As India marks a decade since the launch of the transformative "Make in India" program, the country has made notable strides in boosting domestic manufacturing and attracting foreign investment. However, significant challenges remain in realizing the initiative's full potential and establishing India as a global manufacturing powerhouse.

Launched in 2014 under Prime Minister Narendra Modi's leadership, the Make in India initiative had high goals at its core. The program desired to attract greater investment into the country's manufacturing sector while encouraging innovation, developing skilled labor, and constructing high-quality infrastructure. Underpinning these efforts was an ambitious target - to increase manufacturing's share of India's gross domestic product from a bare 16% in 2014 to a robust 25% by the year 2025. By prioritizing the growth of the manufacturing industries, the Make in India campaign aimed to transform India into a manufacturing powerhouse over the coming decade.

On the foreign investment front, Make in India has generated positive results. India emerged as a leading destination globally, attracting a record $81.97 billion in FDI equity inflows in 2021-22, a 19% annual increase. Key sectors like automobiles, pharmaceuticals, telecommunications and trading have been major beneficiaries.

The government has undertaken substantive policy reforms to improve ease of doing business and facilitate FDI inflows. This includes allowing 100% foreign direct investment under the automatic route in most sectors and launching investor-friendly initiatives like the Production Linked Incentive schemes.

These efforts have catalyzed growth in the manufacturing sector, which has outpaced the overall economy in recent years. FDI inflows into manufacturing have surged 76% since 2014 to $21.62 billion in 2021-22.

However, manufacturing's share of GDP has remained stubbornly around 16% as of 2024, far below the 25% target. Obstacles like poor infrastructure, restrictive labor laws, excessive bureaucracy and a complicated tax regime have stymied greater progress.

Land acquisition for new factories continues to be a contentious issue, with disagreements over compensation and outdated laws acting as bottlenecks. Rigid labor laws have also deterred manufacturers concerned about hiring and firing flexibility.

While Make in India has undoubtedly enhanced India's manufacturing capabilities and global profile, the reality is that remaking the country into a top export hub on par with China or other Asian peers will require years of sustained reforms across multiple areas.

As it enters its second decade, the Make in India initiative must double down on addressing core challenges through infrastructure investment, legal overhauls and skills development to unlock the country's full manufacturing potential.

At PHC Advisory, we can offer you full support on matters regarding doing business in China, or any other issues your business may face. If you would like to know more about policies relevant to your business in Italy or Asia, please contact us at info@phcadvisory.com.

PHC Advisory is a company of DP Group: an international professional services conglomerate of companies with approximately 100 experienced professionals worldwide. We offer comprehensive services in tax, accounting, and financial consulting, including financial supervision, financial audit, internal audit, internal control over financial reporting, and support for audited financial statements and annual audits, ensuring clients' financial transparency and compliance.

The content of this article is provided for informational purposes only, financial advice must be tailored to the specific circumstances on a case-by-case basis, and the contents of this article do not legally bind PHC Advisory with the reader in any way.

If you want to know more about doing business in China, please have a look at our previous articles:

•  Have You Filled Your Annual Income Tax Declaration for 2023?

•  China Tax Incentives for Manufacturing Companies