12 years of ‘Make in India’ in 12 metrics: Low and patchy impact on growth, employment & global share

Indian Economy & Industrial Policy · 26 September 2026 · Based on The Hindu (original report)

Worth reading — 1 past UPSC question on this theme (Prelims GS-1 2018).

2-minute summary

The 'Make in India' initiative, launched on September 25, 2014, completed 12 years in 2026. An analysis of 12 key economic metrics across growth, investment, employment, and exports reveals that the campaign's overall impact has been low and patchy. Despite structural reforms, promotional campaigns, and targeted fiscal interventions, the manufacturing sector's share in India's Gross Value Added (GVA) and employment has remained stagnant at around 15-17%. While newer policy instruments like the Production Linked Incentive (PLI) scheme have catalyzed significant success in specific high-tech sectors—most notably mobile phone assembly and electronics—these gains remain highly concentrated. Broader labor-intensive manufacturing sectors, such as textiles, leather, and gems, have not experienced similar transformative growth. Consequently, the structural shift of the Indian workforce from low-productivity agriculture to high-productivity manufacturing remains incomplete, highlighting the need for deeper regulatory, factor market, and MSME-focused reforms.

Why it's in the news

September 25, 2026, marks the 12th anniversary of the launch of the 'Make in India' initiative. A comprehensive review of 12 years of performance metrics indicates that the manufacturing sector's contribution to GDP growth, employment, and global exports has largely remained unchanged since 2014.

Facts to remember

The 'Make in India' initiative was launched on September 25, 2014, and completed 12 years in 2026.
The manufacturing sector's share in India's Gross Value Added (GVA) and employment has remained stagnant at around 15-17%.
The Production Linked Incentive (PLI) scheme has catalyzed significant success in specific high-tech sectors like mobile phone assembly and electronics.
Broader labor-intensive manufacturing sectors, such as textiles, leather, and gems, have not experienced transformative growth.

Background and context

Launched in September 2014, the 'Make in India' campaign aimed to transform India into a global design and manufacturing hub. The initiative set ambitious targets, including raising the manufacturing sector's share in GDP to 25% (initially by 2022, later revised to 2025) and creating 100 million additional jobs. Over the past decade, the government implemented several supply-side reforms to support this vision, such as slashing corporate tax rates to 15% for new manufacturing units, simplifying Foreign Direct Investment (FDI) norms, launching the PM GatiShakti National Master Plan for logistics, and introducing the Production Linked Incentive (PLI) schemes across 14 sectors with an outlay of ₹1.97 lakh crore. Despite these efforts, India's manufacturing growth has been uneven, often described as 'jobless' or 'job-loss' growth, with the service sector continuing to drive the bulk of economic expansion.

Constitutional provisions

Article 39(a) — Directs the State to secure that citizens have the right to an adequate means of livelihood, which links directly to the employment-generation objectives of industrial policies like Make in India.
Article 301 — Guarantees freedom of trade, commerce, and intercourse throughout the territory of India, providing the constitutional basis for a unified national market (facilitated by GST) to boost domestic manufacturing.

Committees and reports

Baba Kalyani Committee Report on SEZ Policy — Recommended shifting the focus of Special Economic Zones (SEZs) from export-promotion to broad-based 'Employment and Economic Enclaves' (3Es) to align with Make in India objectives.
National Manufacturing Policy (NMP) — Laid down the original target of increasing manufacturing's share in GDP to 25% and creating 100 million jobs, which was later integrated into the Make in India campaign.

Government schemes

Make in India — The umbrella initiative designed to facilitate investment, foster innovation, enhance skill development, and build best-in-class manufacturing infrastructure.
Production Linked Incentive (PLI) Scheme — Offers financial incentives to domestic and foreign companies based on incremental sales of products manufactured in India across 14 key sectors.
PM GatiShakti National Master Plan — A digital platform to coordinate infrastructure planning and reduce logistics costs, a critical bottleneck for Indian manufacturing competitiveness.

International organisations

World Trade Organization (WTO) — Monitors domestic subsidies and local content requirements under the Agreement on Subsidies and Countervailing Measures (ASCM), which impacts the design of India's manufacturing incentives like the PLI.

Previous UPSC questions on this theme

Prelims GS-1 2018 — Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (a) industrial output fails to keep pace with agricultural output. (b) agricultural output fails to keep pace with industrial output. (c) poverty and unemployment increase. (d) imports grow faster than exports.

Mains practice: Evaluate the performance of the 'Make in India' initiative over the last decade. Why has India's manufacturing sector struggled to increase its share in the national GDP despite significant structural reforms?

The 'Make in India' initiative was launched in 2014 with the ambitious goal of transforming India into a global manufacturing hub, targeting a 25% share of manufacturing in GDP and the creation of 100 million jobs. However, twelve years since its inception, the sector's share in India's Gross Value Added (GVA) has remained stagnant at around 15-17%, indicating a patchy and uneven performance.

