The Reality of ‘Make in India’ in 2025

Has ‘Make in India’ moved the needle? We break down the data across manufacturing, jobs, and exports.

Launched with fanfare in 2014, ‘Make in India’ promised to transform India into a global manufacturing hub. A decade later, the verdict is nuanced. While there have been pockets of success—in electronics, defense, and mobile phones—many foundational goals remain elusive. In 2025, India’s manufacturing story is not one of failure, but of partial realization and persistent bottlenecks.

What the Data Says

Manufacturing’s share in India’s GDP stands at around 16.3% in FY24, inching up from ~15% a decade ago—well below the government’s original target of 25%. The sector has grown, but not at the transformative pace hoped for. In contrast, services have surged ahead, especially in IT, fintech, and digital media.

On employment, manufacturing contributes just 11–13% of total jobs, even as tens of millions continue to enter the workforce annually. Despite schemes like the Production Linked Incentives (PLI) and cluster development programs, the expected wave of factory-driven formal employment hasn’t fully materialized.

On exports, however, the picture is brighter. India exported over $450 billion worth of goods in FY24—its highest ever. Mobile phone exports have grown over 400% since FY20. Electronics, defense components, and renewables-related hardware have become emerging categories. But traditional sectors—textiles, leather, and auto parts—have faced global headwinds, reducing their relative contribution.

Pillars of Progress: Where ‘Make in India’ Has Worked

Certain sectors have clearly benefited from targeted policy support and global supply chain realignment:

• Electronics and Mobile Manufacturing: India now produces over 97% of its mobile phones domestically. Apple, Samsung, and Xiaomi have deepened their supply chains here. The PLI scheme has been instrumental, offering production-based subsidies to global OEMs and contract manufacturers.
• Defense and Aerospace: The indigenization of defense manufacturing has picked up, with over 300 private licenses issued since 2016. Exports of defense equipment have crossed ₹21,000 crore in FY24, a sharp rise from under ₹2,000 crore in 2015.
• Renewables: Solar module manufacturing capacity has expanded rapidly, aided by import duties on Chinese equipment and subsidies for domestic manufacturing parks.

These pockets signal that with the right mix of policy, demand, and global context, Indian manufacturing can scale. But success has been uneven—and the gaps tell a broader story.

Persistent Bottlenecks

Despite its progress, ‘Make in India’ continues to be hampered by longstanding structural challenges:

• Infrastructure Gaps: Logistics costs remain high at 13–14% of GDP, compared to 8–10% in peer economies. Port delays, power outages, and fragmented warehousing systems remain a drag on efficiency.
• Land and Labour Rigidities: Land acquisition remains costly and litigious. Labour law reforms are underway, but state-level implementation remains inconsistent, especially for large-scale factories.
• Skill Deficit: India produces millions of graduates each year, but vocational and technical training is lagging. The skill-to-job mismatch is stark in advanced manufacturing and precision engineering.
• MSME Struggles: While large firms benefit from PLI and global linkages, small manufacturers—who form the bulk of India’s industrial base—struggle with financing, digitization, and market access.

These friction points are not new—but in a globalized and AI-accelerated economy, they’ve become more costly. Competing with Vietnam, Bangladesh, and Mexico demands faster policy execution and deeper institutional reform.

Geopolitics and the China+1 Opportunity

The biggest tailwind for ‘Make in India’ may come not from policy but from geopolitics. Global manufacturers are actively diversifying supply chains beyond China—a shift accelerated by the U.S.-China trade war, COVID-19 disruptions, and rising labour costs in East Asia.

This “China+1” strategy has brought new interest to Indian shores. Companies like Foxconn, Pegatron, Boeing, and GE have made sizable bets on Indian capacity. States like Tamil Nadu, Gujarat, and Uttar Pradesh are competing aggressively for FDI, offering land, power, and policy sops.

However, India is not the default beneficiary. Vietnam, Indonesia, and even Eastern Europe offer compelling alternatives with easier land acquisition, lower tariffs (via FTAs), and faster execution. To truly seize the moment, India must deliver predictability—legal, fiscal, and infrastructural.

The Future of ‘Make in India’: A Mixed Outlook

By 2030, India’s manufacturing sector is projected to cross $1 trillion—driven by electronics, EVs, semiconductors, pharma, and aerospace. But realizing this potential hinges on scaling ecosystem depth. Building not just factories, but full value chains—tooling, testing, design, logistics, compliance—is essential for long-term competitiveness.

The Digital India stack, ONDC, and logistics corridor investments (like Gati Shakti) may help level the playing field. So will trade agreements with the EU, UAE, and Australia. But the fundamental challenge remains: turning policy headlines into factory-floor outcomes.

‘Make in India’ in 2025 is no longer a slogan—it’s a work in progress. The next decade must turn incremental gains into systemic transformation. The world is watching. And the window won’t stay open forever.