Assessing India’s strengths in trade and manufacturing

India has long aspired to be a manufacturing powerhouse, integrated with global supply chains, in order to boost its exports, forex and growth.
 

However, success has been limited - the share of manufacturing in GDP has remained between 15.2% and 18.4% over the past three decades - and the countrycontinues to be a service-driven economy.

Asian peers such as Korea, China, Malaysia and Vietnam have tasted far more success through timely reforms, policy push and trade agreements. What worked in favour of these economies was the globalisation push and increase in trade when they were reforming.

In India, there is sharp government focus today on expanding capabilities in new-age sectors, achieving higher localisation and driving backward integration in key value chains. Reforms, including the Make in India initiative, the phased manufacturing programme and the PLI scheme, are showing green shoots across sectors.

Riding on timely interventions, imposition of import duty and stringent quality control measures, sectors such as electronics and toys have become net exporters from being net importers five years ago.