India’s Next Manufacturing Leap: From Make in India to Global Factory

Current Context & Foundation

• India’s manufacturing sector has regained momentum amid global supply-chain reconfiguration, geopolitical uncertainties, and return of industrial policy worldwide.
• Firms are actively diversifying away from single-country dependence (China-centric models).
• Existing policy focus — lowering entry barriers, targeted incentives (PLI schemes), infrastructure push, ease of doing business — has attracted investment and built business confidence.
• This creates a strong base, but the next phase must shift from mere capacity creation to deeper capability building and global value-chain integration.

Strategic Direction for Next Phase

• Prioritise strategically important and technology-intensive sectors (even if it involves higher experimentation and tolerance for firm-level failures).
• Countries commanding critical technologies, complex processes, and trusted production enjoy greater bargaining power in a fragmented world.
• Scale traditional manufacturing while moving up the value chain in high-tech, high-value-addition sectors.
• Visible progress already:
  • Electronics — production up ~6×, exports up ~8× in last 11 years.
  • Pharmaceuticals — among world’s largest by volume; >50% of global vaccine supply; major generics exporter.

Key Enablers for Deeper Capability Building

• Stronger private participation in R&D and innovation.
• Deeper industry–academia linkages.
• Faster absorption of advanced technologies by firms.
• Robust skilling systems aligned with future needs.
• Quality Control Orders (QCOs) — used constructively in strategic/safety-critical sectors to enforce international standards, upgrade capabilities, and build global credibility (requires phased rollout, testing infrastructure, industry consultation to avoid input cost spikes or scale constraints).

Spatial & Ecosystem Reorganisation

• Shift focus from small/fragmented clusters to larger, deeper, integrated industrial ecosystems.
• Anchor next-generation clusters in Tier-2 and Tier-3 cities — advantages include:
  • Affordable land & real estate
  • Lower operating & wage costs
  • Large labour pools
  • Improved infrastructure & liveability vs. congested metros
• State & local governments critical — need stable regulations, functional single-window systems, time-bound approvals, speedy land/utilities access, efficient dispute resolution.

Logistics & Infrastructure Competitiveness

• Logistics costs declined to ~7.97% of GDP (FY 2023–24) — now comparable to global benchmarks.
• Port performance improved (several Indian ports in World Bank’s top 100 Container Port Performance Index 2024).
• Key initiatives: PM Gati Shakti, National Logistics Policy, accelerated highway construction.
• Next frontier: Rebalance freight mix — reduce road dominance, increase share of rail and coastal shipping (more efficient for bulk/long-distance) → multimodal integration for further cost reduction.

Role of MSMEs

• Backbone of manufacturing — key for employment, output, exports.
• Recent gains: Formalisation, better finance access, supply-chain integration.
• Next opportunity: Deeper participation in strategic value chains (components, specialised services).
• Support needed: Bridge credit gaps, strengthen skilling, accelerate technology adoption, expand quality infrastructure at ecosystem level.

Regulatory & Execution Reality

• Firms value speed, predictability, consistency more than formal EoDB rankings.
• Bottlenecks: Delays in land acquisition, utilities, approvals, dispute resolution → directly impact investment & scale.
• Success depends on daily factory-floor experience, not just policy headlines.

Ultimate Objective

• India’s next manufacturing leap defined not by how much it produces, but by what it produces and how strategically indispensable it becomes globally.
• Build:
  • Deeper technological capability
  • Stronger R&D systems
  • Globally competitive firms embedded in strategic sectors

Proposed National Manufacturing Mission — platform to align reforms, skilling, infrastructure, and innovation under a coherent long-term industrial strategy.

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