Building beyond Make in India: Road to a $5 trillion manufacturing economy

India’s ambitious goal of becoming a $5 trillion economy and narrowing the gap with global peers like the US and China will invariably hinge on its ability to scale up its manufacturing sector. The government’s relentless manufacturing push over the last decade underpins that aspiration, with policymakers recognising that an economic model predominantly reliant on the services industry needs greater diversification.

While the share of manufacturing in India's GDP has remained steady at 17% in the last few years, active efforts to revive the sector have led to visible progress. Record foreign direct investment inflows and marquee announcements such as Apple moving 20% of its total iPhone production to India reflect the growing global confidence. Flagship initiatives, such as the Production Linked Incentive (PLI) scheme and the National Logistics Policy, under the broader 'Make in India' umbrella, have been instrumental in strengthening India’s manufacturing outlook.

The PLI scheme, introduced in 2020 and spread across 14 sectors, has strengthened India’s manufacturing profile, helping attract original equipment manufacturers and boosting local competitiveness at a time of heightened geopolitical turmoil and trade realignments.

Yet, for India to emerge as a true manufacturing powerhouse, continued focus and interventions will be necessary to address structural gaps.

One such area is Domestic Value Addition (DVA). While India is rapidly expanding its manufacturing footprint, it continues to rely on imports for many components that go into finished goods. This has led to questions about the depth of value being created within the country.

According to Cushman & Wakefield’s latest report, ‘Elevating India’s Manufacturing Resilience: Charting the Path to Self-Reliance’, India’s overall value addition of 17% still trails peers such as China (25%), Vietnam (26%) and South Korea (36%). It is also a reflection of India’s import dependence, especially on China, which it uses to source most of the critical components that go into the manufacturing of mobile phones and other high-value electronic products. This calls for deeper backwards integration and building stronger indigenous component ecosystems.

To address this, the government announced the Electronics Component Manufacturing Scheme earlier this year – a ₹22,919 crore PLI program focused on the production of foundational electronic components that would also extend support to capital equipment and subassembly of equipment used in manufacturing. The government is aiming to produce components such as display modules, printed circuit board assemblies, and capacitors under the new scheme. This is a progressive step that can not only enhance India’s self-reliance but also serve as a template for other sectors to build similar depth.

Another key challenge is the cost and complexity involved in setting up new facilities. The government has taken proactive steps by launching plug-and-play industrial parks, with ₹2,500 crore earmarked in the last Union Budget for 12 such infrastructure-ready zones.

These parks could be the catalysts for India’s manufacturing leap, offering the speed-to-market and flexibility that manufacturers increasingly demand. More broadly, 93% of the nearly 100 industry leaders we surveyed reported improved operational efficiency and profitability in regions where infrastructure has seen significant upgrades, underscoring the critical role of well-developed ecosystems in driving manufacturing success.

China’s success in this regard is instructive. With over 1,400 industrial parks supporting nearly 40% of its manufacturing jobs, it has shown how integrated infrastructure can act as an enabler of scale and resilience.

Another area where India's manufacturing sector faces a fundamental challenge that extends far beyond factory efficiency is the absence of an integrated logistics infrastructure. While manufacturers invest heavily in production capabilities, their competitiveness is undermined by fragmented supply chains that lack seamless connectivity between different modes of transport.

Multimodal Logistics Parks (MMLPs) could potentially plug this critical gap by integrating rail, road, water and air transport. MMLPs can act as force multipliers, especially when India remains heavily dependent on relatively costlier roadways (60%) for its logistical needs.

In parallel, the role of India’s Micro, Small and Medium Enterprises (MSMEs) must not be overlooked. Contributing over 30% to GDP and 45% to goods exports, MSMEs are the bedrock of Indian manufacturing. While policy initiatives have helped ease access to credit and digital tools, targeted handholding can further strengthen their competitiveness.

MSMEs need dedicated facilitation centers that can guide them through export documentation, financial institutions that understand their seasonal cash flow patterns, and digital platforms that can connect a small textile manufacturer in Tamil Nadu, for instance, directly with buyers in European markets, and crucially, accessible skilling programs that can upgrade their workforce capabilities to meet evolving global standards.

India’s manufacturing momentum today is backed by a strong policy foundation. The path forward lies in sustaining this progress through collaborative efforts between government, industry, and investors.

Attracting global capital is critical, but so is empowering domestic businesses to deepen value creation. With a supportive regulatory environment, world-class infrastructure, and a skilled workforce, India has a unique opportunity to redefine its global manufacturing narrative.

(Abhishek Bhutani, Managing Director, Logistics & Industrial Services India, Head- Gujarat, Cushman & Wakefield)