Ten years later – how far has the ‘Make In India’ journey come?

The ‘Make in India’ initiative was launched in 2014 to shift the country’s focus towards manufacturing and leverage global value chains. On September 25, the mission turned 10 years old.

Recent years have been marked by the establishment of production plants in various sectors – defense, electronic components, railway and aviation infrastructure and key chip production.

Plants that assemble phones, especially iPhones, are expanding rapidly, with Foxconn and India’s Tata Group playing a key role in this expansion.

We recently learned of Foxconn’s potential investment of around $1 billion to set up a smartphone display module assembly plant in Tamil Nadu to meet Apple’s iPhone manufacturing needs.

Meanwhile, the Indian semiconductor ecosystem consistently makes headlines with new discoveries.

During the Prime Minister’s recent visit to the United States (US), both countries agreed to set up a joint semiconductor manufacturing plant. This facility will produce chips for applications related to national security, next-generation telecommunications and green energy.

PLI’s role in ‘Make in India’

Despite skepticism about the long-term sustainability of the Make in India initiative, data shows significant progress over the years.

Foreign direct investment (FDI) in the manufacturing sector increased by 76 percent, from $12.09 billion in FY 2020-21 to $21.34 billion in FY 2021-22.

As of November 2023, PLI initiatives have created 6.78 lakh jobs. The main beneficiaries were women in the electronics sector.

The Production Linked Incentive (PLI) scheme, introduced in 2020, was the main driving force behind the Make in India brand.

With a budget of Rs 1.97 lakh crore distributed across 14 key sectors, the program has transformed India’s manufacturing landscape, enabling the country to become more self-sufficient in key segments such as mobile phones, medical devices and pharmaceuticals.

In FY 2022-23, PLI-backed sectors generated exports worth over Rs 2.56 lakh crore, strengthening India’s position in global manufacturing. Till November 2023, goods worth Rs 8.6 lakh crore were produced under PLI schemes and exports were Rs 3.2 lakh crore.

Growth in various sectors

In 2014, the manufacturing industry accounted for a small share of India’s gross domestic product (GDP). However, recent progress suggests that India is well on its way to becoming a manufacturing and export hub.

Production of electronics, especially mobile phones, has skyrocketed, making India one of the largest smartphone producers in the world, with electronics production reaching $101 billion in fiscal year 2022-23.

In electronics, exports have almost quadrupled compared to a decade ago.

Meanwhile, after the initiative was launched, mobile phone imports dropped by about 85 percent. In 2014-15, imports were Rs 48,609 crore, which came down to Rs 7,665 crore in 2023-24.

India’s defense sector has expanded in a bid to reduce imports, with defense exports increasing 21-fold in a decade to Rs 88,319 crore.

The Indian automotive sector, especially electric vehicles (EVs), has seen significant growth, again driven by PLI incentives.

Similarly, Indian Railways, once heavily dependent on imported coaches, have made inroads into domestic production. This change was particularly noticeable in the production of rolling stock for the national medium-speed rail network and metro transport systems in various cities.

The road lies ahead

Industrial production currently contributes about 17 percent to India’s GDP.

Commerce Minister Piyush Goyal highlighted the target of increasing this share to 25 per cent by 2047, which would require the sector to grow at a rate of 1.5 times the overall economic growth.

While the benefits are not yet widespread across all sectors, there are clear indicators of growth.

According to A Money control In the report, India’s Purchasing Managers’ Index (PMI) for the manufacturing sector remains consistently above the long-term average.

In FY24, manufacturing growth remained steady at 7 percent, contributing to the overall economic growth rate of 6.7 percent.

“The culture of promoting manufacturing in India is now well established,” Goyal said, adding that when Make in India was launched, it was not driven by any “China plus one” strategy or anti-China sentiment.

“Our ambition is for every electronic device to have a component made in India,” he said.

In the 10 years to FY24, FDI inflows more than doubled to $667 billion. This is despite significant global challenges such as wars and the Covid-19 pandemic.