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Is Indian manufacturing sector ready for take-off?
Articles- Mar 03,25
The Make in India initiative, launched on September 25, 2014, has had a significant impact on the Indian manufacturing sector. However, the country has also missed several opportunities over the past decade. Can the National Manufacturing Mission, announced in budget 2025-26, propel the sector in the high-growth orbit? Let's find out
The last decade has witnessed significant transformations globally and in India, driven by technological advancements, economic shifts, and social dynamics. The global economy continues to face challenges such as inflation, rising interest rates, and supply chain disruptions. Financial resilience became crucial as businesses sought to optimise operations and mitigate risks amid these uncertainties. At the same time, the integration of technology has accelerated, with innovations such as artificial intelligence, blockchain, and cloud computing becoming mainstream. Organisations embracing these technologies have gained competitive advantages, streamlining operations and enhancing transparency.
At the same time, over the past decade, India has emerged as one of the largest economies globally, currently ranked 5th in GDP terms and expected to become 3rd by 2027. The country’s GDP growth is projected at about 7 per cent for FY 2024-25, underscoring its position as the fastest-growing major economy. "India's integration into the global economy has strengthened its diplomatic clout and made it a key player on the international stage. The country is expected to continue this trajectory towards becoming a developed economy by 2047. Significant reforms in various sectors have laid a strong foundation for sustained economic growth. These include improvements in infrastructure, labour regulations, and public sector efficiency, which are essential for attracting investment and fostering development," opines Amitabh Kant, India's G20 Sherpa. The former CEO of NITI Aayog, who has been a key governance reformer and policy change agent, was instrumental in launching several initiatives including "Make in India".
A decade of transformation
India’s engineering sector has undergone a significant transformation over the last decade, driven by rapid urbanisation, technological advancements, and increased government focus on infrastructure development. Amit Sharma, MD & CEO, Tata Consulting Engineers, elaborates, "Initiatives like Make in India have boosted domestic manufacturing capabilities, while global collaborations have introduced cutting-edge technologies. The sector has grown into a dynamic ecosystem, contributing to both economic growth and technological progress."
Post Covid, the world has transformed drastically. The pandemic has shown that supply chain resilience is critical for business continuity, and companies must accelerate the adoption of advanced technologies like AI, IoT, and predictive analytics to streamline operations. S Sunil Kumar, Country President, Henkel India, comments, "The pandemic underscored the need for resilience, adaptability, and innovation. Globally, we’ve seen accelerated digital transformation, a reconfiguration of supply chains, and an intensified focus on sustainability. These shifts have compelled businesses to rethink operations and prioritise agility and self-reliance."
For the Indian manufacturing sector, the post-Covid period has been a time of reinvention and growth. The sector has embraced digital tools, automation, and Industry 4.0 technologies to enhance efficiency and reduce vulnerabilities. Sunil Kumar elaborates, "Government initiatives such as Make in India and the Production-Linked Incentive (PLI) schemes have been instrumental in this transformation. The Make in India campaign has bolstered confidence in India as a global manufacturing hub, driving investments across sectors such as electronics, pharmaceuticals, and automotive. The PLI schemes, with their sector-specific incentives, have attracted global players and encouraged domestic manufacturers to scale production, invest in R&D, and adopt cutting-edge technologies."
With contribution of renewables to India's energy kitty increasing, companies are gearing up to take advantage of these shifts. Amit Sharma says, "The energy sector is witnessing a shift towards renewable energy sources, energy storage, decarbonisation and a renewed interest in nuclear both fission and fusion. India has taken bold steps in this transition, with a strong focus on nuclear, solar and wind energy, hydrogen technologies, and energy efficiency. While challenges like grid modernisation and infrastructure remain, India is well-positioned to leverage its strengths in innovation and policy support to lead the global energy transition."
