 Make in India Completes 12 Years as India Expands Manufacturing Capacity but Faces Value-Addition and Export Challenges

Recent Developments:

• Make in India, launched on 25 September 2014, completed 12 years in September 2026, with substantial expansion in electronics, automobiles, pharmaceuticals, steel, defence and renewable-energy manufacturing, while challenges remain in private investment, domestic value addition, employment and integration with global value chains.
• Manufacturing GVA at constant prices recorded a 10.88% CAGR during 2022-23 to 2025-26 under the revised national accounts series. The manufacturing sector contributes around 16–17% of GDP and employs more than 27 million workers.
• The PLI schemes across 14 sectors had attracted more than ₹2.40 lakh crore in investment, generated over ₹22.66 lakh crore in production and sales, supported more than ₹15.20 lakh crore in exports and created over 14 lakh direct and indirect jobs by June 2026.
• Recent policy measures have shifted attention from final-product assembly towards domestic value addition, components, strategic technologies and complete manufacturing ecosystems.

Make in India: Objectives and Evolution:

Core Objectives:

• Make in India was launched to transform India into a global hub for manufacturing, design and innovation by facilitating investment, fostering innovation, developing infrastructure and improving business processes.
• The initiative sought to address structural constraints affecting manufacturing, including regulatory complexity, infrastructure gaps, limited investment and inadequate integration with global production networks.
• Make in India 2.0 currently covers 27 sectors, including 15 manufacturing and 12 services sectors, with implementation involving multiple ministries, departments and state governments.

Supporting Policy Architecture:

• The manufacturing ecosystem has been strengthened through PLI schemes, National Single Window System, PM GatiShakti, GIS-enabled industrial land bank, FDI reforms, industrial corridors, public procurement measures and compliance rationalisation.
• PM GatiShakti seeks to integrate multimodal infrastructure planning, while industrial parks and single-window systems aim to reduce logistical and regulatory bottlenecks.
• The policy approach has gradually moved from attracting investment towards building sector-specific production capacity and value chains.

Manufacturing Performance: Sectoral Transformation:

Electronics and Mobile Manufacturing:

• Electronics production increased from approximately ₹1.9 lakh crore in 2014-15 to ₹13.11 lakh crore in 2025-26, representing nearly a sevenfold increase.
• Mobile-phone production increased from about ₹18,000 crore to ₹6.27 lakh crore during the same period, making India the world's second-largest mobile-phone manufacturer by volume.
• Domestic value addition in electronics has also increased, although industry estimates place it at around 18–20%, indicating substantial scope for deeper component and sub-system manufacturing.
• PLI-supported electronics manufacturing has expanded beyond final assembly into printed circuit board assemblies, batteries, camera modules, display modules and other sub-assemblies.

Automobiles, Pharmaceuticals and Medical Devices:

• Vehicle production reached 31.03 million units in 2024-25, around 33% above the 2014-15 level.
• India's pharmaceutical industry recorded annual turnover of ₹4,71,898 crore in 2024-25, while domestic medical-device manufacturing increased from ₹28,000 crore in 2019-20 to ₹41,500 crore.
• Pharmaceutical PLI schemes have strengthened domestic production of critical APIs, bulk drugs, complex generics and high-value medicines, thereby addressing import dependence in selected segments.

Steel, Defence and Renewable Energy:

• Crude steel production increased from 81.7 million tonnes in 2014-15 to around 170 million tonnes in 2025-26.
• Defence production increased from ₹46,429 crore in 2014-15 to ₹1.78 lakh crore in 2025-26, indicating significant expansion of indigenous defence manufacturing.
• Solar-module manufacturing capacity expanded from 2.3 GW in 2014 to 192 GW by June 2026, while solar-cell capacity increased from 1.2 GW to around 30 GW.
• Manufacturing capabilities are increasingly extending towards strategic components and technologies, including indigenous microprocessors for space applications and rare-earth permanent magnets.

Production Linked Incentive Scheme: Manufacturing as Policy Instrument:

Scale and Impact:

• The PLI scheme was introduced across 14 strategic sectors to incentivise incremental production and sales, attract investment, increase exports and generate employment.
• As of June 2026, PLI schemes had attracted over ₹2.40 lakh crore investment, generated more than ₹22.66 lakh crore production and sales, supported over ₹15.20 lakh crore exports and created more than 14 lakh jobs.
• In electronics, PLI support has contributed to higher domestic production and a sharp decline in mobile-phone imports, while pharmaceutical PLI has promoted domestic manufacturing of critical products.

Concentration of Benefits:

• PLI gains remain concentrated in sectors such as solar modules, pharmaceuticals, automobiles and components, speciality steel and large-scale electronics.
• This concentration highlights the need to expand manufacturing incentives towards labour-intensive sectors, MSMEs and deeper component ecosystems.

