Celebrating 10 Years of Make in India | UPSC

Introduction

• The Prime Minister, Shri Narendra Modi has hailed the completion of the 10 Years Of Make In India initiative. 
• ‘Make in India’ illustrates the collective resolve of 140 crore Indians to transform the nation into a manufacturing and innovation powerhouse. 
• The initiative was conceived during a period when India’s economic growth had sharply declined, and the country faced critical challenges in sustaining its development trajectory. 
• Against this backdrop, “Make in India” was designed to transform India into a global hub for design and manufacturing.
•  Its core objectives were to facilitate investment, encourage innovation, and develop world-class infrastructure. 
• As one of the pioneering ‘Vocal for Local’ initiatives, it sought not only to boost India’s manufacturing capabilities but also to showcase its industrial potential on a global stage.
• Now, with the “Make in India 2.0” phase encompassing 27 sectors, the program continues to drive forward with significant achievements and renewed vigour, reinforcing India’s position as a major player in the global manufacturing landscape.

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Objectives of Make in India

• Boost Manufacturing: Increase manufacturing sector growth to 12-14% annually, create 100 million jobs by 2022, and raise the sector’s contribution to GDP to 25% by 2025.
• Global Competitiveness: Attract FDI, improve infrastructure, and simplify regulations to enhance India’s competitiveness.
• Focus on Key Sectors: Initially targeted 25 sectors (e.g., automobiles, electronics, defence), later expanded to 27 in the “Make in India 2.0” phase.
• Economic Transformation and Employment Generation: Designed to transform India’s economy and create jobs for the young workforce.

Pillars of Make in India

New Processes: 

• • The “Make in India” initiative identified ‘ease of doing business’ as a crucial factor for promoting entrepreneurship. Several measures were implemented to enhance the business environment, making it more conducive for startups and established enterprises alike.
  • Key reforms such as the Insolvency and Bankruptcy Code, the Goods and Services Tax and the Jan Vishwas (Amendment of Provisions) Act alongside the start-up reforms have been instrumental in making India a global business hub.  
  • India made remarkable progress in improving its business environment, climbing from 142nd in 2014 to 63rd in the World Bank’s Doing Business Report (DBR) 2020, published in October 2019 before its discontinuation. 

New Infrastructure: 

• • The government focused on developing industrial corridors and smart cities, integrating state-of-the-art technology and high-speed communication to create world-class infrastructure. Innovation and research were supported through streamlined registration systems and improved intellectual property rights (IPR) infrastructure. Efforts were made to identify industry skill requirements and develop the workforce accordingly.

New Sectors:

• •  Foreign Direct Investment (FDI) was significantly opened up in various sectors including Defence Production, Insurance, Medical Devices, Construction, and Railway infrastructure. This expansion also included easing FDI regulations in Insurance and Medical Devices, encouraging international investment and growth.

New Mindset:

• •  The government embraced a role as a facilitator rather than a regulator, partnering with industry to drive the country’s economic development. This shift aimed to foster a collaborative environment that supported industrial growth and innovation.

Key Initiatives Under Make in India (2014-2024)

Production Linked Incentive (PLI) Scheme:

• • Incentivizes domestic manufacturing to reduce imports, promote investments, and incorporate advanced technology.
  • Covers 14 sectors, such as electronics and solar panels, fostering large-scale manufacturing ecosystems.
  • Investment realized: ₹1.23 lakh crore by March 2024.

PM Gati Shakti:

• • PM GatiShakti is aimed at achieving Aatmanirbhar Bharat and a US $5 trillion economy by 2025 through the creation of multimodal and last-mile connectivity infrastructure.
  • It is driven by seven engines: Railways, Roads, Ports, Waterways, Airports, Mass Transport, and Logistics Infrastructure.

Semiconductor Ecosystem Development:

• • Semicon India Programme with ₹76,000 crore outlay developed sustainable semiconductor ecosystems.
  • India’s semiconductor ecosystem has gained significant momentum, with several landmark projects receiving like the first major project with Micron was sanctioned for nearly Rs 22,000 crores. 
  • Tata’s joint venture with Taiwan’s Powerchip in Dholera stands out as a promising development. 

National Logistics Policy:

• • Launched on September 17, 2022, the National Logistics Policy (NLP) was introduced to complement the PM GatiShakti National Master Plan by focusing on enhancing the soft infrastructure of India’s logistics sector. 
  • Its targets include reducing logistics costs, improving India’s Logistics Performance Index ranking to among the top 25 countries by 2030, and developing a data-driven decision support system. 
  • To meet these objectives, the Comprehensive Logistics Action Plan (CLAP) was also initiated, addressing digital logistics systems, standardization, human resource etc.

FDI Boost:

• • Foreign Direct Investment (FDI) reforms have also played a crucial role in driving India’s industrial growth.
  • Over the last 10 financial years (2015-24), FDI inflow has increased by 119%, reaching $667 billion, compared to $304 billion in the previous 10 financial years (2005-14). 
  • India now ranks among the top 100 nations in the Ease of Doing Business (EoDB) index.
  • India is now exporting more value-added and high-end products. For example, from being a mobile phone importer in 2014-15, when only 5.8 crore units were produced domestically and 21 crore units used to get imported, India produced 33 crore units in 2023-24, with only 0.3 crore units imported while exporting around five crore units.  

Skill Development Initiatives:

• • Initiatives like Skill India and PMKVY trained millions to meet the demand for skilled labor.

Startup India:

• • 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:

• • The formation of the Goods & Services Tax Council has further ensured the smooth implementation of GST, boosting foreign direct investment by fostering a stable and business-friendly tax environment.
  • The GST rate on over 200 products was reduced from 28% to 18%, enhancing overall efficiency and productivity. 

