JRI Research Journal;Vol.7 No.8,
Assessment of 10 Years of "Make in India"
― Manufacturing Has Seen Significant Development But Goals Are Only Halfway to Being Achieved ―
Shotaro Kumagai
Summary
The "Make in India" manufacturing promotion campaign launched by the Indian government in September 2014 marked its 10th anniversary. Although India's manufacturing industry has developed significantly over the past decade, the goals eyed through the development of manufacturing, such as reducing the country's trade deficit and creating jobs, are only halfway to being achieved.
One positive is that the real value added of manufacturing has doubled in the past 10 years, driven by the pharmaceuticals, metals, and transportation machinery sectors, as the business environment has improved. Even in the electronics sector, which has lagged behind other countries, the production of smartphones is expanding rapidly, and the momentum for domestic production of semiconductors is increasing.
On the other hand, given that 1) the share of manufacturing in the overall economy has been declining, 2) trade and current account deficits have continued, 3) India remains highly dependent on imports from China, and 4) India's share of imports in other countries has not changed significantly, it cannot be said that the manufacturing industry has achieved the development that the government initially hoped for in either qualitative or quantitative terms.
Whether India will be able to reduce its trade deficit and create jobs through further development of its manufacturing industry will depend on the evolution of small and medium-sized enterprises (SMEs), which are key to raising domestic procurement ratios, and progress with creating the kind of business environment required to attract labor-intensive export manufacturing.