• UGI USER
  • Sep 25, 2026
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Make in India at 12: Manufacturing Growth

MAKE IN INDIA AT 12: MANUFACTURING GROWTH AND THE CHALLENGE OF STRUCTURAL TRANSFORMATION

Why in the News?

Twelve years after its launch on 25 September 2014, an assessment of Make in India across growth, investment, employment and exports indicates mixed outcomes. While manufacturing has recorded gains in selected sectors, its overall contribution to GVA, employment, private investment and global merchandise exports has not increased substantially, highlighting the challenge of achieving manufacturing-led structural transformation.

Make in India: Growth vs Structural Change

MANUFACTURING PERFORMANCE UNDER MAKE IN INDIA

  • Growth Performance: Manufacturing has not consistently outpaced overall economic growth, with the sector showing stronger performance in recent years but a narrowing growth differential.
  • GVA Share: Under the newer national accounts series, manufacturing’s share of GVA increased marginally from 14.6% in 2022–23 to 15.6% in 2025–26.
  • Export Position: India’s non-petroleum goods exports increased substantially, but India’s share of global merchandise exports remained around 1.7% after rising from approximately 0.8% in 2002.
  • Investment Constraint: Private-sector GFCF as a proportion of GDP has remained weaker than desired, limiting sustained expansion of productive manufacturing capacity.
  • Capacity Utilisation: Although capacity utilisation has improved, it remains below the level generally associated with strong incentives for firms to undertake substantial fresh capacity creation.

PLI SCHEMES AND THE CHALLENGE OF BROAD-BASED INDUSTRIALISATION

  • Investment Gains: The 14 Production-Linked Incentive schemes had attracted cumulative investment of approximately ₹2.4 lakh crore by March 2026, indicating meaningful gains in selected industries.
  • Sector Concentration: Solar modules, pharmaceuticals, automobiles and components, specialty steel and large-scale electronics together accounted for nearly 83% of PLI-linked investment, showing considerable concentration.
  • FDI Performance: Manufacturing’s share of overall FDI increased from approximately 48% in 2014–15 to 55% in 2025–26, although manufacturing FDI growth lagged overall FDI growth in several years.
  • Credit Expansion: Rising industrial bank credit, particularly to MSMEs, can support production and working capital, but sustained output growth is necessary to distinguish productive investment from financing of existing operations.
  • Structural Challenge: Achieving manufacturing-led development requires stronger MSME integration, labour-intensive industries, infrastructure, technology adoption and global value-chain participation rather than relying on incentives concentrated in selected sectors.

MANUFACTURING AND STRUCTURAL TRANSFORMATION IN INDIA

●      Economic Transformation: Structural transformation involves the movement of labour and capital from low-productivity activities towards higher-productivity manufacturing and modern services.

●      Manufacturing Multiplier: Manufacturing can generate significant employment and productivity gains through supply chains, technological learning, exports and linkages with agriculture and services.

●      Global Value Chains: Participation in global value chains (GVCs) enables firms to specialise in different stages of production, potentially increasing India’s exports, technology transfer and manufacturing competitiveness.

●      Industrial Policy: Schemes such as PLI represent a shift towards targeted industrial policy aimed at achieving scale, attracting investment and strengthening domestic manufacturing capabilities.

●      Employment Challenge: India’s manufacturing strategy must particularly promote labour-intensive sectors such as textiles, footwear, food processing and light engineering to absorb its large workforce and realise the potential demographic dividend.