12 years of Make in India: What worked, what’s unfinished and what comes next

India has made visible gains in manufacturing over the past 12 years, particularly in electronics, air conditioners and other sectors. But the next phase of Make in India will be harder: moving beyond assembly, building deeper domestic supply chains and attracting private investment despite higher costs and global uncertainty.Launched in 2014, Make in India was aimed at making India a global hub for manufacturing, design and innovation. The initiative now covers 27 sectors — 15 in manufacturing and 12 in services — and has opened up new opportunities across electronics, automobiles, pharmaceuticals and defence.Industry leaders speaking to CNBC-TV18 on the 12th anniversary of Make in India said the initiative has helped change the direction of Indian manufacturing. But they also pointed to unfinished work, including increasing manufacturing’s contribution to the economy, developing components and semiconductor capabilities, bringing smaller companies into supply chains and improving export competitiveness.What has worked: From imports to domestic manufacturingB Thiagarajan, Chairman of the CII Skilling Panel and MD of Blue Star, said Make in India provided a much-needed push to manufacturing when the sector needed a change in direction.He pointed to the air-conditioning industry as an example. The sector was heavily dependent on imports, but has since developed a substantial domestic manufacturing and component ecosystem.”Almost 95 to 100%, is being manufactured here,” Thiagarajan said, referring to air conditioners. He added that close to 70% of the component ecosystem had already been indigenised.He also cited toys and furniture as sectors that had come a long way.Vinod Sharma, Chairman of the CII Electronics Manufacturing Panel and MD of Deki Electronics, said electronics manufacturing had undergone a particularly significant change.Twelve years ago, the industry had largely accepted that India was good at software while hardware could continue to be imported. Policy support changed that approach, he said.Sharma described the initial phase as the first leg of a “4 x 400 m relay race”, with India first focusing on assembling products locally.According to him, 99.2% of mobile phones are now locally assembled, while value addition is increasing through components and modules.The gains, however, are concentrated in certain areas. The broader question is whether those gains can translate into a stronger manufacturing base across the economy.Why manufacturing’s broader numbers remain a challengeManufacturing as a percentage of GDP remains broadly similar to where it was when Make in India was launched. That has raised questions about how broad-based the manufacturing expansion has been.Thiagarajan said the industry should not expect the shift to show up immediately in the overall numbers.”I think we will get there. It’s a question of another three to four years,” he said.The discussion also raised the question of how much of the growth reflects genuine expansion in manufacturing and how much reflects formalisation, particularly around the period when the GST regime was introduced.The industry leaders’ assessment was that progress has been uneven. Some sectors have moved rapidly, while others still need to build scale, competitiveness and domestic supply chains.That leaves India with a different challenge after the first 12 years: increasing the amount of value created within the country rather than simply increasing the number of products assembled here.The next challenge: Going beyond assemblyFor electronics, Sharma said the next stage involves manufacturing semiconductors, components and modules rather than concentrating primarily on final assembly.Smaller companies also need to become part of the manufacturing ecosystem. Sharma said the PLI schemes had brought in large and some medium-sized players, but smaller industries were still struggling to participate fully.The focus also needs to move towards research and design. Sharma pointed to design-linked incentives and the RDI fund as part of this shift.”The journey has just begun,” he said.For Thiagarajan, research and innovation will also be important in helping manufacturers deal with pressure on margins. Companies can look at alternative materials, develop higher-value products and use innovation to command a premium.The next step is therefore not simply to manufacture more, but to build capabilities around manufacturing — including components, design, research and supply chains.Why investment and margins remain a problemThe ability to build that deeper manufacturing ecosystem will depend partly on private investment.Rahul Garg, Chairman of the CII Advanced Manufacturing Panel and Founder & CEO of Moglix, said private capital is available, but global uncertainty is affecting the pace at which it is deployed.Companies investing for the domestic market may have greater visibility, while those looking at exports need more clarity on tariffs and changing global supply chains.Garg said geopolitical developments and the continuing reconfiguration of supply chains had created uncertainty for investors.The companies that have already invested are also facing pressure on margins.Thiagarajan said the pandemic disrupted the manufacturing journey, while subsequent geopolitical developments and higher commodity prices added to the pressure.He pointed to the air-conditioning industry as an example of investment continuing despite those pressures. PLI applications in the sector may total around ₹12,000 crore, he said, while total investments have exceeded ₹45,000 crore.For companies, however, higher investment does not automatically translate into comfortable returns. Thiagarajan said research, innovation and greater participation in global supply chains would be important in addressing the pressure.Exports are another part of that equation. Indian manufacturers need to identify categories where they can capture a larger share of global demand and increase exports, he said.Building global supply chains — and managing ChinaA larger role in global supply chains also brings the question of how India manages its relationship with China.Puneet Kaura, Chairman of the CII Northern Region and MD & CEO of Samtel Avionics, said the issue is particularly important for defence production.He said India remains cautious about where Chinese equipment should be used in defence, with the broader preference being to develop indigenous capabilities or work with partners from countries other than China.At the same time, Chinese equipment continues to enter the Indian market, Kaura said.For defence manufacturing, this creates a need to balance supply-chain requirements with the effort to develop domestic capabilities and alternative partnerships.Kaura said there remains significant room for India to expand defence production and partnerships.What happens to PLI?The final question is whether production-linked incentives should remain a long-term feature of India’s manufacturing policy or whether they should eventually give way to a more competitive manufacturing environment.Sharma said PLI was originally intended to offset some of India’s manufacturing disadvantages, including higher energy and logistics costs, financing costs and inefficiencies in the wider ecosystem.But he said the industry was not seeking a permanent subsidy.The objective, he said, should be for companies to eventually operate without incentives, allowing government support to move to other sectors.At the same time, the nature of the incentives is already changing. In electronics, Sharma said the focus has moved from assembly towards localisation of components, PCBs and semiconductors, while design and research are receiving greater attention.That captures the broader challenge for Make in India after 12 years. The first phase was about changing India’s manufacturing trajectory and proving that sectors could be built at scale. The next phase is about increasing domestic value addition, strengthening the wider ecosystem and making Indian manufacturing more competitive in global supply chains.

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