Saturday, 05 Oct, 2024
Employment in the manufacturing sector rose from 57 million in 2017-18 to 64.4 million in FY23. (Photo courtesy: FreePik)
India’s industrial success spans beyond electronics, achieving net exporter status in steel and ranking fourth globally in renewable energy production. A remarkable 400% increase in renewable capacity underscores New Delhi’s commitment to sustainable growth, positioning the country as a potential leader in the green energy sector.
As India celebrates the 10th anniversary of its Make in India initiative, the government has highlighted significant strides in mobile phone manufacturing, which now meets 99 per cent of domestic demand. This transformation from a net importer to a manufacturing hub has reduced import reliance and positioned India as a competitive force in global supply chains.
Steel and renewables: Emerging global players
India’s industrial achievements extend beyond electronics. The country has transitioned to a net exporter in the steel sector and ranks as the fourth-largest producer of renewable energy globally. A 400 per cent increase in renewable capacity underscores India’s commitment to sustainable growth and sets the stage for leadership in the green energy sector.
PLI Scheme: Driving manufacturing growth
Central to these developments is the Production-Linked Incentive (PLI) scheme, which has attracted Rs 1.46 lakh crore in investment, generated Rs 12 lakh crore in output, and created 9 lakh jobs since its inception. The PLI programme has not only strengthened domestic production but also enhanced India’s competitiveness internationally.
FDI inflows indicate global confidence
Foreign direct investment (FDI) in manufacturing surged by 69 per cent to $165.1 billion over the past decade, reflecting growing global confidence in India’s manufacturing capabilities. This influx aligns with the government’s strategy to position India as a preferred hub for global manufacturing and supply chains.
A promising future
With the groundwork laid by the Make in India initiative, complemented by targeted policies and strategic investments, India is poised to reinforce its status as a global manufacturing powerhouse.
Prime Minister Narendra Modi celebrated the initiative’s impact on the economy, noting substantial increases in exports across sectors and enhanced domestic manufacturing capabilities. Defence exports alone skyrocketed from approximately Rs 1,000 crore in 2014 to more than Rs 21,000 crore today, marking India’s emergence as a significant player in global defence manufacturing, with products now reaching over 85 countries. This growth illustrates the government’s commitment to strengthening indigenous production and reducing reliance on imports.
Revitalising the toys industry
Modi also highlighted a resurgence in India’s toy industry, with exports surging by 239 per cent. The Centre’s efforts to boost local manufacturing have halved imports, showcasing the quality and competitiveness of Indian toys and reinforcing the broader Make in India agenda.
The road ahead
Modi’s remarks indicate a transformative shift in India’s manufacturing landscape, particularly in defence and toys. Continued government focus on local production promises further growth and innovation, fostering a more self-reliant economy.
However, despite high expectations, the Make in India initiative has yielded only modest gains. Data from the Ministry of Statistics shows that the manufacturing sector’s GDP share increased slightly from 17.3 per cent in 2013-14 to a peak of 18.5 per cent in 2021-22. Recent growth can be attributed to post-pandemic recovery, yet the sector’s limited expansion falls short of the ambitious target of 25 per cent of GDP. Structural reforms in infrastructure, labour, and competitiveness are essential; without decisive action, the initiative may be seen as a missed opportunity.
After reaching 18.5 per cent of GDP in 2021-22, the sector’s contribution has declined for two consecutive years, falling to 17.7 per cent in 2022-23 and 17.3 per cent in 2023-24—the same level as before the initiative began. Alarmingly, preliminary data for FY24 indicates a further drop to 15.7 per cent, raising concerns about the effectiveness of current policies and highlighting the urgent need for interventions to sustain India’s manufacturing ambitions.
Surge in merchandise exports
India’s merchandise exports reached $437 billion in FY 2023-24, spurred by the PLI scheme, which contributed an additional Rs 4 lakh crore. This highlights the initiative’s role in strengthening India’s competitive edge in global markets.
Employment growth in manufacturing
Employment in the manufacturing sector rose from 57 million in 2017-18 to 64.4 million in 2022-23, reflecting expanding opportunities fuelled by policies designed to create a robust manufacturing environment.
Crisis in West fuels shift to India
As Western nations grapple with concerns over China’s dominance in supply chains, India emerges as a viable alternative. New Delhi aims to enhance economic competitiveness, appealing to Western firms looking to diversify away from Beijing. With a large, cost-effective labour force, India is well-positioned to attract investments seeking stability and growth.
Infrastructure investment: A game changer
PM Modi’s commitment to infrastructure is evident, with budget allocations tripling over five years, surpassing Rs 11 lakh crore ($132 billion) for fiscal year 2025. This figure may exceed Rs 20 lakh crore when considering state-level spending. Modi plans to invest an ambitious Rs 143 lakh crore by 2030 to improve railways, roads, ports, and other vital infrastructure, boosting domestic production and enhancing connectivity essential for attracting global businesses.
Economic projections: Shifting growth dynamics
According to Bloomberg Economics, India’s economy is projected to grow by 9 per cent by the decade’s end, while China’s growth is expected to slow to 3.5 per cent. This trajectory positions India to potentially surpass China as the world’s leading growth driver by 2028. Even under conservative scenarios, such as those outlined by the IMF, India is likely to exceed China’s contribution to global growth by 2037.
Economists are of the view that as global dynamics shift, India’s proactive approach to enhancing economic competitiveness through substantial infrastructure investments positions it as a key player in the global supply chain landscape. With ongoing reforms and a focus on local manufacturing, India has the potential to attract Western businesses and emerge as a dominant force in the global economy.
