Make in India and Manufacturing Policy — Explained

Detailed Explanation

Make in India represents one of the most ambitious industrial transformation initiatives in contemporary India, fundamentally reshaping the country's manufacturing landscape since its launch on September 25, 2014. The initiative emerged from a critical recognition that India's economic growth, while impressive in the services sector, had been lopsided, with manufacturing contributing only 16% to GDP compared to the global average of 25-30% for developing economies.

Historical Context and Evolution

India's manufacturing journey can be traced through distinct phases. The Industrial Policy Resolution of 1956 established the 'commanding heights' approach with public sector dominance. The 1991 economic liberalization marked a shift towards market-oriented policies, but manufacturing growth remained subdued.

The National Manufacturing Policy (NMP) 2011 was the immediate precursor to Make in India, aiming to increase manufacturing's GDP share to 25% by 2022. However, NMP 2011 lacked the comprehensive approach and political commitment that Make in India brought.

Make in India was conceived as a response to several challenges: jobless growth in the services sector, the need to leverage India's demographic dividend, global supply chain disruptions, and the imperative to move up the value chain from low-skill services to medium-skill manufacturing. The initiative coincided with global trends of supply chain diversification away from China, presenting India with a unique opportunity.

Constitutional and Legal Framework

The constitutional foundation of Make in India rests on several provisions. Article 39(b) and (c) of the Directive Principles mandate that the State shall direct its policy towards ensuring equitable distribution of material resources and preventing concentration of wealth.

Article 41 provides for the right to work, while Article 43 directs the State to promote cottage industries and ensure living wages. The Seventh Schedule provides legislative competence through the Union List (Entry 52 on industries regulation) and Concurrent List (Entry 24 on welfare of labor).

The legal framework encompasses multiple acts including the Companies Act 2013, Foreign Exchange Management Act (FEMA), Industrial Disputes Act, and various state-specific industrial promotion acts. Recent amendments to labor codes and the introduction of the Insolvency and Bankruptcy Code 2016 have strengthened the legal architecture supporting manufacturing.

25 Focus Sectors and Strategic Approach

Make in India identified 25 focus sectors: Automobiles, Auto Components, Aviation, Biotechnology, Chemicals, Construction, Defense Manufacturing, Electrical Machinery, Electronic Systems, Food Processing, IT & BPM, Leather, Media & Entertainment, Mining, Oil & Gas, Pharmaceuticals, Ports, Railways, Renewable Energy, Roads & Highways, Space, Textiles & Garments, Thermal Power, Tourism, and Wellness. This sectoral approach allows targeted policy interventions and resource allocation.

The selection criteria included sectors with high growth potential, employment generation capacity, export competitiveness, and strategic importance. For instance, defense manufacturing addresses national security concerns while reducing import dependence. Electronics manufacturing targets the growing domestic market and global supply chain opportunities. Textiles leverages India's traditional strengths while moving towards technical textiles.

Policy Framework and Reforms

Make in India's policy framework operates on four pillars:

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New Processes — Streamlining procedures through online portals, single-window clearances, and time-bound approvals. The eBiz portal integrates multiple regulatory clearances.

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New Infrastructure — Development of industrial corridors (Delhi-Mumbai, Chennai-Bengaluru), smart cities, and manufacturing hubs with world-class infrastructure.

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New Sectors — Opening previously restricted sectors to private investment and FDI, including defense, railways, and space.

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New Mindset — Fostering government-industry partnership and moving from regulatory to facilitative governance.

FDI Policy Liberalization

Make in India coincided with significant FDI liberalization. Key reforms include:

Defense manufacturing: FDI limit increased from 26% to 74% under automatic route
Railways: 100% FDI allowed in specific segments
Insurance: FDI limit raised from 26% to 49%
Single Brand Retail: 100% FDI with relaxed conditions
Multi-brand retail: FDI allowed with conditions

These reforms positioned India as one of the most open economies for FDI, with inflows reaching record levels of $83.57 billion in 2021-22.

