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:
- New Processes — Streamlining procedures through online portals, single-window clearances, and time-bound approvals. The eBiz portal integrates multiple regulatory clearances.
- New Infrastructure — Development of industrial corridors (Delhi-Mumbai, Chennai-Bengaluru), smart cities, and manufacturing hubs with world-class infrastructure.
- New Sectors — Opening previously restricted sectors to private investment and FDI, including defense, railways, and space.
- 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:
- Infrastructure Bottlenecks — Power shortages, inadequate transport connectivity, port congestion
- Regulatory Complexity — Multiple clearances, center-state coordination issues, environmental approvals
- Skill Gaps — Mismatch between available skills and industry requirements
- Land Acquisition — Complex procedures, farmer resistance, legal disputes
- Labor Laws — Rigid regulations, compliance burden, industrial relations issues
- Global Competition — Competition from Vietnam, Bangladesh, Mexico for manufacturing investments
- 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.
Often confused with
Side-by-side differences the UPSC paper likes to test.
| Aspect | Make in India and Manufacturing Policy | National Manufacturing Policy 2011 |
|---|---|---|
| Scope | Comprehensive initiative covering manufacturing, services, infrastructure, and governance reforms | Focused primarily on manufacturing sector development and industrial promotion |
| Approach | Global integration with emphasis on FDI attraction and export promotion | Domestic market-oriented with limited focus on global value chain integration |
| Policy Framework | Four-pillar strategy with new processes, infrastructure, sectors, and mindset | Traditional industrial policy approach with investment promotion and infrastructure development |
| Implementation | High-level political commitment with PM leadership and integrated approach across ministries | Ministry-level implementation with limited cross-sectoral coordination |
| Target Timeline | 25% manufacturing GDP share by 2025, 100 million jobs by 2022 | 25% manufacturing GDP share by 2022 with focus on employment generation |
Make in India represents a paradigm shift from the National Manufacturing Policy 2011's domestic-focused approach to a globally integrated manufacturing strategy. While NMP 2011 was a sectoral policy, Make in India is a comprehensive transformation initiative that integrates manufacturing with broader economic reforms, infrastructure development, and governance improvements.
The key difference lies in Make in India's emphasis on global value chain integration, FDI attraction, and simultaneous focus on domestic manufacturing and export promotion.
Why it is tested: UPSC frequently tests the evolution of India's industrial policies and the shift from protectionist to globally integrated approaches. Questions often compare different policy phases and their effectiveness in achieving manufacturing growth and employment generation.
| Aspect | Make in India and Manufacturing Policy | China's Manufacturing Strategy |
|---|---|---|
| Development Stage | Emerging manufacturing hub seeking to increase manufacturing GDP share from 16% to 25% | Established manufacturing powerhouse with 28% manufacturing GDP share transitioning to high-tech manufacturing |
| Policy Focus | Attracting global manufacturers through FDI liberalization and ease of doing business reforms | Made in China 2025 focuses on upgrading to high-tech manufacturing and reducing dependence on foreign technology |
| Market Approach | Open economy approach with emphasis on FDI attraction and global integration | State-led approach with significant government investment and strategic sector protection |
| Competitive Advantage | Large domestic market, demographic dividend, English-speaking workforce, democratic institutions | Established supply chains, infrastructure, manufacturing ecosystem, and scale economies |
| Challenges | Infrastructure gaps, skill development, regulatory complexity, and late entry into global manufacturing | Rising labor costs, environmental concerns, trade tensions, and technology transfer restrictions |
Make in India and China's manufacturing strategy represent different stages of industrial development. While China focuses on upgrading its established manufacturing base to high-tech sectors, India seeks to build basic manufacturing capabilities while simultaneously targeting advanced sectors.
India's democratic approach contrasts with China's state-led model, offering different advantages in terms of market access and investor confidence but facing challenges in rapid decision-making and resource mobilization.
Why it is tested: UPSC examinations often include questions comparing India's manufacturing strategy with global models, particularly China's approach. Understanding these differences is crucial for questions on India's competitive positioning and policy effectiveness.
Questions students ask
8 answered on this topic.
What is the difference between Make in India and National Manufacturing Policy 2011?
The National Manufacturing Policy 2011 was a sectoral policy focused primarily on increasing manufacturing's share in GDP to 25% by 2022 through investment promotion and skill development. Make in India, launched in 2014, is a comprehensive transformation initiative that goes beyond manufacturing to include ease of doing business reforms, FDI liberalization, infrastructure development, and integration with other flagship programs.
While NMP 2011 was largely government-driven, Make in India emphasizes public-private partnership and global integration. Make in India also includes services sectors and focuses on both domestic manufacturing and export promotion, whereas NMP 2011 was primarily domestic market-oriented.
How does Make in India integrate with Atmanirbhar Bharat?
