20th September 2025 (16 Topics)
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India’s Manufacturing Surge
Context:
The Index of Industrial Production (IIP) registered a 3.5% YoY growth in July 2025, with manufacturing expanding by 5.4%, supported by flagship policy initiatives, rising exports, and employment creation.
Manufacturing at a Turning Point
- Rising Industrial Output
- IIP grew 3.5% YoY in July 2025 compared to 1.5% in June.
- Manufacturing growth accelerated to 5.4% from 3.7% in the previous month.
- Policy-led Expansion
- PLI, National Manufacturing Mission, PM MITRA Parks, and Skill India are key drivers.
- The shift of global supply chains and domestic market expansion reinforce India’s strategic position.
Sectoral Engines of Growth
- Electronics
- Electronics production rose sixfold in the past decade; exports increased eightfold.
- India has become the world’s second-largest mobile manufacturer with ~300 units operating.
- Imports of mobile phones reduced from 75% (2014–15) to 0.02% (2024–25).
- Pharmaceuticals
- Contributes 50% of global vaccine demand and 40% of U.S. generics.
- Supported by PLI (?15,000 crore) and SPI (?500 crore).
- Industry projected to reach USD 130 billion by 2030.
- Automobiles
- Accounts for 7.1% of GDP and 49% of manufacturing GDP.
- Production of over 3.1 crore units in FY25, making India the 4th largest producer globally.
- Textiles
- Contributes 2.3% to GDP, 13% to industrial production, and 12% to exports.
- Expected to grow to USD 350 billion by 2030 and generate 3.5 crore jobs.
- PM MITRA Parks targeting ?70,000 crore investments and 20 lakh jobs.
Investment Flows & Global Confidence
- FDI Trends
- USD 748.78 billion FDI inflows in 2014–25, up 143% from 2003–14.
- FY25 gross inflows at USD 81.04 billion (+14% YoY).
- Manufacturing FDI rose to USD 19.04 billion (+18% YoY).
- Investor Geography
- Top states: Maharashtra (39%), Karnataka (13%), Delhi (12%).
- Top origins: Singapore (30%), Mauritius (17%), USA (11%).
Employment, Skills, and Human Capital
- Job Creation
- 17 crore jobs created in the last decade; manufacturing’s contribution to job creation rose to 15%.
- PLFS August 2025: UR eased to 5.1% overall, 5.0% for males.
- Skilling Initiatives
- Restructured Skill India Programme outlay: ?8,800 crore.
- Integrates PMKVY 4.0, NAPS, and Jan ShikshanSansthan to align skills with industry demand.
Policy Catalysts and Structural Reforms
- GST 2.0 Reforms
- Simplified two-slab structure, lower rates on essentials, reduced compliance burden.
- Beneficial for MSMEs, logistics, and auto sector.
- National Manufacturing Mission (NMM)
- Unified framework integrating ministries and states.
- Prioritises clean-tech manufacturing aligned with Net Zero 2070.
- PLI Scheme
- Outlay of ?1.97 lakh crore across 14 sectors.
- Boosted exports, scale, and competitiveness (smartphone exports crossed ?1 lakh crore in 5 months of FY26).
- National Logistics Policy
- Aims to reduce logistics cost and improve India’s LPI ranking.
- Startup India & Industrial Corridors
- Over 1.91 lakh recognized startups and 17.69 lakh direct jobs.
- Industrial corridors integrating manufacturing with urban development.
The Road Ahead: From Momentum to Leadership
- Deepen value addition in key sectors (electronics, pharma).
- Strengthen R&D and innovation ecosystems.
- Expand clean-tech and sustainable manufacturing.
- Improve MSME integration into global value chains.
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