A decade of Make in India: Hits & misses
The Make in India initiative, launched on September 25, 2014, has significantly impacted the Indian manufacturing sector over the past decade. According to Amitabh Kant, some of the key achievements of the initiative are:
- Increased FDI: FDI inflows surged from approximately $45.14 billion in 2014-15 to $84.83 billion in 2021-22, totaling about $667.41 billion from April 2014 to March 2024.
- Improvement in ease of doing business: India's ranking improved dramatically from 142nd in 2014 to 63rd in the World Bank’s Ease of Doing Business Index by 2020.
- Infrastructure development: The initiative facilitated the establishment of industrial corridors, special economic zones (SEZs), and smart cities, creating a conducive environment for manufacturing activities.
- Indigenous manufacturing projects: Notable projects like the Vande Bharat trains and the indigenous aircraft carrier INS Vikrant exemplify India's growing capabilities in advanced manufacturing sectors.
- Focus on sustainable manufacturing: India has emerged as the world's fourth-largest producer of renewable energy.
- Technological advancements: The adoption of digital technologies such as Industry 4.0 and IoT has improved efficiency and productivity.
Some of the missed opportunities by India during the last decade are:
- Job creation: Despite promises to generate millions of jobs, India has experienced a significant rise in unemployment, with rates reaching the highest levels in 45 years.
- Lower investment in skill development: India's education system has not kept pace with the needs of a modern economy. The National Skill Development Mission, launched in 2015, came too late. As a result, many young people lack the necessary skills for gainful employment.
- Losing share in labour-intensive sectors: While initiatives like Make in India aimed to boost manufacturing, India missed opportunities to build large-scale capacities in labour-intensive sectors like textiles and garments.
- Less focus on R&D: India has not sufficiently increased public investment in R&D limiting the country's ability to compete globally in high-tech industries.
Still a long way to go
Regulatory developments, such as evolving labour laws and localisation mandates under initiatives like Make in India, are reshaping the landscape, encouraging manufacturers to modernise and adopt global best practices. While the Indian manufacturing sector is on a promising growth trajectory, it must navigate several challenges to realise its full potential.
Speaking about the key challenges before Indian electronics manufacturing sector, J S Gujral, Managing Director, Syrma SGS Technology, says, "While the Indian electronics manufacturing services (EMS) industry is on a robust growth trajectory, there are areas that present opportunities for improvement. Enhancing advanced infrastructure will enable more efficient supply chain operations, ensuring faster and more reliable delivery systems. Additionally, building a skilled workforce equipped to handle cutting-edge manufacturing technologies remains an exciting prospect."
He adds, "India’s regulatory environment is evolving, and ongoing efforts to simplify processes are paving the way for greater ease of doing business. With continued collaboration between industry stakeholders and policymakers, these developments can serve as catalysts to unlock the full potential of India’s EMS sector and solidify its position as a global manufacturing hub."
Sustainability is no longer optional with manufacturers forced to adopt eco-friendly processes and products as industries align with global net-zero goals. Sunil Kumar says, "Sustainability is another defining factor. Indian manufacturers are increasingly embracing green practices, from leveraging renewable energy to implementing circular economy models that emphasise recycling and resource efficiency. This aligns with the government’s vision of fostering eco-friendly industrial growth through policies like PLI schemes."
Technological transformation
Technology will be at the heart of transformation, with Industry 4.0-related innovations such as IoT, AI-powered robotics, 5G, and digital twin technologies driving the next wave of smarter, more efficient manufacturing. Sunil Kumar explains, "Supply chain resilience has become a top priority. Manufacturers are focusing on localisation and nearshoring to reduce dependency on global networks, while integrating technologies like blockchain and AI to digitize and secure their supply chains."
While there is a plenty of opportunities for India in the manufacturing space, the country faces challenges such as skill gaps, supply chain disruptions, and the need for modernised infrastructure. "To address these, the industry should prioritise investments in R&D and skill development, while the government could support by fostering public-private partnerships, simplifying regulatory frameworks, strengthening the industry-academia partnerships, and ensuring a steady pipeline of infrastructure projects. Collaborative efforts will help overcome these hurdles and unlock the sector’s potential," suggests Amit Sharma.
