But did we really ‘Make in India’?

On the 10th anniversary of the ‘Make in India’ scheme (launched in September 2014), it is time to reflect on whether the scheme achieved the objectives it set out to achieve. Under the Department of Promotion of Industry and Internal Trade (DPIIT), Union Ministry of Commerce and Industry, the scheme aimed to boost India’s manufacturing sector to make it globally competitive. 

In 1950, the primary sector contributed to 59 per cent of the GDP; by 2011, the tertiary sector contributed to 59 per cent of the GDP. As is evident, India’s economy seemingly skipped the secondary sector.

Economists argued that leapfrogging the secondary sector hindered the country’s economic growth, given its high multiplier effect and the high employment opportunities it generates. As a result, the government has invested heavily in growing the manufacturing sector over the past decade. Most notable of their efforts have been the ‘Make in India’ scheme.

One of the key objectives of the ‘Make in India’ scheme was to increase the share of the manufacturing sector in the GDP to 25 per cent from 16 per cent by 2025 (the target was supposed to be achieved by 2022 but was later revised and extended to 2025). Was this objective achieved?

The manufacturing sector contributed to 16-17 per cent of the GDP in the 1990s. And years later, despite the elaborate and expensive ‘Make in India’ scheme, the sector’s contribution was still stagnant at 17.7 per cent in 2023. This brings into question whether it is even reasonable to expect that we will reach the 25 per cent target by 2025 in just one year.

Since the launch of the scheme nearly 10 years ago, the contribution of manufacturing increased by only 2.7 percentage points. To achieve the remaining 7 per cent in just one year seems highly unlikely. Perhaps we need to be more realistic and revise this timeline — again, for the second time?

Contribution of the Manufacturing Sector to GDP since the Launch of ‘Make in India’

Another key objective of the scheme was to create 100 million new jobs in the manufacturing sector by 2022. This, however, has also not been achieved.

Employment in the manufacturing sector has shown little growth over the past decade. The manufacturing sector employed 30.3 million people in 2013-14, according to the 6th Economic Census. Various sources such as Statista and Business Standard estimate that although employment had increased to 51.3 million in 2017, it decreased to 35.7 million in 2023 and that this decrease, although exacerbated by the pandemic, had started even before 2020.

This showed that an entire decade later, the increase in employment in the manufacturing sector has been infinitesimal. However, government sources claimed that employment is increasing and had reached 62.4 million jobs in 2019. While it is unclear whether employment in the sector has increased or decreased and by how much, what is clear is that the goal of creating 100 million has not been achieved.

Employment in the Manufacturing Sector (in crores)

Even the highly celebrated announcements of multinational corporations, expanding manufacturing operations in India do not create enough jobs to achieve the 100 million new job objective. For instance, the Rs 3,000 crore Coca-Cola investment in Gujarat is expected to generate only 1,400 jobs or Nestle’s Rs 900 crore investment in Odisha is expected to generate over only 800 jobs.

While these investments are certainly crucial, the number of jobs created is not as high as the enthusiasm with which we celebrate the news and nowhere near enough to reach the ten crore new jobs goal.

India is aggressively pushing to establish itself as an electronic and semiconductor manufacturing hub, as seen by the enormous budget allocated to these sectors. In this year’s interim budget, Rs 13,104.5 crore was allocated to electronic and chip manufacturing. The problem with this is that is a capital-intensive, high-skilled manufacturing industry.

For a country like India with a high number of low-skilled labour, investments in labour-intensive manufacturing industries like textile and footwear are needed for the manufacturing sector to generate significant employment and absorb these numbers.

The Union minister for commerce and industry, Piyush Goyal, stressed that “we can create not lakhs but crores of jobs in the textiles sector, plastics, footwear, auto components, sports goods, agri / food processing, there are so many sectors where labour is an important element of cost, that’s our competitive or comparative advantage that we should leverage.”

However, the budget for these industries is much lower. In 2022-23, although Rs 11,059.81 crore was allocated to the Union Ministry of Textiles, the revised budget estimate cut the budget by 71 per cent to Rs 3,579 crore. This concentration of investment in capital-intensive manufacturing has resulted in the sluggish growth of labour-intensive manufacturing. 

That is not to say that the scheme did not bring any advancements in the manufacturing sector. Due to governmental intervention, primarily to cut down red-tapes, India’s ranking in the ‘Ease of Doing Business Index’ by the World Bank improved to 63rd in 2020 from 134th in 2014. Furthermore, India’s manufacturing sector has grown in vaccine and electronic production areas. 

However, these efforts and achievements fall short when the fundamental indicators of the manufacturing sector show lacklustre growth, and the core objectives of the ‘Make in India’ scheme, even a decade later, are nowhere near being achieved.

Juhi Todi is a Master’s student of the Department of Public Policy at Manipal Academy of Higher Education, Bengaluru.

Views expressed are the author’s own and don’t necessarily reflect those of Down To Earth.