In the past decade, India has witnessed a transformative shift in its economic structure, with a distinct focus on manufacturing as a key driver of growth, employment, and national progress. The Modi government's vision, combined with a series of industry-friendly policies, has paved the way for India to emerge as a global manufacturing hub. The Annual Survey of Industries (ASI) for 2022-23, which reports a 7.5% increase in employment in manufacturing industries, underscores the significant progress made in recent years. From “Make in India” to “Production Linked Incentive” schemes, the government’s strategy has been multi-dimensional, aiming to attract foreign investment, enhance domestic production capabilities, and create millions of jobs for the Indian workforce.
The "Make in India" Initiative: Laying the Foundation
Launched in 2014, the “Make in India” campaign was one of the flagship initiatives of Prime Minister Narendra Modi's government. The primary goal of the initiative was to position India as a global manufacturing hub, ensuring that both domestic and foreign companies invest in manufacturing within the country. The idea was not only to boost industrial output but also to create employment opportunities, increase the share of manufacturing in GDP, and reduce dependency on imports.
The initiative targeted 25 key sectors, including automobiles, textiles, chemicals, pharmaceuticals, and electronics, among others. Through regulatory reforms, infrastructure upgrades, and financial incentives, the government sought to make India a more attractive destination for manufacturing investments. In particular, simplification of business regulations and enhanced ease of doing business were central to the policy’s framework, ensuring that the manufacturing sector could thrive without bureaucratic bottlenecks.
Ease of Doing Business: A Landmark Achievement
India's jump in the World Bank’s Ease of Doing Business rankings from 142 in 2014 to 63 in 2019 is a testament to the Modi government’s concerted efforts to create a business-friendly environment. This improvement reflects policy reforms aimed at simplifying regulations, streamlining approval processes, and making it easier for businesses to establish and operate in India. The Insolvency and Bankruptcy Code (IBC) of 2016 was a key legislative reform that improved India’s investment climate by providing a robust framework for the resolution of distressed assets. By reducing the time required for resolving insolvency cases, the IBC enhanced investor confidence and fostered a healthier business environment. Additionally, the Goods and Services Tax (GST), implemented in 2017, replaced a myriad of taxes with a single, unified tax regime, making interstate trade more seamless and reducing the tax burden on manufacturers.
Production Linked Incentive (PLI) Scheme: Boosting Domestic Manufacturing
A game-changing policy introduced by the Modi government was the Production Linked Incentive (PLI) scheme, designed to promote domestic manufacturing in sectors with high potential for growth and export. Launched in 2020, the PLI scheme offers financial incentives to companies based on their incremental production and sales. Initially focused on 13 sectors, including electronics, pharmaceuticals, textiles, and automobiles, the scheme has since expanded to cover additional industries, creating a broad platform for growth.
The PLI scheme is particularly notable for its focus on cutting-edge sectors such as semiconductors, advanced electronics, and renewable energy technologies. By encouraging investment in these areas, the government aims to reduce dependency on imports, especially from China, while fostering innovation and technological advancement within India. The scheme is expected to generate substantial employment, particularly in sectors like mobile phone manufacturing, where India has already made significant strides, emerging as a global leader in production.
Infrastructural Development: Building for the Future
Recognising the importance of infrastructure as a backbone for manufacturing, the Modi government has invested heavily in upgrading India's infrastructure over the past decade. Initiatives such as Bharatmala, Sagarmala, and the Dedicated Freight Corridors are designed to improve connectivity, reduce transportation costs, and enhance the overall efficiency of the logistics sector. The Bharatmala project focuses on building roads and highways to connect industrial corridors and economic zones with ports, airports, and logistics hubs. Meanwhile, Sagarmala aims to modernize India's port infrastructure and improve port connectivity, enabling faster movement of goods and boosting trade. The government's focus on infrastructure has not only facilitated the growth of manufacturing but also made it more attractive for foreign investors to set up industries in India.
The development of Industrial Corridors, such as the Delhi-Mumbai Industrial Corridor (DMIC) and the Chennai-Bengaluru Industrial Corridor (CBIC), has been a key component of this strategy. These corridors provide world-class infrastructure, smart cities, and special economic zones (SEZs) to support manufacturing and attract investments from global companies. The government's focus on building a robust infrastructure network has played a pivotal role in enhancing India's competitiveness as a manufacturing destination.
Foreign Direct Investment (FDI): Attracting Global Capital
One of the major indicators of India's success in becoming a preferred manufacturing hub is the surge in Foreign Direct Investment (FDI) inflows. The Modi government has implemented a series of reforms to liberalize FDI policies, allowing 100% FDI in various sectors, including defense, pharmaceuticals, and electronics. These reforms, coupled with efforts to ease business operations, have made India one of the most attractive destinations for global investors.
Between 2014 and 2023, India saw a consistent rise in FDI inflows, with investments pouring in from countries such as the United States, Japan, South Korea, and Germany. The FDI inflow reached a record high in 2021, surpassing $80 billion, as companies looked to India as a reliable alternative to China for setting up manufacturing units. The government's focus on reducing bureaucratic red tape, providing fiscal incentives, and creating a stable policy environment has contributed to this FDI boom. Moreover, the establishment of special economic zones (SEZs) and industrial parks across the country has provided foreign companies with a conducive environment for large-scale manufacturing operations.
Job Creation and Skill Development: Empowering the Workforce
The manufacturing sector's growth has been instrumental in generating employment, with the ASI 2022-23 data showing a significant rise in employment, particularly in industries like food products, textiles, and basic metals. However, the Modi government's focus on job creation extends beyond manufacturing output to include initiatives for skill development.
The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), launched in 2015, is one of the flagship programs aimed at equipping the Indian workforce with the skills needed for the modern industrial landscape. Under PMKVY, millions of young Indians have been trained in a variety of trades, from machine operation to digital technologies, ensuring that the labor force is prepared to meet the demands of an evolving manufacturing sector.
Additionally, the government’s focus on vocational training, internships, and apprenticeship programs has enabled Indian workers to gain practical experience and enhance their employability. Initiatives such as the Skill India Mission are designed to bridge the gap between education and employment, ensuring that India’s youth are well-equipped to contribute to the country's industrial growth.
Digital India and Industry 4.0: A Technological Leap
In parallel with the manufacturing push, the Modi government has also focused on integrating digital technologies into industrial processes. The “Digital India” initiative, aimed at transforming India into a digitally empowered society, has facilitated the adoption of Industry 4.0 technologies, including automation, artificial intelligence, and the Internet of Things (IoT), in manufacturing.
The introduction of smart manufacturing technologies has enabled Indian industries to enhance efficiency, reduce production costs, and compete on a global scale. The government’s push for technological innovation is reflected in initiatives such as the Atal Innovation Mission, which promotes research and development in cutting-edge technologies.
Conclusion: A Decade of Transformation
In the last ten years, the Modi government has taken significant strides towards transforming India into a global manufacturing hub. Through a combination of policy reforms, infrastructure development, and skill enhancement programs, India has created a favorable environment for industrial growth. The “Make in India” initiative, complemented by the PLI scheme and a strong focus on ease of doing business, has not only attracted foreign investments but also generated millions of jobs.
The ASI data for 2022-23, which highlights a 7.5% increase in employment, is a clear reflection of these efforts. As India continues to rise as a manufacturing power, the next decade promises to solidify the country’s position as a major player in global industrial production. The vision of “Atmanirbhar Bharat” (self-reliant India) is becoming a reality, as the nation moves towards sustained economic growth, technological innovation, and global competitiveness.
Uday India Bureau
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