Sunil Kumar adds, "Industries should collaborate to upskill the workforce, especially in emerging areas such as AI, robotics, and green manufacturing. Industry-academia partnerships can align educational curricula with the needs of modern manufacturing."
Emphasising innovation, reskilling, and technology integration will help industries stay ahead in an increasingly competitive global market. Gujral explains, "Industry-academia collaboration is the need of the hour to address the talent gap in advanced manufacturing technologies and will ensure the availability of skilled workforce. Such measures, combined with strategic policy interventions, can position India as a global electronics manufacturing leader."
Mission manufacturing
The Government of India has been striving to increase the share of manufacturing in its Gross Domestic Product (GDP) from the current 17 per cent to 25 per cent. However, the Economic Survey 2024-25, presented a day before the Union Budget 2025-26, highlighted that while manufacturing growth in India is steadily recovering, it remains slightly below its pre-pandemic trajectory.
Against this backdrop, in the Budget 2025-26, Union Finance Minister Nirmala Sitharaman announced the launch of a National Manufacturing Mission (NMM) to support small, medium, and large industries, further strengthening the "Make in India" initiative. The mission will focus on five key areas: ease and cost of doing business, upskilling for in-demand jobs, MSME support, access to technology, and quality product manufacturing.
"The National Manufacturing Mission announced, along with policy support for clean technology manufacturing, will further solidify India's position as a global manufacturing hub. The government's focus on domestic value addition, with a focus on manufacturing of EV batteries, solar PV cells, and electronics, is a step towards enhancing self-reliance and sustainability. The emphasis on skill development through initiatives such as establishing National Centers of Excellence aligns with the need for a highly skilled workforce in Industry 4.0. This, along with targeted policies for MSME growth and global supply chain integration, will create new opportunities for businesses like ours," commented Gujral.
As part of this initiative, clean-tech manufacturing will be promoted to enhance domestic value addition. According to Jayadev Galla, Chairman and Managing Director, Amara Raja Energy & Mobility Ltd (ARE&M), the government’s emphasis on clean-tech manufacturing—including solar PV cells, electric vehicle (EV) batteries, and wind turbines—underscores its unwavering commitment to the Make in India vision. "While the National Manufacturing Mission represents a crucial step in strengthening domestic manufacturing capabilities, targeted incentives for lithium-ion battery production, along with R&D support for emerging sectors in the energy transition—such as electronics and EV components for solar energy—will help India accelerate its efforts toward realising the Make in India initiative," he adds.
The budget 2025-26 has reinforced the government’s commitment to strengthening India’s rail infrastructure and operational efficiency. The ?2.9 trillion allocation, a 12 per cent increase from last year, supporting 300 new Vande Bharat trains, modernisation of 1,200 stations, 100 per cent route electrification, and bullet train expansion, will drive key developments. "Investments in freight corridors and AI-driven Kavach safety systems will enhance logistics and passenger safety, while the focus on rail MRO capabilities ensures long-term reliability. Additionally, export-driven initiatives under the National Manufacturing Mission and Export Promotion Mission will bolster India’s global competitiveness, opening new avenues for manufacturers and aligning with the Viksit Bharat vision," stated Umesh Chowdhary, Vice Chairman & MD, Titagarh Rail Systems Ltd.
According to him, the creation of a ?250 billion Maritime Development Corpus, along with revamped shipbuilding financial assistance, is expected to empower Indian companies to invest in modern vessels, advanced technology, and infrastructure, ultimately making them more competitive in the global market.
The budget has laid down a clear map for India’s energy transition by prioritising domestic clean-tech manufacturing, power sector reforms, and electric mobility. Raju Kumar, Partner and Energy Tax Leader, EY India said, “The National Manufacturing Mission for clean tech is a crucial step in reducing import dependence for solar PV cells, wind turbines, and battery storage, supporting India’s goal of energy self-sufficiency. Lower customs duties on solar modules, lithium-ion battery waste, and critical minerals will enhance cost competitiveness and encourage local manufacturing."
