10 Years of Make in India – Success and Challenges – Explained Pointwise

The “Make in India” initiative was launched by Prime Minister Narendra Modi on September 25, 2014, with the vision to transform India into a global manufacturing hub. This year, this program has completed it’s 10 years. Therefore, it becomes important to analyse the achievements and challenges during 10 years of make in India Program. Now let’s start with the introduction of the same.

What were the objectives of Make in India?

• Boost Manufacturing Aims to raise manufacturing sector growth to 12-14% per annum, create 100 million additional jobs by 2022, and increase manufacturing sector’s contribution to GDP to 25% by 2025
• Global Competitiveness: Improve India’s competitiveness by attracting foreign direct investment (FDI), modernizing infrastructure, and simplifying bureaucratic processes.
• Focus Sectors: 25 sectors, including automobiles, textiles, electronics, pharmaceuticals, defence manufacturing, renewable energy, and more.
• Now, with the “Make in India 2.0” phase, it includes 27 sectors, the program continues to drive forward with significant achievements and renewed vigour.
• Designed to transform India’s economic trajectory and generate employment opportunities for the vast young workforce

Pillars of ‘Make in India’:

1. New Processes It identified ‘Ease of Doing Business’ as crucial for promoting entrepreneurship. Measures like Streamlined processes, simplified regulations, and reduced bureaucratic hurdles were implemented to enhance the business environment for startups and established enterprises.
2. New Infrastructure: Under this government focussed on development of industrial corridors and smart cities with state-of-the-art technology, high-speed communication and creating world-class infrastructure to support industrial growth. It also focussed on improving intellectual property rights (IPR) infrastructure.
3. New Sectors: In included opening up various sectors for Foreign Direct Investment (FDI).
4. New Mindset: Government embracing a role as a facilitator rather than a regulator. It created partnership with industry to drive the country’s economic development.

What are the key Initiatives taken under 10 Years of Make in India?

Production Linked Incentive (PLI) Scheme:

PLI scheme was launched to incentivize domestic manufacturing and reduce imports. It was aligned with India’s vision of becoming ‘Atmanirbhar’ (self-reliant). The primary goals of the PLI Schemes are to attract substantial investments, incorporate advanced technology, and ensure operational efficiency.

It covers 14 sectors, including electronics, solar panels, and pharmaceuticals, aiming to create large-scale manufacturing ecosystems.

The scheme was launched with an incentive outlay of ₹1.97 lakh crore and ₹1.23 lakh crore worth of investment was realized by companies by March 2024.

PM Gati Shakti: The Plan launched in Oct 2021 to create multi-modal and last mile connectivity infrastructure, aimed at US$5 trillion economy by 2025.

The plan is driven by 7 engines, namely: 1. Railways 2. Roads 3. Ports 4. Waterways 5. Airports 6. Mass Transport 7. Logistics Infrastructure.

The government has focused on developing industrial corridors, including: Delhi-Mumbai Industrial Corridor (DMIC), Bengaluru-Mumbai Economic Corridor (BMEC), etc.,

Semiconductor Ecosystem Development – Semicon India Programme launched with outlay of ₹76,000 crore to develop sustainable semiconductor and display ecosystem. It resulted in projects like Tata’s joint venture with Taiwan’s Powerchip in Dholera.

National Logistics Policy – Launched in Sept 2022 to improve logistics efficiency and reduce costs, targeting top 25 rank in Logistics Performance Index by 2030.

Boost in FDI: Several reforms have been implemented to ease the flow of FDI, including raising the FDI cap in critical sectors like defence (from 26% to 74%), insurance, and railways. This has led to a consistent increase in FDI inflows, with $84 billion received in 2021-22, making India one of the largest FDI destinations globally.

Skill Development Initiatives: To meet the demand for skilled labor, the government launched initiatives like Skill India and the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which have trained millions of youths across India​.

Startup India:  launched for building a robust startup ecosystem, and transforming India into a country of job creators instead of job seekers.  As of September 25, 2024, India boasts the third-largest startup ecosystem in the world, with 148,931 DPIIT Recognized Startups, which have created over 15.5 lakh direct jobs.

Tax Reforms: It included implementation of the Goods and Services Tax (GST) on July 1, 2017. Simplification of the tax reforms lowered production costs, making local manufacturing more competitive.

Unified Payments Interface: India’s Unified Payments Interface (UPI) has emerged as a frontrunner in the global digital payments landscape. UPI processed nearly ₹81 lakh crore in transactions between April and July 2024 alone.

What are the achievements in 10 Years of Make in India?

Vaccines: India supplies nearly 60% of the world’s vaccines, meaning every second vaccine globally is proudly made in India. India not only achieved COVID-19 vaccination coverage in record time but also became a major exporter of much-needed life-saving vaccines.

Rise in Mobile Manufacturing: India is now the second-largest mobile phone manufacturer globally. From having two mobile manufacturing units in 2014, the country now hosts over 200 units, producing 99% of the mobile phones used in India. Mobile exports surged from ₹1,556 crore to ₹1.2 lakh crore in 2024​.

Defence Manufacturing: India has made significant strides in defence production, particularly in reducing imports. For example, Hindustan Aeronautics Limited (HAL) and other domestic players are producing key military equipment like fighter jets and submarines. In 2023-24, defence production has soared to ₹1.27 lakh crore, with exports reaching over 90 countries, showcasing India’s growing strength and capability in this critical area.

