By Rajiv Tyagi, Former “Indian Air Force (Fighter Pilot)”*
A Reality Check on Manufacturing, Micro-Frictions, and the Road Ahead
New Delhi | 21 February 2026 :: More than a decade after its launch in September 2014, the Government of India’s flagship ‘Make in India’ initiative stands as a study in contrasts—marked by high-visibility successes in select sectors and persistent structural challenges at the grassroots level of manufacturing.
Launched by Prime Minister Narendra Modi with the ambition of transforming India into a global manufacturing hub, the program set bold targets: raising manufacturing’s share of GDP to 25% and creating 100 million jobs by 2022. While the campaign succeeded in reshaping global perceptions of India as an investment destination, its deeper objective of broad-based industrial transformation remains only partially fulfilled.
Key Achievements
India’s Ease of Doing Business ranking improved dramatically, from 142nd in 2014 to 63rd by 2020.
Manufacturing-focused FDI inflows touched approximately USD 165 billion between 2014 and 2024.
India emerged as the world’s second-largest mobile phone manufacturer, up from just two production units in 2014.
Indigenous defense manufacturing gained momentum, symbolized by projects such as INS Vikrant, advancing strategic self-reliance.
The Structural Gap
Despite these sectoral gains, manufacturing’s share of GDP has remained largely stagnant—rising marginally from ~16% in 2014 to ~17% by 2026. Analysts identify a persistent “missing middle,” where Micro, Small, and Medium Enterprises (MSMEs) struggle to scale due to regulatory shocks, compliance overloads, and limited shock-absorption capacity.
The cumulative impact of demonetization, GST transition challenges, and high compliance costs disproportionately affected informal and semi-formal manufacturing units, slowing employment generation and ecosystem depth.
The Hidden Brake: Local-Level Corruption
While national-level reforms improved headline indicators, municipal and state-level corruption continues to act as an invisible yet powerful deterrent. This “corruption tax” manifests through:
Complex approval regimes requiring 50–80 No-Objection Certificates (NOCs)
Discretionary inspections, sustaining rent-seeking behavior
Utility access bottlenecks, where informal payments inflate production costs
In globally competitive supply chains, even a 2–3% cost escalation can disqualify manufacturers from international contracts.
Global Comparison: India and Vietnam
Vietnam’s administrative efficiency highlights India’s challenge. As of 2026:
Factory construction approvals in Vietnam take 7–10 days, compared to 30–60 days in India
Vietnam’s adoption of post-audit, self-declaration models has minimized gatekeeping risks
Manufacturing contributes ~25% to Vietnam’s GDP, compared to India’s ~17%
Course Correction Underway
Recognizing these bottlenecks, India has begun shifting toward a “frictionless governance” model. Initiatives such as the National Single Window System (NSWS) and state-level reforms like TS-iPASS (Telangana) have introduced Deemed Approvals, where permissions are automatically granted if officials fail to act within defined timelines.
Early evidence suggests commissioning timelines have reduced by up to 60%, and informal compliance costs have sharply declined in digitally integrated states.
The Road Ahead
India’s manufacturing ecosystem continues to face the challenge of moving beyond the “screwdriver economy”—where firms assemble imported components rather than undertake deep manufacturing—largely due to high compliance, logistics costs (13–14% of GDP), and expensive industrial power.
Experts emphasize that incentives such as PLI schemes cannot permanently substitute for systemic administrative reform.
Make in India has not failed—but it has evolved. From a broad branding campaign, it has become a targeted industrial policy experiment. Its long-term success now hinges not on subsidies or slogans, but on digitized, corruption-proof execution at the local level.
India’s path to becoming a true global manufacturing powerhouse will be determined less by grand announcements and more by the quiet efficiency of single-window clearances, deemed approvals, and accountable local governance.
(The views expressed are solely those of the author.)
