India's manufacturing reality: An incomplete story

To boost domestic factory production and capitalize on the global "China Plus One" strategy, which encourages multinational companies to reduce reliance on China, India needs a conducive ecosystem for manufacturing.

- INDIVJAL DHASMANA

However, instead of becoming a hub of production and integrating with the global supply chain, the contribution of manufacturing to the Indian economy has been declining, despite initiatives like the National Manufacturing Policy (NMP) and Make in India.

A slow progress, though, is being made in select commodities, such as telecom handsets, in reducing imports and increasing exports.

Though the NMP was introduced in 2011 by the United Progressive Alliance (UPA), there were several earlier measures that aimed to boost manufacturing.

For instance, the National Strategy for Manufacturing (2006) targeted raising the share of manufacturing in the gross domestic product (GDP), adopting best practices and production techniques, committing to skill development and knowledge enhancement, and increasing investment in research and development (R&D).

This policy led to the creation of the National Manufacturing Competitiveness Council.

Attempts were also made to increase merchandise exports through various export-import (Exim) policies and special economic zones (SEZs), even though SEZs encompass both services and manufacturing.

In fact, services exports have outperformed manufacturing in these zones.

For instance, services exports through SEZs were over 50 percent higher, at $25.4 billion, compared to $16.5 billion for manufacturing during the first quarter of the current financial year.

The Make in India initiative, launched by Prime Minister Narendra Modi in September 2014, aimed to transform India into a global design and manufacturing hub.

Its core objectives were to facilitate investment, encourage innovation, and develop world-class infrastructure.

The initiative, covering 14 manufacturing and 12 services sectors, is supported by major programmes like the Production-Linked Incentive (PLI) scheme, PM GatiShakti, the National Logistics Policy, and tax reforms such as the goods and services tax (GST).