Manufacturing industry has been taken as the real national muscle, particularly when the global trade war is likely around the corner. Whether 'Make in India' could replace 'Made in China' arouses the universal attention. However, the recent argument within India's domestic politics proves India still has a long way.
The Indian National Congress (INC) and the Bharatiya Janata Party (BJP) have engaged in heated debates over whether the 'Make in India' initiative has failed. Congress MP Rahul Gandhi pointed out that although Prime Minister Narendra Modi has sought to turn India into a factory for the world, the share of manufacturing in India's GDP has unexpectedly declined, dropping from 15.3 per cent in 2014 to 12.6 per cent today, the lowest in six decades.
Congress President Mallikarjun Kharge was even more scathing in his criticism, stating that "Modinomics is a curse on India's economy". Given the current state of development, he argues, Modi's campaign promises to build India into a global production powerhouse has no chance of being fulfilled.
Reacting to these sharp remarks, BJP's IT department head Amit Malviya insisted that the "Make in India" initiative has fueled sustained expansion in the country's manufacturing sector. While 29 million jobs had been created during the INC's tenure (2004-2014), the Modi administration (2014-2024) has added 179 million new jobs, potentially positioning India as a global manufacturing hub. The clashes between INC and BJP expose irreconcilable visions for India's industrial future.
'Make in India' is an ambitious top-down planning. Introduced as a core initiative during the early days of the Modi administration, 'Make in India' was designed to showcase reform credentials and rally public backing through industrial upgrading. However, its overly aggressive targets were severely misaligned with the actual industrial base and execution capabilities.
Policy execution has proven to be inefficient. The sluggish bureaucratic system and cumbersome administrative procedures caused substantial delays in the implementation. Businesses often find themselves mired in red tape, even simple approvals taking months, substantially hampering the response capability.
Incentive mechanisms have been poorly designed while the government's Production-Linked Incentive (PLI) scheme for boosting manufacturing industry, its complex criteria, such as progressively increasing investment and output thresholds, misalign with actual needs. Many small and medium-sized enterprises are excluded due to stringent requirements, while large corporations remain hesitant due to policy uncertainty.
Additionally, systemic inadequacies, such as fragmented land ownership and the absence of just compensation frameworks for land expropriation, have ensnared numerous manufacturing endeavours in the cycle of "land acquisition-public dissent-impasse".
The stagnation of India's manufacturing sector is linked to its socio-cultural values, which hinders its labour market development. The traditional caste system ties individuals' career trajectories to their birth, thereby restricting the free movement of labour into the manufacturing domain.
Lower-caste groups are systematically marginalised from technical positions, thus vocational training is woefully insufficient. Higher-caste individuals view manufacturing with contempt, preferring "respectable" professions like finance and software.
Deep-seated cultural traditions persist in stifling female engagement in the workforce. According to World Bank labour force statistics, women account for only 31.2 per cent of India's workforce in 2023 and 32.8 per cent in 2024, and their representation in manufacturing is even more limited, mostly in low-wage industries such as textiles and tobacco. Despite India's abundant supply of young workforce, labour participation rates remain low, lagging not only behind China but even Bangladesh.
The protectionist measures of Modi government have not only tarnished India's international business standing but impeded foreign investment. 'Make in India' couldn't offer a stable and transparent business climate. Government authorities often carry out unannounced inspections on the pretext of compliance audits or tax probes.
The negative impact of the investment environment has been demonstrated by typical examples such as Xiaomi, Amazon and Samsung. It has eroded corporate confidence as well as investment reputation of India. The slowdown in foreign investment inflows has significantly diminished the upgrading capacity of domestic supply chains. This vicious cycle is likely to persist in the foreseeable future.
Besides economic factors, India's failure to merge with the regional economy proved to be the proverbial last straw. India's withdrawal from RCEP made it miss a crucial opportunity to integrate into the Asia-Pacific value chains. Its hesitant attitude towards China's BRI and the CPTPP has largely constrained its ability to ride the tide of regional economic development.
Such self-imposed foreign policies have plunged India's manufacturing sector into an increasingly "isolated" predicament. On the background of tariff war triggered by President Donald Trump, the chances for the Indian manufacturing industry to rise are slimmer than ever.
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