Make in India: Transforming the Automobile and Manufacturing Sectors Over the Past Decade
Introduction
Launched in 2014, the Make in India initiative was envisioned as a game-changer for India's manufacturing sector. It aimed to position India as a global manufacturing hub by attracting foreign investments, boosting domestic production, creating jobs, and increasing the sector's contribution to GDP. The government set ambitious targets, including:
Increasing the manufacturing sector's growth rate to 12-14% per annum.
Generating 100 million additional manufacturing jobs by 2022.
Raising the sector’s share of GDP to 25% by 2022 (later revised to 2025).
Over the past ten years, this initiative has had a profound impact on various industrial sectors, with some experiencing massive growth while others facing challenges. Below is a detailed sector-wise review of its impact, backed by data and figures.
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Performance of the Overall Manufacturing Sector (2014-2024)
1. GDP Contribution and Growth Trends
The manufacturing sector plays a crucial role in India's economic growth. However, despite significant policy interventions, its contribution to GDP has seen fluctuations:
2014-15: The sector contributed 16.3% to GDP.
2020-21: Due to the pandemic and structural issues, the contribution declined to 14.3%.
2023-24: The manufacturing sector's share further reduced to 14.1%, falling short of the 25% target set under Make in India.
Despite these fluctuations, the average growth rate of the manufacturing sector between 2014-15 and 2019-20 was 6.9% per annum. The sector faced challenges during the COVID-19 pandemic, leading to temporary setbacks, but has since recovered with strong government interventions.
2. Foreign Direct Investment (FDI) Inflows
Foreign Direct Investment (FDI) has been a crucial pillar of the Make in India campaign. Between 2014 and 2024, India witnessed a 69% surge in FDI inflows into the manufacturing sector:
2004-2014: FDI equity inflows into manufacturing stood at $97.7 billion.
2014-2024: This figure jumped to $165.1 billion, showcasing increased investor confidence and policy success.
Government policies such as 100% FDI in several sectors, streamlined approvals, and ease of doing business reforms have contributed to this growth.
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Sector-wise Performance Under Make in India (2014-2024)
1. Automobile Industry: Accelerated Growth and Export Expansion
The automobile sector has been one of the biggest beneficiaries of the Make in India initiative. India is now the fourth-largest automobile market globally and the largest manufacturer of two-wheelers.
Key Achievements:
Production Growth: Vehicle production has surged due to new investments and the adoption of electric mobility.
Exports Boom: India has become a major automobile exporter, with passenger vehicle exports growing by 23% in FY 2023-24.
EV Manufacturing: Policies like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) have pushed India toward EV leadership.
Major Investments:
Global giants like Tesla, Tata Motors, Hyundai, and Maruti Suzuki have significantly expanded their manufacturing capacities in India.
The PLI (Production-Linked Incentive) scheme has attracted investments of over ₹76,000 crore in the automobile sector.
2. Pharmaceutical Industry: A Rising Global Hub
The pharmaceutical sector has seen substantial growth, positioning India as the "Pharmacy of the World".
Key Statistics:
Industry Growth: The Indian pharmaceutical market grew from $38 billion in 2018 to $50 billion in 2023.
Export Growth: Exports nearly doubled, from $15.07 billion in 2013-14 to $27.85 billion in FY 2023-24.
Future Outlook: The industry is projected to reach $130 billion by 2030.
Factors Driving Growth:
PLI Scheme for Pharmaceuticals: Investments in Active Pharmaceutical Ingredients (API) and bulk drugs.
India’s Global Positioning: Supplies 50% of the world's vaccines and 40% of generic medicines in the U.S..
3. Electronics Manufacturing: Reducing Import Dependence
The electronics sector has witnessed a major boost, helping India reduce dependence on China and emerge as a global manufacturing hub.
Key Developments:
PLI Scheme Impact: Over $17 billion in investments in electronics manufacturing.
Mobile Phone Manufacturing: India is now the second-largest mobile phone producer globally. Apple alone exported $12 billion worth of iPhones in FY 2023-24.
Semiconductor Push: Government plans a $10 billion semiconductor mission to develop domestic chip manufacturing.
Future expansion includes laptops, tablets, and servers, further strengthening India’s self-reliance in electronics.
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4. Small and Medium Enterprises (SMEs): Job Creation and Expansion
SMEs are the backbone of India's economy, contributing 30% to GDP. Under Make in India, SMEs have:
Created 11 million new jobs between 2023-24.
Increased total employment to 120.6 million workers.
Benefitted from government schemes like MUDRA loans, Startup India, and MSME credit expansion.
However, high inflation and slow wage growth remain challenges for small businesses.
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Challenges and Areas for Improvement
While Make in India has achieved significant progress, several challenges remain:
1. Manufacturing Sector’s GDP Share Still Below Target:
Despite efforts, manufacturing contributes only 14.1% to GDP instead of the targeted 25%.
2. Slow Implementation of Some Policies:
Some PLI schemes have faced delays in fund disbursement and meeting production targets.
3. Need for Skill Development and Infrastructure:
Skill gaps and lack of high-tech infrastructure are hurdles in achieving full manufacturing potential.
4. Global Economic Challenges:
The COVID-19 pandemic, geopolitical tensions, and supply chain disruptions have impacted industrial growth.
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Conclusion: A Decade of Transformation with Further Potential
The Make in India initiative has undoubtedly transformed India's industrial landscape, making the country a leading global manufacturing hub in several sectors like automobiles, pharmaceuticals, and electronics. However, challenges such as infrastructure gaps, policy execution delays, and skill shortages need to be addressed to fully realize India's manufacturing potential.
With strong policy measures, continued PLI incentives, and a focus on high-value manufacturing, India is well-positioned to achieve its goal of a $5 trillion economy, with manufacturing playing a pivotal role in the next decade.
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References for Further Reading:
1. India’s Manufacturing Growth Report - Wikipedia
2. PLI Schemes and Their Impact on India’s Economy - Reuters
3. Pharmaceutical Industry Growth in India - JLL Report
4. Small Business Job Growth in India - Reuters
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