democracy: Capitalise on India’s democratic framework to promote free-thinking, creativity, and innovation, making it a competitive advantage over authoritarian economies like China.

“Make in India” embodies the vision of transforming India into a global manufacturing powerhouse by focusing on “Make in India for the World” and becoming an assembly hub for global supply chains. With strategic reforms, innovation, and sustainable practices, India can secure its place as a leader in global manufacturing.

Key Facts about India’s Manufacturing Sector

India’s manufacturing sector plays a crucial role in its economy, contributing around 17% to GDP. Despite facing challenges like low productivity and regulatory bottlenecks, it remains the 5th largest manufacturer globally and a key driver of economic growth.

Contribution to GDP and Employment

Share in GDP: ~17% of India’s Gross Value Added (GVA) (Economic Survey 2022-23).
Employment: Employs ~15% of the workforce in manufacturing job.

Global Standing

5th Largest Manufacturer: 3% of global output (after China, US, Japan, and Germany).
2nd Most Sought-After Manufacturing Destination: Ranked after China (Global Manufacturing Risk Index 2021).

MSME Sector

Contribution to GDP: 30% (Manufacturing and Services).
Output and Exports: 45% of manufacturing output and 40% of total exports.
Employment: Provides 80% of industry jobs with only 20% investment.

Sector-Specific Insights

Pharmaceuticals: 3^rd largest producer by volume globally and largest supplier of generic drugs (20% global share).
Electronics: 2^nd largest mobile phone manufacturer; domestic production tripled from $30 billion (2014-15) to $105 billion (2022-23).
Automobile: 3^rd largest automobile market globally; largest producer of two-wheelers, three-wheelers, and tractors.
Textiles: 3^rd largest exporter of textiles and apparel globally; largest jute producer and 2^nd largest cotton producer.
Leather: 2^nd largest footwear producer globally; employs 30% of women with a young workforce (55% below 35 years).
Gems and Jewelry: Contributes ~7% to GDP; >90% of world’s diamonds are cut & polished in India.
E-Commerce: India’s e-commerce market is the fastest growing globally, with 20% annual growth rate.

Reference: PIB | Business Standard

UPSC Mains PYQs – Theme – Manufacturing

Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than capital intensive exports. (2017)
“Success of ‘Make in India’ programme depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (2015)

PMF IAS Pathfinder for Mains – Question 17

Q. “Make in India can become the foundation for India’s economic self-reliance.” Discuss this statement in the context of India’s current manufacturing and export performance. (250 Words) (15 Marks)

Approach

Introduction: Briefly write an introduction about the Make in India initiative.
Body: Discuss the key benefits and challenges of the Make in India initiative.
Conclusion: Write a way forward & conclude by highlighting need for shift to productivity-driven growth.