Statsguru: A decade of Make in India sees growth, but challenges remain

An uptick in manufacturing activity a decade since the launch of the Make in India initiative notwithstanding, India’s integration with global value chains faces some challenges.

Global value chain (GVC)-related trade, a measure of a country’s participation in the multi-stage trade process, accounts for more than half of the gross trade in India’s manufacturing sector. And despite an uptick in the ratio in other sectors as well, India’s total GVC-related trade lags behind Vietnam and Russia (Charts 1, 2).

One of the stated objectives of the Make in India initiative was to boost manufacturing activity and improve investments in the sector. Manufacturing contributes less than a fifth of India’s gross domestic product, a ratio that has remained unchanged since 2013-14. In the decade ending in 2022, India’s manufacturing output per capita grew at a compound annual growth rate of 5 per cent.

However, Bangladesh, Vietnam, and China grew at a faster pace (Chart 3).

However, manufacturing activity, which has picked up after the pandemic, remains robust compared to many peers from the Brics (Brazil, Russia, China, and South Africa) grouping (Chart 4).

The initiative also aimed to strengthen self-reliance and boost exports.

However, India’s share in the world’s merchandise exports has remained stagnant despite exceeding $400 billion in the decade since the initiative was launched (Chart 5).

India has taken its share of high-technology exports in total manufactured goods exported up by over 3 percentage points between 2014 and 2022, while in the same period, China has seen a drop of over 6 percentage points. The share of India’s overall high-technology exports, though, remains small compared to China, Vietnam, and the global average (Chart 6).