Unified Payments Interface (UPI):

• • India emerged as a leader in global digital payments, processing nearly ₹81 lakh crore in transactions between April and July 2024.
  • With an impressive 46% of the global real-time payment transactions occurring in India, UPI has firmly established itself as a significant player in this sector. 

Achievements of Make in India (2014-2024)

• • Vaccines: India supplies 60% of the world’s vaccines and quickly became a key COVID-19 vaccine exporter.

Mobile Manufacturing:

• • Now the world’s second-largest mobile phone manufacturer, with over 200 units producing 99% of India’s mobile phones.
  • Mobile exports surged to ₹1.2 lakh crore in 2024.

Defence Manufacturing:

• • India is achieving remarkable milestones in defence production, exemplified by the launch of INS Vikrant, the country’s first domestically made aircraft carrier. 
  • 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 Manufacturing: Investment of ₹1.5 lakh crore led to five fabrication plants, with a combined capacity of 7 crore chips daily.

Railway Infrastructure:

• • Vande Bharat Trains represent India’s indigenous manufacturing success, providing a modern travel experience.
  • As of now, 102 Vande Bharat train services (51 trains) are operational across Indian Railways, connecting states with a Broad-Gauge electrified network and showcasing India’s growing capability in advanced rail technology. 
  • Renewable Energy Growth: India became the 4th largest renewable energy producer, growing from 76.38 GW (2014) to 203.1 GW (2024).
  • Steel Production: India became a net exporter, with steel production increasing by 50%.
  • Automobile Industry Growth: India became a global leader in two-wheelers and electric vehicles, driving sustainable mobility.

Challenges Faced by Make in India Program

• • Slowing Manufacturing Growth: The Gross Value Added (GVA) growth rate of the manufacturing sector dropped significantly from 8.1% (2001-12) to 5.5% (2012-23). For example, the slowdown in growth impacted industries like textile and apparel, which were traditionally major contributors to the manufacturing sector’s growth.
  • Limited Job Creation: Manufacturing employment declined from 12.6% (2011-12) to 11.4% (2022-23), leading to a shrinking industrial workforce. 
    • For instance, the automobile sector witnessed automation and digitalization, which further limited the growth in manual employment opportunities.
    • Reserve Bank of India’s KLEMS database shows the share of the manufacturing sector in total employment in the country has marginally declined from 11.6 percent in 2013-14 and 2014-15 to 10.6 percent in 2022-23, the latest period for which there is data.
  • Stagnant Manufacturing Share in GDP: The sector’s share in GDP remained stagnant at 17%-18%, far from the target of 25%. The electronics sector, for example, failed to achieve its full potential despite initiatives like “Digital India,” resulting in a lower contribution to GDP.
  • Decline in Exports: Exports as a share of GDP fell from 25.2% (2013-14) to 22.7% (2023-24). The apparel industry, for instance, faced increased competition from countries like Bangladesh and Vietnam, leading to a decline in market share in global exports.
    • The World Bank, in the latest edition of its India Development Update made particular mention of India’s poor export performance in terms of contributions to GDP, in global value chains, and in employment generation.
    • Data from the Economic Survey shows India’s share in global exports grew slowly over the past decade. In 2005-06, India contributed 1% to global exports, rising to 1.6% by 2015-16. However, by 2022-23, it only reached 1.8%, marking a modest increase. 
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  • Supply Chain Bottlenecks: Inadequate logistics, poor connectivity, and supply chain inefficiencies impacted various sectors. For example, the lack of seamless connectivity in the Delhi-Mumbai Industrial Corridor led to delays in manufacturing and increased logistics costs.
  • Regulatory Complexity: Continued bureaucratic hurdles and approval delays in certain sectors remained a significant challenge. For instance, obtaining environmental clearances for new projects in the chemical industry often took several months, deterring potential investors.
  • High Logistics Costs: Logistics costs in India remained high at 13%-14% of GDP, compared to 8%-9% in developed nations. For example, the transportation cost for moving goods from the eastern states to western ports was significantly higher due to poor road infrastructure and congestion at key ports.
  • Underfunded R&D: R&D spending was less than 1% of GDP, limiting innovation. For instance, the semiconductor industry, a key area of focus under “Make in India,” struggled to compete globally due to the lack of sufficient research funding, resulting in a continued dependence on imports.
  • Declining Capital Formation: Gross Fixed Capital Formation (GFCF) fell from 4.5% (2012-13) to 0.3% (2019-20). This impacted industries such as construction, where a decline in capital investment led to a slowdown in new projects and infrastructure development.
  • Suboptimal FDI Growth:Despite improvements in India’s Ease of Doing Business rank, FDI growth remained below expectations. For instance, the defence sector, which allowed up to 74% FDI, faced limited inflows due to procedural complexities and a lack of clear policy frameworks, discouraging foreign investors.

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Way Forward

• • Boost R&D: Invest in domestic R&D and adaptive research to indigenize imported technologies, especially in critical sectors.
  • Affordable Finance: Establish development finance institutions for long-term credit to promote technology adoption and learning.
  • Strengthen Domestic Value Chains: Build backward linkages in sectors like electronics and automotive to increase self-sufficiency.
  • Expand Skill Development: Enhance skill programs to focus on high-tech industries and digital skills.
  • Support SMEs: Provide financial incentives, easier credit access, and technological support to small and medium enterprises.
  • Promote Green Manufacturing: Encourage sustainable practices through incentives for renewable energy use and energy-efficient production.

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