Manufacturing and Global Value Chains:

India’s Global Position:

• The Economic Survey 2025-26 estimated India's share at about 2.9% of global manufacturing GVA and 1.8% of global merchandise exports in 2024.
• India's limited participation in global value chains is partly associated with relatively low backward participation, particularly in intermediate goods and components.
• Greater integration with global production networks can increase domestic value added and employment through scale effects, even when some intermediate inputs are initially imported.

Export Challenge:

• Non-petroleum goods exports increased substantially during the Make in India period, but India's share of global merchandise exports has remained comparatively modest.
• Therefore, higher domestic production does not automatically translate into a proportional increase in global export share.
• Export competitiveness depends on logistics costs, product quality, scale, technology, trade agreements, input availability and integration with multinational production networks.

Key Structural Challenges:

Investment and Capacity Utilisation:

• Private-sector investment remains critical because sustained manufacturing expansion requires long-term capital formation, not only government incentives.
• Manufacturing capacity utilisation has improved but remains an important constraint because sustained private investment generally requires adequate utilisation and credible demand conditions.
• Manufacturing FDI has not increased as rapidly as overall FDI across the period examined, indicating the need for greater sector-specific investment attractiveness.

Employment and Labour Intensity:

• Manufacturing expansion has generated substantial employment in selected sectors, but the transformation has not yet produced a proportionate increase in manufacturing's role in total employment.
• Labour-intensive manufacturing, particularly textiles, footwear, food processing, furniture and light engineering, can provide greater employment absorption if supported by skills, infrastructure and export access.

Domestic Value Addition:

• Higher output can coexist with significant dependence on imported components and intermediate goods.
• The strategic priority is therefore to move from assembly-led manufacturing to component-led and technology-intensive manufacturing.
• Electronics illustrates this challenge: production has expanded rapidly, but domestic value addition remains considerably lower than total gross production value.

Recent Policy Push: From Capacity to Strategic Ecosystems:

BHAVYA Industrial Parks:

• Bharat Audyogik Vikas Yojana (BHAVYA) has an outlay of ₹33,660 crore for developing 100 investment-ready industrial parks over six years.
• The scheme emphasises plug-and-play infrastructure, multimodal connectivity, reliable utilities, digital governance and investor facilitation.
• BHAVYA is intended to reduce the time and infrastructure constraints associated with establishing manufacturing units.

Semicon 2.0:

• Semicon 2.0, approved in July 2026, has a total outlay of ₹1,27,500 crore to strengthen India's semiconductor ecosystem.
• Its focus extends across chip design, semiconductor equipment and materials, fabrication facilities, advanced packaging, research and development and talent development.
• The approach seeks to build a complete semiconductor value chain rather than concentrating only on assembly or packaging.

Rare-Earth Permanent Magnets:

• The government has allocated ₹7,280 crore for integrated manufacturing of sintered Nd-Fe-B rare-earth permanent magnets with a targeted capacity of 6,000 MTPA.
• The measure addresses a strategic midstream gap between rare-earth processing and downstream applications in electric vehicles, wind turbines, electronics, aerospace and defence.

Way Forward:

From Production to Competitive Value Chains:

• India's manufacturing strategy needs to shift from simply increasing gross production towards building competitive domestic and internationally integrated value chains.
• Policy should prioritise components, capital goods, industrial R&D, advanced materials, logistics, skills and technology diffusion alongside final-product manufacturing.
• Greater participation in global value chains can provide scale, technology transfer, export opportunities and employment while domestic capabilities deepen.
• Manufacturing policy should simultaneously support MSMEs and large firms, because domestic suppliers are essential for achieving higher value addition.
• Stable regulations, predictable taxation, efficient logistics and faster approvals remain necessary to convert policy incentives into durable private investment.

Conclusion:

• Twelve years of Make in India have produced substantial manufacturing capacity across electronics, automobiles, pharmaceuticals, steel, defence, renewable energy and strategic technologies.
• The next challenge is qualitative rather than merely quantitative: India needs to convert production growth into higher domestic value addition, stronger private investment, greater employment intensity and deeper global value-chain integration.
• The effectiveness of the next phase will therefore depend on whether manufacturing ecosystems can move from final assembly towards components, technology, capital goods, innovation and export competitiveness.

Value Addition for UPSC:

GS Paper III Linkages:

• Industrial Policy: Make in India represents a shift towards targeted industrial policy through sector-specific incentives and infrastructure creation.
• Employment: Labour-intensive manufacturing can support India's employment transition and demographic dividend.
• External Sector: Export competitiveness requires deeper integration with global value chains and lower logistics and input costs.
• Technology: Semicon 2.0, electronics components and rare-earth magnets illustrate the movement towards strategic technology and critical-input security.
• Infrastructure: BHAVYA and PM GatiShakti demonstrate the importance of integrated industrial and multimodal infrastructure.
• Atmanirbhar Bharat: The policy increasingly emphasises resilience and domestic capability without completely disconnecting India from global production networks.
• UPSC Mains Angle: The central analytical question is not whether manufacturing output has increased, but whether output growth is translating into domestic value addition, productive employment, investment and sustainable export competitiveness.