Similarly, the Nuclear Energy Mission, targeting 100 GW by 2047, could be a game-changer, as nuclear can provide round-the-clock clean power. "However, the success of private sector participation, facilitated by proposed amendments to the Atomic Energy Act, will depend on clear regulatory frameworks and risk-sharing mechanisms. The investment in Small Modular Reactors (SMRs) with an outlay of ?200 billion is a forward-looking step, with the potential to enhance energy security," noted Raju Kumar.
On February 21, 2025, while addressing the 69th Foundation Day of All India Management Association (AIMA), BVR Subrahmanyam, CEO, NITI Aayog, the National Manufacturing Mission, which will coordinate with more than 20 ministries on manufacturing related policies, will be launched in three months. While the mission takes its shape, there is already plenty of opportunity to explore.
Neighbour's envy, India's gain
Supply chain disruptions, influenced by global uncertainties and import dependencies, are pushing manufacturers to focus on resilience and localisation. Sunil Kumar informs, "Dependence on global supply chains has exposed vulnerabilities. Indian manufacturers should focus on increasing localisation to mitigate risks, as Henkel is doing by sourcing raw materials locally and transitioning from imported finished products to domestic manufacturing. This also supports the Make in India initiative and creates jobs."
The growing demand for product customisation and personalisation requires manufacturers to embrace flexibility and innovation. Digital transformation is reshaping the sector, though challenges in implementation and workforce readiness persist.
One of the sectors that have been a real beneficiary of PLI and China-Plus One policy is electronics. Gujral elaborates, "The EMS sector in India has witnessed unprecedented growth over the past five years. Initiatives such as the PLI scheme have attracted substantial investments, accelerating the country’s journey toward becoming a global electronics manufacturing hub. Furthermore, the rising demand for consumer electronics and smart devices has bolstered local production capabilities, gradually reducing India’s reliance on imports."
Place “Table” on page 3 or 4
Table 1: Major PLI Schemes (? million)
PLI for Industries | FY23 | FY24 (A) | FY25 (RE) | FY26 (BE) |
Ministry of Electronics and Information Technology - PLI for Large Scale Electronics and IT Hardware | -- | 42,844 | 57,770 | 90,000 |
Department of Heavy Industry - PLI Automobiles and Auto Components | 57 | 26 | 3,469 | 28,189 |
Department of Pharmaceuticals - PLI Pharma | 14,250 | 16,044 | 21,505 | 24,449 |
Ministry of Food Processing Industries - PLI for Food Processing | 4,898 | 5,905 | 7,000 | 12,000 |
Department of Industrial Policy and Promotion - PLI for White Goods (ACs and LED Lights) | 35 | 742 | 2,136 | 4,445 |
Ministry of Steel- PLI Scheme for Specialty Steel in India | -- | 24 | 550 | 3,050 |
Department of Heavy Industry - PLI for Advanced Chemistry Cell (ACC) Battery Storage | 17 | 77 | 154 | 1,558 |
Ministry of Civil Aviation - PLI Drone and Drone Component | 300 | 312 | 570 | -- |
Ministry of Textiles - PLI Textiles | 71 | 41 | 450 | 11,480 |
Total Outlay | 19,628 | 66,016 | 93,604 | 1,75,171 |
Source: Union Budget Documents; CareEdge
Tension between China and developed countries (led by the US and European countries) has been increasing in the last few years. This geopolitical tension has also contributed to India’s emergence as a preferred manufacturing destination. The focus on supply chain diversification by global players has opened new opportunities for Indian manufacturers to expand their capabilities and extensively cater to international markets. Gujral elaborates, "The ongoing geopolitical dynamics present India with a unique opportunity to solidify its position as a global design and manufacturing hub. With multinational companies seeking to diversify their supply chains, India stands out for its cost advantages and skilled workforce. Strategic trade partnerships with countries like the US and EU will further enhance India’s appeal as a preferred destination."
