India is setting its sights on tripling its exports by 2035, aiming for a $1.3 trillion target through a revamped manufacturing ecosystem. The strategy hinges on structural reforms and deregulation rather than large-scale subsidies, marking a shift in approach for Prime Minister Narendra Modi's administration.
The government plans to prioritize 15 sectors, including high-end semiconductors, metals, and labor-intensive industries like leather, to achieve this ambitious goal. This initiative, dubbed the National Manufacturing Mission, aims to address shortcomings of previous efforts such as the "Make in India" campaign (2014) and the $23 billion Production Linked Incentive (PLI) scheme launched in 2020, which failed to significantly increase manufacturing's share of GDP to the targeted 25%.
Officials involved in drafting the new policy acknowledge that past initiatives have only yielded modest gains. One official stated that a "bold, focused, and cohesive strategy to drive transformative change" is needed. The new strategy emphasizes easing regulatory and compliance burdens, which are considered major obstacles to Indian manufacturing, over broad subsidies. Financial support will be decided on a case-by-case basis, guided by a newly formed government panel.
The government intends to invest approximately ₹100 billion ($1 billion) to develop infrastructure for around 30 manufacturing hubs across the identified sectors. An additional $218 million in grants will support advanced sectors like semiconductor fabrication and energy storage. These hubs will be strategically located, considering existing infrastructure, geographic advantages, and proximity to ports to support efficient logistics and exports.
The reforms also prioritize faster regulatory clearances, land acquisition, and cheaper financing for large projects. A key aspect of the strategy involves reducing delays and friction that hinder investment and factory development. The new panel, led by a cabinet-level minister and senior bureaucrats, will work with state governments to ensure reliable and affordable electricity supplies for manufacturing units.
Furthermore, the government aims to tackle the complexities arising from the patchwork of federal and state-level regulations that impede manufacturing investment. Divergent policies across states, encompassing varying labor regulations and business compliance requirements, have increased costs for companies operating in multiple regions of the country.
The National Manufacturing Mission, announced in last year's budget, may see further details revealed in the upcoming Union Budget on February 1st. The mission will oversee the development of manufacturing hubs and coordinate actions across different government bodies.
This multi-pronged approach signals India's commitment to enhancing its manufacturing sector, boosting exports, and integrating further into global value chains. By prioritizing structural reforms, targeted investments, and streamlined regulations, India aims to establish itself as a competitive manufacturing hub and achieve its ambitious export targets by 2035.
