Boosting India Manufacturing
India Must Deepen Manufacturing Capabilities and Skills to Drive Sustainable Economic Growth
Anonymous
Key Points
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Chief Economic Adviser V. Anantha Nageswaran said India’s goods trade deficit, excluding oil and gold, is around 3.5–4% of GDP, underscoring the need to deepen domestic manufacturing while also improving export competitiveness.
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Nageswaran identified practical measures to attract foreign investment: greater tax certainty, simpler regulation, stronger investor protection and access to skilled talent, with policy improvements needed at both national and state levels.
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The 2025 Periodic Labour Force Survey found that just 4.9% of Indians aged 15–29 had received formal vocational or technical training, while 21.2% had acquired skills informally. The article cautions that government programme participation totals do not represent an equivalent number of uniquely qualified workers.
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CII President R. Mukundan said India’s manufacturing potential depends on combining its large domestic market with a competitive production base: “A large market attracts businesses. A competitive production base creates businesses.”
India's manufacturing push is shifting focus from simply replacing imports to building world-class production capabilities that can compete globally. Chief Economic Adviser V. Anantha Nageswaran warned that India's goods trade deficit—excluding oil and gold—sits at 3.5–4% of GDP, signaling an urgent need to deepen domestic manufacturing while also boosting export competitiveness. The Confederation of Indian Industry says Make in India has evolved beyond basic incentives to include supply-chain development, innovation hubs, and workforce training as critical pillars.
The shift reflects a hard truth: expanding factories alone will not work. India needs millions more workers with formal technical and digital skills. A 2025 government survey found just 4.9% of Indians aged 15–29 have received formal vocational training, even as over 32 million have participated in government skilling programs. CII President R. Mukundan framed the challenge plainly: "A large market attracts businesses. A competitive production base creates businesses."
PLI Schemes Attract Billions But Skills Gap Remains
India's Production-Linked Incentive (PLI) schemes have pumped ₹2.58 lakh crore into manufacturing investment by June 2026, generating ₹23.79 lakh crore in production and sales. Exports topped ₹15.53 lakh crore, with over 14.57 lakh direct and indirect jobs created. Yet Confederation of Indian Industry warns that these gains alone are insufficient without deeper technical workforce development.
The 2025 Periodic Labour Force Survey exposed the bottleneck: while 21.2% of young workers picked up skills informally on the job, only 4.9% completed formal vocational or technical training. Ministry of Statistics reported over 32 million cumulative enrollments across government programs—but noted this masks overlap and short-term certifications, not uniquely qualified workers ready for advanced manufacturing roles.
CEA Pushes Four Practical Steps to Attract Foreign Investment
Chief Economic Adviser V. Anantha Nageswaran outlined concrete reforms needed to draw global manufacturing capital. Tax certainty, simpler regulations, stronger investor protections, and access to skilled talent topped his list. He emphasized that policy improvements must happen at both national and state levels—a signal that fragmented bureaucracy remains a barrier to foreign factories choosing India over competitors like Vietnam or Mexico.
Nageswaran stressed that import substitution alone cannot solve India's trade deficit. Instead, manufacturing and services must grow together, with policies designed to improve export competitiveness globally. He warned: "The time is not on our side," urging the country to develop capabilities in sectors where global supply chains cannot easily replace Indian producers.
Make in India Expands Beyond Assembly to Advanced Production
Twelve years after its September 2014 launch, Make in India 2.0 now targets 27 sectors, moving away from basic assembly toward technology-intensive manufacturing. CII Director General Chandrajit Banerjee said the opportunity "is no longer only about substituting imports; it is about building deeper capabilities that can compete globally." Focus areas now include semiconductors, chemicals, and engineering—sectors requiring precision, automation, and digital expertise.
The shift demands more than factories and machines. It demands workers who can program, troubleshoot, and adapt to AI-driven production lines. Without a structural overhaul of technical education, India risks creating assembly plants staffed with workers trained for yesterday's manufacturing, not tomorrow's.
Global Supply Chains Beckon—If India Can Deliver Quality
CII President R. Mukundan framed India's advantage clearly: "A country that can combine a large market with a competitive production base can shape global value chains." India's 1.4 billion people offer unmatched domestic demand. But global multinationals will only route advanced production here if costs, speed, and quality match rivals.
The challenge is real. Informal skill acquisition dominates—21.2% of young workers learn on the job versus 4.9% through formal training. That gap threatens India's ability to compete for high-margin, technology-dependent manufacturing that creates lasting prosperity, not just temporary assembly jobs.
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