National Manufacturing Mission Begins Its Journey

The mission will also offer policy support and create a governance and monitoring system for both central ministries and state governments.

The panel headed by BVR Subrahmanyam, the Chief Executive Officer (CEO) of NITI Aayog, is currently meeting various stakeholders, including industry bodies, value chain experts, and policymakers.

Subrahmanyam, an Indian Administrative Service (IAS) officer of the 1987 batch (Chhattisgarh cadre), is known for his quiet, purposeful, and efficient functioning style, and his colleagues say that he should be able to get the results that the government is looking for.

A senior government official said, “The committee is in consultations with stakeholders and will be forming a concrete plan on how to take forward the National Manufacturing Mission." 

Covering small, medium and large industries, the mandate is clearly charted around five themes: (1) making it easier and cheaper to do business, (2) preparing a future-ready workforce, (3) strengthening the MSME sector, (4) providing better technology, and (5) ensuring high-quality products.

“The goal is to enhance competitiveness, increase efficiency, foster innovation, integrate domestic manufacturing into global value chains and make India a globally competitive manufacturing hub," an industry expert opined.

Manufacturing Share In GDP Refuses To Go Up

One of the targets of the “Make in India” was to boost the manufacturing share in GDP to 25 per cent by 2025. The 25 per cent target was initially supposed to be achieved by 2022, but was later revised to 2025.

However, the manufacturing share in GDP languished at 15.9 per cent in 2023-24, compared to 16.7 per cent in 2013-14. Last year in September, the government also admitted that regaining momentum for the manufacturing sector would require time, as the manufacturing share in GDP remains below the 2023-14 level.

“In many places, the bottlenecks are not just of investment but also of technology. Investment should bring technology, build capacity and skills, and when all these come together, the momentum is built,” said DPIIT secretary Amardeep Singh Bhatia while addressing the media.

So, the target to achieve 25 per cent manufacturing share, once again, has been revised to 2030. The National Manufacturing Mission is expected to complete this unfinished job for the government.

The World Bank database calculates the manufacturing share in GDP by using the net output of the sector. After liberalisation, the ratio reached its maximum (till date) at 18 per cent in 1995. Thereafter, it generally slid down before going up again, around 17 per cent,  between 2006 and 2010.

After 2010, the manufacturing share in GDP kept falling, and according to World Bank calculations, it was 13 per cent in 2023.

India’s Continued Struggle To Boost Manufacturing 

After the 1991 liberalisation, the Indian government made hard efforts in sporadic phases to boost the manufacturing sector by policy reforms and targeted initiatives.

From the advent of liberalisation to the early 2000s, there was a radical shift from the “license, permit and quota raj” towards a more market-oriented economy. By implementing the New Industrial Policy of 1991, the role of the public sector was curtailed, paving the way for greater private and foreign participation.

Foreign direct investment (FDI) norms were eased; technology imports and modernisation were encouraged. There were explicit export promotions by creating export-oriented units (EOUs) and later special economic zones (SEZs).

The result was a boost in manufacturing share by the mid-1990s, at 18 per cent. However, the momentum was lost after that.

Then came the phase between the mid-2000s and 2010. Focus shifted heavily towards infrastructure, as pundits and policymakers, in unison, highlighted the lack of infrastructure as the main reason behind manufacturing’s not-so-good performance.

It looked like working for some time as the manufacturing share in GDP shot back around 17 per cent. But the ratio started falling again after 2010.

The year 2011 was marked by the unveiling of the National Manufacturing Policy, aimed at increasing the share in GDP to 25 per cent and creating 100 million jobs by 2022. Energy efficiency, clean and green technologies and MSMEs created their own spce within this policy ambit.

However, the manufacturing share in GDP refused to go up.

The period between 2014 and 2019 saw the ambitious launch of “Make in India”, the flagship initiative to position India as a global manufacturing hub. Initially, 25 sectors were selected for the simplification of regulatory processes and facilitating the ease of doing business.

Later, the flagship was expanded to the new tech areas like AI and blockchain. But the slide in the ratio of manufacturing to GDP continued.

While the global economy started experiencing headwinds, the Indian government by 2020 started a self-reliance endeavour through “Atmanirbhar Bharat” to reduce import dependence and boost domestic manufacturing in critical sectors like electronics, pharma and defence.

This was followed by the launch of production-linked incentive (PLI) schemes, providing direct financial incentives to manufacturers for incremental rise in sales and production.

As the data show, the manufacturing share is still languishing below the 2013-14 level.

"The National Manufacturing Mission has to achieve what could not be achieved in the last three decades, despite repeated attempts. It's a tough task, but with a new methodology, we may actually be able to do something. If we succeed, we will be able to create quality jobs for the next generation," the official attached to the National Manufacturing Mission told The Secretariat.

In a world where every major economy is trying to look inwards to protect its domestic economy, India’s progress towards a prosperous future will be crucially dependent on its manufacturing performance.