**Key Achievements of the Initiative:**

• **FDI Inflows:** India has registered record Foreign Direct Investment inflows, particularly in services, software, and select manufacturing segments.

• **Sectoral Success (PLI Scheme):** The Production Linked Incentive (PLI) scheme has successfully boosted mobile phone manufacturing and electronics assembly, turning India into a net exporter of smartphones.

• **Infrastructure Push:** Initiatives like PM GatiShakti and the National Infrastructure Pipeline (NIP) have significantly improved physical connectivity and logistics.

**Reasons for Stagnant Manufacturing Share:**

• **High Cost of Doing Business:** Despite improvements in ease of doing business rankings, factor costs—specifically high land acquisition costs, expensive industrial power, and rigid labor regulations—remain prohibitive.

• **The 'Missing Middle' in MSMEs:** Over 99% of Indian enterprises are micro-businesses. Due to regulatory thresholds and lack of formal credit, these firms face a 'dwarfism' trap, failing to scale up into productive medium-sized manufacturing units.

• **Inadequate Infrastructure and Logistics:** India's logistics cost stands at around 13-14% of GDP, compared to 8% in advanced economies, making Indian exports price-incompetitive.

• **Skill Mismatch:** A significant gap exists between the academic curriculum and the technical skills demanded by modern, automated manufacturing industries.

• **Premature Deindustrialization:** India's growth trajectory has bypassed the traditional transition from agriculture to manufacturing, moving directly to a services-led economy, which is less labor-intensive.

**Conclusion:**

To unlock the true potential of 'Make in India', future policy must shift focus from capital-intensive assembly to labor-intensive sectors like textiles, leather, and food processing. Addressing factor market rigidities, reducing compliance costs for MSMEs, and investing in vocational training are essential steps to achieve sustainable, job-led industrial growth.

Prelims practice questions

Q1. With reference to the Production Linked Incentive (PLI) scheme in India, consider the following statements: 1. It offers financial incentives based on the total annual turnover of the eligible manufacturing units. 2. The scheme is implemented uniformly across all 14 sectors by NITI Aayog as the sole executing ministry. 3. It aims to reduce India's import dependency in critical sectors like Active Pharmaceutical Ingredients (APIs) and electronics. Which of the statements given above is/are correct?

1 and 2 only
3 only
1 and 3 only
1, 2 and 3

Answer: B. Statement 1 is incorrect because the PLI scheme offers incentives based on *incremental* sales (not total annual turnover) over the base year. Statement 2 is incorrect because while NITI Aayog coordinates the broad policy framework, the scheme is implemented by respective line ministries (e.g., Ministry of Electronics and IT, Ministry of Pharmaceuticals), not NITI Aayog alone. Statement 3 is correct as reducing import substitution in APIs and electronics is a core objective.

Q2. The 'Baba Kalyani Committee', which submitted its report to the Government of India, is associated with which of the following areas?

Restructuring of Public Sector Banks
Assessing the impact of corporate tax cuts on manufacturing
Reviewing the defense procurement procedures
Reforming the Special Economic Zones (SEZ) policy

Answer: D. The Baba Kalyani Committee was constituted by the Ministry of Commerce and Industry to study the Special Economic Zones (SEZ) policy of India and recommended aligning it with the 'Make in India' initiative by transforming SEZs into Employment and Economic Enclaves (3Es).

Q3. Which of the following best describes the structural trend of India's manufacturing sector's share in Gross Value Added (GVA) over the last decade (2014–2026)?

It has shown a steady, linear increase to reach 25% of GVA.
It has surpassed the services sector as the primary contributor to India's GVA.
It has remained largely stagnant, hovering between 15% and 17% of GVA.
It has declined sharply due to the rapid growth of the agricultural sector.

Answer: C. Despite the launch of 'Make in India' in 2014 and various subsequent reforms, the manufacturing sector's share in India's GVA has remained largely stagnant, hovering around the 15% to 17% mark, failing to reach the targeted 25%.

Revision flashcards

What was the original target year and GDP share target for manufacturing under the 'Make in India' initiative? The target was to increase the manufacturing sector's share in India's GDP to 25% (originally by 2022, later revised to 2025).
What is 'premature deindustrialization' in the Indian context? It refers to the phenomenon where India's economy transitioned directly from agriculture to services, bypassing the high-growth, labor-absorbing manufacturing phase.
How many sectors are currently covered under the Production Linked Incentive (PLI) scheme (as of September 2026)? 14 key manufacturing sectors (including electronics, pharmaceuticals, solar PV modules, and advanced chemistry cell batteries).
What is the primary difference between the PLI scheme and traditional export subsidies? PLI incentives are linked to domestic production and incremental sales, making them WTO-compliant, unlike direct export subsidies which are prohibited under WTO rules.
What is the 'dwarfism' of MSMEs in India, and how does it affect manufacturing? It refers to firms that remain small (employing few workers) despite being old, often to avoid crossing regulatory thresholds, which prevents them from achieving economies of scale.