India’s Manufacturing Revival in a Reconfigured Global Economy
Introduction: Manufacturing at a Historical Crossroads
The global economy is undergoing a profound reconfiguration. Long-standing assumptions about hyper-globalisation, just-in-time supply chains, and singular manufacturing hubs have been disrupted by the COVID-19 pandemic, the US–China trade tensions, the Russia–Ukraine war, and rising techno-nationalism. In this changing landscape, manufacturing has regained strategic significance—not merely as an engine of growth, but as a pillar of national resilience, employment, and geopolitical influence. For India, which has long aspired to raise manufacturing’s share in GDP from around 15–16% to 25%, this moment represents both an opportunity and a test of policy credibility.
A Reconfigured Global Economy: From Efficiency to Resilience
The post-1990 global economic order was shaped by cost efficiency, with China emerging as the “factory of the world.” However, recent shocks have exposed the vulnerabilities of over-concentrated supply chains.
As a result, multinational firms are now pursuing “China-plus-one” or “China-plus-many” strategies, prioritising supply chain diversification, geopolitical alignment, and resilience over mere cost minimisation.
This shift has created openings for countries like India, Vietnam, Mexico, and Indonesia. India’s large domestic market, democratic institutions, improving ease of doing business, and strategic alignment with major economies such as the US, EU, and Japan position it as a credible alternative manufacturing destination.
Policy Push: The State as a Catalyst
Recognising manufacturing as a strategic priority, India has launched a series of policy interventions over the past decade. The Make in India initiative sought to improve the investment climate, while Production Linked Incentive (PLI) schemes, introduced from 2020 onwards, marked a more targeted and outcome-oriented approach.
Covering sectors such as electronics, pharmaceuticals, automobiles, solar modules, and semiconductors, PLI links fiscal incentives directly to incremental production.
Recent examples illustrate tangible progress. Apple has significantly expanded iPhone assembly in India, with exports rising sharply from Tamil Nadu and Karnataka.
India has also emerged as a major exporter of pharmaceuticals and vaccines, demonstrating manufacturing strength in high-value, knowledge-intensive sectors.
The government’s push for semiconductor manufacturing, including projects in Gujarat and Assam, reflects an ambition to enter complex global value chains.
Infrastructure and Logistics: Addressing Structural Bottlenecks
Manufacturing competitiveness depends not only on incentives but also on foundational infrastructure. In this context, initiatives such as PM Gati Shakti, Dedicated Freight Corridors, Bharatmala, and port modernisation have improved logistics efficiency.
India’s Logistics Performance Index ranking has shown improvement, and the integration of digital platforms for customs and taxation has reduced transaction costs.
Nevertheless, challenges remain. Power costs, land acquisition delays, and last-mile connectivity issues continue to affect manufacturing units, particularly small and medium enterprises (SMEs). While large firms can absorb inefficiencies, smaller manufacturers often struggle, limiting the depth and inclusiveness of India’s manufacturing revival.
Employment and Inclusivity: The Missing Link
A key expectation from manufacturing growth is large-scale job creation, especially for semi-skilled workers transitioning out of agriculture.
However, recent manufacturing growth has been relatively capital-intensive. Sectors like electronics and automobiles, though high in value, generate fewer jobs per unit of output compared to textiles, footwear, and food processing.
This raises concerns about “jobless manufacturing growth.” The decline of traditional labour-intensive sectors due to competition from countries like Bangladesh and Vietnam highlights the need for a differentiated strategy. Without addressing skill mismatches, labour law implementation at the ground level, and MSME credit constraints, manufacturing may fail to deliver its full demographic dividend potential.
Trade Policy and Global Integration: Walking a Tightrope
India’s manufacturing revival must also be viewed through its evolving trade strategy. While India has exited negotiations like the RCEP due to concerns over import surges, it has actively pursued bilateral and minilateral trade agreements with the UAE, Australia, and the EU. These agreements aim to secure market access while safeguarding domestic industry.
However, balancing protection and competitiveness remains delicate.
- High tariffs may encourage domestic production in the short term but risk reducing export competitiveness and integration into global value chains.
- Manufacturing success stories in East Asia demonstrate that exports, not just domestic demand, are crucial for scale and productivity gains.
Sustainability and Technology: Manufacturing for the Future
In the reconfigured global economy, manufacturing is increasingly shaped by sustainability norms and digital transformation. Carbon border taxes, ESG standards, and clean energy transitions are redefining competitiveness. India’s push for electric vehicles, green hydrogen, and renewable energy manufacturing reflects an awareness of these trends.
At the same time, Industry 4.0 technologies—automation, AI, and data analytics—are becoming integral to modern manufacturing. While these enhance productivity, they also raise concerns about workforce displacement. India’s challenge lies in leveraging technology without excluding labour, through reskilling and adaptive education systems.
Conclusion: From Opportunity to Outcome
India’s manufacturing revival is neither an illusion nor a guaranteed success. The reconfiguration of the global economy has opened a rare strategic window, and India has taken meaningful steps to seize it. Policy intent, market scale, and geopolitical alignment work in India’s favour. Yet, structural constraints, employment concerns, and execution gaps temper optimism.
Ultimately, manufacturing revival must be judged not by announcements or isolated success stories, but by sustained gains in output, exports, employment, and technological capability. If India can align state capacity, private enterprise, and human capital with long-term vision, manufacturing can indeed become the backbone of its economic transformation in the new global order.
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