Semiconductor and Chip Manufacturing: The semiconductor sector, once nearly absent, attracted investments worth ₹1.5 lakh crore with five semiconductor fabrication plants in the pipeline. These plants are set to have a combined daily capacity of 7 crore chips.

Railway infrastructure: Vande Bharat Trains, India’s first indigenous semi-high-speed trains, are a shining example of the success of the ‘Make in India’ initiative. Featuring state-of-the-art coaches, these trains offer passengers a modern and enhanced travel experience.

Renewable Energy Growth: India has emerged as the 4th largest renewable energy producer globally. The country has witnessed a meteoric rise from 76.38 gigawatts (GW) in 2014 to an impressive 203.1 GW in 2024.

Steel Production: India became a net exporter of finished steel, with production increasing by 50%. This is a direct impact of the policy focus on domestic capacity building​.

Automobile Industry Growth: India is now a global leader in automotive manufacturing, particularly in two-wheelers and electric vehicles (EVs). The EV market, valued at $3 billion, grew substantially after 2014, contributing to sustainable mobility goals​

What are the challenges faced by Make in India program during last 10 years?

Slowing growth rate: According to the National Accounts Statistics (NAS), the manufacturing real gross value added (GVA) growth rate has slowed down from 8.1 during 2001-12 to 5.5% during 2012-23.

Image Credit: The Print

Lagging Manufacturing Share in GDP: The sector’s GDP share has stagnated at 17%-18% over the last three decades, though it is slightly higher in the latest GDP series due to methodological changes. This is still far from 25% target.

Limited Job Creation: The growth in output has not been mirrored by growth in employment​. As per the NSSO sample surveys, manufacturing employment has declined from 12.6% in 2011-12 to 11.4% in 2022-23. Agriculture’s share in the workforce increased from 42.5% in 2018-19 to 45.8% in 2022-23. As per surveys of unincorporated sector enterprises, employment in Unorganised or informal sector manufacturing still accounts for most employment. But, still, it was reduced from 38.8 million in 2015-16 to 30.6 million by 2022-23.

Exports: India’s exports as a share of GDP has fallen from 25.2 percent in 2013-14 to 22.7 percent in 2013-24. India’s contribution to global exports has increased at a slow pace, in 2005-06, India contributed 1 percent to global exports. By 2015-16, this had grown to 1.6 percent. However, by 2022-23, it stood at just 1.8 percent — a significantly lower increase.

Source: The print

What are causes of challenges faced during 10 Years of Make in India?

Supply Chain and Infrastructure Bottlenecks: While industrial corridors and infrastructure projects have progressed, certain areas still suffer from inadequate logistics, poor connectivity, and inefficient supply chains​.

Complexity in Regulatory Environment: Although reforms have eased some processes, bureaucratic hurdles and delays in approvals remain in specific sectors, leading to challenges for businesses.

Overdependence on Imports: Several critical components, especially in high-tech sectors like electronics and semiconductors, are still heavily dependent on imports, limiting India’s self-reliance in strategic areas​. Furthermore, trade imbalance is growing from 2020-21 to 2023-24.

High Logistics cost: Logistics cost in India is higher at 13% to 14% of GDP compared to 8% to 9% of GDP in other developed economies such as the USA. Higher logistics cost reduces the competitiveness of ‘Made in India’ products in global markets.

R&D: The India Innovation Index 2021 has found that the overall spending on R&D by India has been relatively low across the country. The funding is less than 1% of the GDP. Further there are no extra provisions for R&D in the sunrise sectors. The best talent of our country migrates to foreign countries resulting in brain drain.

GFCF: As per National Accounts Statistics (NAS) and Annual Survey of Industries (ASI), Gross Fixed Capital Formation (GFCF) reduced from 4.5% in 2012-13 to 0.3% in 2019-20.

FDI: FDI in India did not grow at a required pace, even though India’s rank in the World Bank’s Ease of Doing Business (EDB) index, improved from 142 in 2014-15 to 63 in 2019-20.

What more can be done?

R&D: India must aim at investment-led growth and technological catching up. They must be supported by domestic R&D to promote adaptive research and the indigenisation of imported technology.

Finance: Publicly funded development finance institutions or “policy banks” are needed to provide affordable long-term credit. It will be beneficial for socialising the risks of learning and catching up with the technological frontier.

Deepening Domestic Value Chains: India needs to build backward linkages in manufacturing sectors such as electronics and automotive by promoting domestic production of key components and raw materials​.

Enhancing Innovation and R&D: Greater emphasis is needed on research and development (R&D), especially in areas like semiconductors, electric vehicles, and clean energy. Establishing R&D hubs and offering greater tax incentives for innovation will help​.

Strengthening Skill Development: Expanding the scope and depth of skill development programs, with a focus on digital and high-tech skills, will enable India’s workforce to better align with the demands of modern industries​.

SME Empowerment: Small and medium enterprises (SMEs) should be provided targeted support through financial incentives, easier credit access, and technological support to help them integrate into global supply chains​.

Focus on Green Manufacturing: With increasing focus on sustainable development, promoting green manufacturing practices by incentivizing renewable energy use, energy-efficient technologies, and eco-friendly production methods can boost India’s standing in the global market​.