How to make in India for the world

Manufacturing and trade support each other: Quality manufacturing increases export, and global-market access helps manufacturers grow.

- AJAY SRIVASTAVA

India's trade relies heavily on manufactured goods, which account for 75 per cent of its merchandise exports.

The last decade (2014-24) of India's manufacturing and export performance offers an interesting perspective on how these two vital components of economic growth have performed.

The government has highlighted several achievements as India completed 10 years of the "Make in India" initiative. For example, 99 per cent of the mobile phones used in India are now made locally. India is now a net exporter of finished steel and the fourth-largest producer of renewable energy, with a 400 per cent rise in capacity. The Production-Linked Incentive (PLI) scheme has attracted ₹1.46 trillion in investment, generating ₹12 trillion in output and creating 900,000 jobs. Foreign direct investment (FDI) in manufacturing has grown by 69 per cent, reaching $165.1 billion in the past decade.

However, looking beyond these highlights, a broader view of the economy shows more mixed results. In FY14, India's GDP was $2,010 billion, with merchandise exports at $314 billion and manufacturing accounting for 15 per cent of GDP. By FY24, GDP had grown to $3,900 billion, and exports reached $437 billion, but manufacturing's share in GDP dropped to 13 per cent. With manufactured products making up 75 per cent of India's trade in both periods, the share of manufacturing exports relative to manufacturing GDP fell from 78.1 per cent in FY14 to 64.6 per cent in FY24. This reflects a dual challenge: The shrinking role of manufacturing and its decreasing export contribution. These trends point to deep structural challenges that require urgent action.

Critical challenges