R&D-linked incentives to drive India's high-end manufacturing push: Experts

Country's focus should be on developing expertise in achieving required mineral purity levels and strengthening chemical engineering capabilities

Research and development (R&D)-linked incentives remain a crucial gap in India’s push towards high-end manufacturing, Kollareddy Ramachandra, chief executive officer (CEO) of Midwest, said on Wednesday at Business Standard annual event Manthan 2026 here. 

The impetus for R&D in high-end manufacturing must primarily come from the central government, which is currently working on the issue, he said in a session titled “India’s high-tech manufacturing prospects”, moderated by Vikas Dhoot. 

High-end manufacturing refers to the production of technologically advanced products such as semiconductor chips, aerospace components, robotics, and defence systems. 

Weighing in on the subject, Abhishek Singh, senior vice president-defence (India & SE Asia), Rolls-Royce, said both the Centre and state governments would play equal role in boosting growth of the sector. The state governments have supported the sector in several ways, including land allocation and skilling, he added. 

 

“With the current geopolitical environment, we have realised that it is becoming important to become self-reliant in order to ensure we have that level of strategic autonomy. In high-end manufacturing, we have seen tremendous growth in recent years,” added Singh.

 

Barring a few minerals, India has abundance of rare earth minerals, said Ramachandra. India’s focus should be on developing expertise in achieving the required mineral purity levels and strengthening its chemical engineering capabilities, he said.

 

“India has a lot of rare earth minerals. Today, China is producing 60,000 tonnes of rare earth oxides and India is producing 500 tonnes while global requirement is 75,000 tonnes. India can meet 25 per cent of global demand (for rare earth) for forward. We are also working on that,” said Ramachandra.

 

India needs to tailor its manufacturing sector to align with the resources available within the country. “We don’t have a lot of lithium, but we have silica. You can replace a lot of lithium with silica. We know the resources we have, we just need to work on technologies related to that,” Ramachandra added.

 

Emphasising on financing required for the sector, Tushar Vikram, CEO of Mashreq Bank, said investors across the world see India as a credible source for investment amid the geopolitical unrest. “India has been better in handling global turbulence. There is confidence in India because of its resilience. We have signed a number of trade deals. It has been a turbulent time for everybody but India has been better placed,” said Vikram.

 

Government policies and initiatives such as production-linked incentive (PLI) schemes are the biggest enablers for high-end manufacturing in India, he noted.

 

The Indian government has introduced a PLI scheme to scale up value-added manufacturing in the country, especially in sectors such as electronics, telecom products, electric vehicles, and batteries. The government aims to raise manufacturing’s share in gross domestic product (GDP) to 25 per cent from the current 15-17 per cent. To achieve the goal, India is investing heavily in building semiconductor chips, advanced packaging, and essential technologies to ensure self-reliance.