Make in India and Atmanirbhar Bharat are complementary initiatives with overlapping objectives but different emphasis. Make in India focuses on manufacturing promotion through global integration and FDI attraction, while Atmanirbhar Bharat emphasizes self-reliance and import substitution.
Post-COVID-19, Make in India has evolved to align with Atmanirbhar Bharat's goals through PLI schemes that promote domestic manufacturing while building export capabilities. The integration is evident in sectors like pharmaceuticals, electronics, and defense manufacturing where both domestic production and export competitiveness are targeted.
The approach is 'Make in India for India and the world' rather than protectionist self-reliance.
What are Production Linked Incentive (PLI) schemes and how do they support Make in India?
PLI schemes are performance-based incentive programs launched in 2020-21 with a total outlay of ₹1.97 lakh crore across 14 sectors. Unlike traditional subsidies, PLI schemes provide incentives linked to incremental sales and production, encouraging efficiency and competitiveness.
They support Make in India by attracting global manufacturers, promoting technology transfer, and building scale in strategic sectors. Key features include minimum investment thresholds, employment generation requirements, and export obligations.
Sectors covered include mobile manufacturing, pharmaceuticals, automotive components, textiles, food processing, and semiconductors. PLI schemes represent Make in India 2.0 - a more targeted and performance-oriented approach to manufacturing promotion.
What are the main challenges facing Make in India implementation?
Make in India faces several implementation challenges: Infrastructure bottlenecks including power shortages, inadequate transport connectivity, and port congestion limit manufacturing competitiveness.
Regulatory complexity with multiple clearances and center-state coordination issues creates compliance burden. Skill gaps exist between available workforce capabilities and industry requirements. Land acquisition remains difficult due to complex procedures and farmer resistance.
Labor laws, despite recent reforms, still pose flexibility constraints. Global competition from countries like Vietnam and Bangladesh for labor-intensive manufacturing is intense. Limited R&D spending and weak innovation ecosystem hinder technology absorption.
Environmental clearances and compliance add time and cost to project implementation.
How has Make in India performed in terms of its stated objectives?
Make in India shows mixed performance against its objectives. Positive achievements include manufacturing GDP growth averaging 7.4% during 2014-19, record FDI inflows reaching $83.57 billion in 2021-22, and significant improvement in Ease of Doing Business ranking from 142nd to 63rd.
Several sectors like mobile manufacturing, pharmaceuticals, and automotive have shown strong growth. However, the overall manufacturing share in GDP remains around 17%, short of the 25% target. Job creation has fallen short of the 100 million target by 2022.
Export competitiveness remains limited in labor-intensive sectors. The COVID-19 pandemic disrupted progress, but PLI schemes and Atmanirbhar Bharat integration have provided renewed momentum.
What is the role of industrial corridors in Make in India strategy?
Industrial corridors are integrated infrastructure projects designed to create world-class manufacturing ecosystems along major transport routes. The Delhi-Mumbai Industrial Corridor (DMIC) is the flagship project spanning 1,483 km across six states with planned investment of $100 billion.
Other corridors include Chennai-Bengaluru (automotive and aerospace focus), East Coast Economic Corridor (port connectivity), and Amritsar-Kolkata (northern-eastern connectivity). These corridors provide plug-and-play infrastructure including power, water, logistics, and digital connectivity.
They integrate manufacturing with urban development through planned cities and townships. The corridor approach enables cluster development, reduces logistics costs, and attracts anchor investments that create supplier ecosystems.
How does Make in India address environmental concerns in manufacturing?
Make in India incorporates environmental sustainability through several mechanisms: Mandatory environmental clearances for manufacturing projects ensure compliance with pollution norms. The policy promotes clean technologies and green manufacturing practices through incentives and regulations.
Integration with renewable energy initiatives reduces carbon footprint of manufacturing. Waste management and circular economy principles are encouraged through policy frameworks. Water conservation and treatment requirements are mandatory for water-intensive industries.
The recent focus on green hydrogen and sustainable manufacturing under Atmanirbhar Bharat demonstrates evolution towards environmentally responsible industrialization. However, balancing rapid industrialization with environmental protection remains a key challenge requiring continuous policy refinement.
What is the significance of the 25 focus sectors identified under Make in India?
The 25 focus sectors represent strategic choices based on India's competitive advantages, growth potential, and employment generation capacity. These sectors span traditional strengths like textiles and pharmaceuticals to emerging areas like renewable energy and space technology.
The selection considers factors like domestic market size, export potential, technology absorption capability, and strategic importance. Each sector has customized policy interventions including FDI liberalization, regulatory reforms, and infrastructure support.
The sectoral approach enables targeted resource allocation and performance monitoring. Recent additions like medical devices and toy manufacturing demonstrate the dynamic nature of sectoral prioritization based on emerging opportunities and global supply chain shifts.