Ease of Doing Business Improvements

India's World Bank Ease of Doing Business ranking improved dramatically from 142nd in 2014 to 63rd in 2020. Key reforms included:

Starting a business: Online incorporation, reduced compliance requirements
Construction permits: Online building plan approvals, risk-based inspections
Getting electricity: Online applications, time-bound connections
Registering property: Online registration, reduced stamp duties
Paying taxes: GST implementation, online filing systems
Trading across borders: Electronic documentation, port infrastructure improvements

Manufacturing Hubs and Industrial Corridors

The initiative emphasizes creating world-class manufacturing infrastructure through:

Delhi-Mumbai Industrial Corridor (DMIC): Spanning 1,483 km across six states
Chennai-Bengaluru Industrial Corridor (CBIC): Focusing on automotive and aerospace
East Coast Economic Corridor (ECEC): Leveraging port connectivity
Amritsar-Kolkata Industrial Corridor (AKIC): Connecting northern and eastern regions

These corridors integrate manufacturing with logistics, power, water, and digital infrastructure.

Integration with Other Flagship Programs

Make in India's success depends on synergy with other initiatives:

Digital India — Enabling Industry 4.0 adoption, IoT integration, and digital manufacturing
Skill India — Addressing skill gaps through sector-specific training programs
Startup India — Fostering innovation and technology transfer
Clean India — Ensuring sustainable manufacturing practices
Smart Cities — Creating urban infrastructure supporting manufacturing

Production Linked Incentive (PLI) Schemes

Launched in 2020-21, PLI schemes represent Make in India 2.0, offering incentives worth ₹1.97 lakh crore across 14 sectors. Key features:

Performance-based incentives linked to incremental sales
Focus on high-value manufacturing and exports
Technology transfer and R&D promotion
Global supply chain integration

Sectors covered include mobile manufacturing, pharmaceuticals, automotive, textiles, food processing, and semiconductors.

Challenges and Implementation Issues

Despite policy initiatives, Make in India faces several challenges:

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Infrastructure Bottlenecks — Power shortages, inadequate transport connectivity, port congestion
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Regulatory Complexity — Multiple clearances, center-state coordination issues, environmental approvals
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Skill Gaps — Mismatch between available skills and industry requirements
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Land Acquisition — Complex procedures, farmer resistance, legal disputes
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Labor Laws — Rigid regulations, compliance burden, industrial relations issues
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Global Competition — Competition from Vietnam, Bangladesh, Mexico for manufacturing investments
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Technology Transfer — Limited R&D spending, weak innovation ecosystem

Recent Developments and Atmanirbhar Bharat Integration

The COVID-19 pandemic accelerated Make in India's evolution towards Atmanirbhar Bharat (self-reliant India). Key developments include:

Supply chain resilience focus
Import substitution in critical sectors
Semiconductor manufacturing promotion
Green manufacturing initiatives
Defense production self-reliance targets

Vyyuha Analysis: Strategic Positioning in Global Value Chains

From Vyyuha's analytical perspective, Make in India represents India's strategic attempt to position itself in global value chains at a time of unprecedented disruption. Unlike previous industrial policies that focused on domestic market protection, Make in India embraces global integration while building domestic capabilities. This dual approach - 'Make in India for India' and 'Make in India for the world' - reflects sophisticated understanding of modern manufacturing economics.

The initiative's timing coincided with three global trends: China's rising labor costs, supply chain diversification post-COVID-19, and the Fourth Industrial Revolution. India's challenge lies in simultaneously building traditional manufacturing capabilities while leapfrogging to Industry 4.0 technologies. The PLI schemes represent this evolution - moving from broad-based incentives to targeted, performance-linked support for strategic sectors.

Performance Assessment and Future Outlook

Make in India's performance shows mixed results. Positive indicators include:

Manufacturing GDP growth averaging 7.4% (2014-19)
FDI inflows reaching record levels
Ease of doing business ranking improvement
Export competitiveness in specific sectors

Challenges remain in:

Overall manufacturing share in GDP (still around 17%)
Job creation falling short of targets
Infrastructure and skill gaps
Global competitiveness in labor-intensive sectors

The initiative's future success depends on addressing structural constraints while leveraging emerging opportunities in green manufacturing, digitalization, and supply chain reconfiguration. The integration with Atmanirbhar Bharat provides renewed focus and resources, potentially accelerating the transformation India seeks to achieve.