New Delhi: Even as the Narendra Modi government celebrates 10 years of the “Make in India” initiative, an analysis of the country's manufacturing and export performance shows that the sector has lost its share in GDP, employment, or global exports. The portion has not increased.
The government launched the “Make in India” initiative on 25 September 2014 to facilitate investment, promote innovation, build best-in-class infrastructure, and make India a hub for manufacturing, design and innovation.
To mark the program's 10th anniversary on Wednesday, Prime Minister Narendra Modi posted on X that “Make in India” exemplified the “collective commitment of 1.4 billion Indians to make our country a manufacturing and innovation powerhouse.” .
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However, the government's own figures show that the manufacturing sector has remained flat in its contribution to gross domestic product (GDP) over the past decade. Further, the sector's share of total employment in the country has declined marginally during this period.
The country's share of global merchandise exports has also largely stagnated during this period, and exports have seen a declining share of India's GDP.
Manufacturing contribution remained unchanged.
Figures from the Ministry of Statistics and Program Implementation show that the manufacturing sector contributed 17.3 percent to India's GDP in 2013-14, a year before the “Make in India” initiative was launched. This increased to a little over 18 percent over the next few years, reaching 18.5 percent in the post-pandemic year of 2021-22.
Since then, the sector has seen two consecutive years of decline in its share of GDP – to 17.7 per cent in 2022-23 and 17.3 per cent in 2023-24, as it was in 2013-14.
In fact, data for the first quarter of 2023-24 shows that the share of manufacturing has further declined to 15.7 percent.
Furthermore, the Reserve Bank of India's KLEMS database shows that the share of the manufacturing sector in total employment in the country has declined from 11.6 per cent in 2013-14 and 2014-15 to 10.6 per cent in 2022-23, which The latest period for is there. is the data.
In other words, while employment has increased in the manufacturing sector, the “Make in India” push has resulted in manufacturing overtaking other sectors of the economy in generating employment.
Exports did not benefit.
Another priority area of the “Make in India” initiative was to increase exports and reduce imports. Data over the past 10 years show that the program has failed to do the former but has been marginally successful in achieving the latter, although this improvement has recently been reversing.
That is, India's exports as a share of GDP have declined from 25.2 percent in 2013-14 to 22.7 percent in 2013-24. In the first quarter of the current fiscal year, it stood at an even lower 21.8 percent.
Data from the Economic Survey shows that India's share of global exports has declined significantly over the past decade or so compared to the 2005-15 period. In 2005-06, India contributed 1 percent to world exports. By 2015-16, it had increased to 1.6 percent. However, by 2022-23, it stood at just 1.8 per cent – a significantly lower increase.
The World Bank, in the latest edition of its India Development Update released earlier this month, specifically noted India's poor export performance in terms of contribution to GDP, global value chains, and employment generation. What did
“India needs to diversify its exports and increase its participation in Global Value Chains (GVCs),” the report said. “Over the past decades, despite rapid overall economic growth, India's trade in goods and services has declined as a percentage of GDP and India's participation in GVCs has fallen.”
“Exports are also relatively concentrated in goods and services that are not labor intensive,” it added. “As a result, linkages to trade jobs are not fully exploited.”
A major factor behind the decline, the report added, was the high import tariffs imposed by India on key inputs used by India's manufacturing sector. The report added that these tariffs have increased production costs and made producers less competitive in international markets.
Perhaps because of these high tariffs, statistics show that “Make in India” has managed to marginally reduce India's dependence on imports, although this trend has also reversed in the past few years.
While imports accounted for 27 percent of GDP in 2013-14, they fell to 21.2 percent by the pandemic year of 2020-21. However, since then, the proportion has been increasing, with 25 per cent coming into effect in 2023-24 – slightly lower than in 2013-14.
(Edited by Tikli Basu)
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