Geopolitical issues have influenced global trade and supply chains. Businesses have had to adapt quickly to shifting trade policies and regional instabilities, with consulting firms providing strategies to navigate these complexities. Industry and the government should take adequate measures to take advantage of the evolving global marketplace. Gujral adds, "To strengthen India’s electronics manufacturing ecosystem, significant investments in infrastructure development are imperative. Establishing manufacturing parks and logistics hubs through public-private partnerships will enhance supply chain efficiency. Simplifying labour laws, application and reimbursement procedures for schemes like PLI and providing faster clearances will encourage more investments in the sector."
Excelling manufacturing
The outlook for India's manufacturing sector over the next five years is promising, driven by government initiatives, increased foreign investment, and a growing domestic market. The government is taking continuous efforts to ensure regulatory stability and simplify compliance. Modern, multimodal logistics networks are critical for supply chain efficiency. Hence, the government is focusing on fast-tracking infrastructure projects like dedicated freight corridors, advanced ports, and efficient warehousing facilities. These incentives can improve India's competitiveness.
The Indian manufacturing sector is projected to grow from $ 310.30 billion in 2024 to $ 523.70 billion by 2029, reflecting a compound annual growth rate (CAGR) of 9.11 per cent, and presenting ample growth opportunities for all. "Sectors such as electronics, automotive, and pharmaceuticals are expected to drive growth. For instance, the electronics manufacturing sector is projected to quadruple to $ 450 billion by FY 2029-30, with a CAGR of 25 per cent. The government's PLI schemes are designed to bolster these sectors further," states Amitabh Kant.
Ongoing investments in infrastructure, including industrial corridors and smart cities are expected to further enhance the manufacturing ecosystem, making it easier for businesses to operate efficiently and competitively. Sunil Kumar comments, "The Indian manufacturing sector has the potential to become a global hub by fostering innovation, enhancing resilience, and leveraging digital transformation. With collaborative efforts from both industry and government, India can navigate global uncertainties and emerge as a leader in manufacturing excellence."
Amitabh Kant, India's G20 Sherpa
India's integration into the global economy has strengthened its diplomatic clout and made it a key player on the international stage. Significant reforms in various sectors have laid a strong foundation for sustained economic growth.
==================================================================
Amit Sharma, MD & CEO, Tata Consulting Engineers
While challenges like grid modernisation and infrastructure remain, India is well-positioned to leverage its strengths in innovation and policy support to lead the global energy transition.
============================================================
J S Gujral, MD, Syrma SGS Technology
The ongoing geopolitical dynamics present India with a unique opportunity to solidify its position as a global design and manufacturing hub. Strategic trade partnerships with countries like the US and EU will further enhance India’s appeal.
==================================================================
S Sunil Kumar, Country President, Henkel India
The Indian manufacturing sector has the potential to become a global hub by fostering innovation, enhancing resilience, and leveraging digital transformation.
==================================================================
Jayadev Galla, CMD, Amara Raja Energy & Mobility Ltd
The government’s emphasis on clean-tech manufacturing—including solar PV cells, electric vehicle batteries, and wind turbines—underscores its unwavering commitment to the Make in India vision.
=================================================================
Umesh Chowdhary, VC & MD, Titagarh Rail Systems Ltd
Export-driven initiatives under the National Manufacturing Mission and Export Promotion Mission will bolster India’s global competitiveness, opening new avenues for manufacturers and aligning with the Viksit Bharat vision.
Amitabh Kant
India's G20 Sherpa
Amit Sharma
Tata Consulting Engineers
J S Gujral
Syrma SGS Technology
Indian manufacturing sector
S Sunil Kumar
Henkel India
Jayadev Galla
Amara Raja Energy
clean-tech manufacturing
Umesh Chowdhary
Titagarh Rail Systems
National Manufacturing Mission
Viksit Bharat
Rakesh Ra
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