India's manufacturing share in GDP has fallen sharply despite over a decade of the Make in India push
Those looking for a sector with a yawning gap between stated political ambition and the physical reality need not look further than manufacturing, a sector which has been hyped up by Narendra Modi ever since he took charge as Prime Minister in 2014, with a high-profile launch of his first pet programme, Make in India, that he personally propelled in his very first Independence Day address to the nation on August 15, 2014.
In his speech, Modi announced the ‘Make in India’ programme, setting an explicit goal of increasing manufacturing’s share in India’s GDP to 25 pc, that was about 17 pc at that time. The target has been repeatedly echoed in subsequent policy discussions and became a reference point for India’s industrial strategy over the last 12 years.
However, over a decade later, the numbers show a significant gap between intent and outcome. According to the World Bank, the contribution of manufacturing to the country’s GDP has dropped from almost 17 pc in 2014 to 12.53 pc in 2024, far below its long-term average of around 15.6 pc.
Well over a decade after Make in India was launched, Indian manufacturing sector remains heavily dependent on imported inputs, particularly from China, across electronics, pharmaceuticals, renewable energy and machinery. The result is a widening gap between the narrative of manufacturing expansion and the underlying indicators of a more constrained and import-dependent industrial base.
Worryingly, the decline continues non-stop. According to World Bank, the share of manufacturing fell from 13.02 pc in 2023 to 12.53 pc in 2024.
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Thus, since 2014, while India’s economy has expanded in size, manufacturing has not kept pace with overall growth. Instead of rising in structural importance, its share in GDP has steadily weakened over the last decade. This divergence becomes more visible when compared with global peers.
Data cited in various reports shows India has lost competitiveness in labour-intensive manufacturing exports such as textiles, apparel, leather and footwear, which have been its traditional strengths. India’s global share in these categories rose from around 0.9 pc in 2002 to a peak of 4.5 pc in 2013, but declined to about 3.5 pc by 2022. In contrast, Bangladesh’s share rose to 5.1 pc and Vietnam reached 5.9 pc over the same period.
For a country seeking to position itself as a major manufacturing alternative in global supply chains, the declining share of manufacturing at home and sharp fall in global export markets highlights a clear challenge.
Moreover, even at the current levels of manufacturing and exports, India depends in an overwhelming manner on imported inputs for various goods. For instance, in the pharmaceutical industry, which is one of the leading export segments, domestic production of drugs depends up to 90 pc on imported ingredients, Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs), most of which come from China.
For the high value drugs like essential antibiotics, vitamins, and cardiovascular drugs, India imports anywhere between 70-100 pc of its APIs and KSMs from Chinese suppliers.
Another high profile segment, which the government has been flogging at home and overseas is the Indian mobile telephone manufacturing industry.
According to the latest data released by the government, while 99.2 pc of mobile phones sold in India are assembled domestically, the share of imported components remains high. Imported components make up roughly 75-80 pc of the manufacturing value, meaning domestic value addition is currently only 18–23 pc.
As a result of rising imports, of finished goods, raw materials and intermediaries, India’s trade deficit with China has widened significantly in recent years, with imports rising far faster than exports. Imports from China are now estimated at over USD 130 billion, while exports remain below USD 20 billion, according to data released by the Ministry of Commerce and Industry.
“The problem is not just the size of the deficit, but its composition. India has built scale in assembly-led manufacturing, but the ecosystem for intermediate goods, chemicals, components, precision parts, remains underdeveloped. That is why imports rise even when domestic production headlines look strong. Without deep supply chains, manufacturing remains shallow in value creation,” Kavita Raghav, Trade economist in Deloitte, a multinational firm in Gurugram, National Capital Region tells Media India Group.
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More importantly, the structure of imports shows strong dependence on core industrial inputs rather than consumer goods.
Electronics components alone accounted for around USD 38 billion in imports from China in 2025, including semiconductors, display panels, batteries and mobile phone parts. In several sub-sectors, dependence is overwhelming. Lithium-ion batteries are about 75 pc China-sourced, solar cells over 80 pc and key pharmaceutical raw materials such as 6-APA and erythromycin show dependence levels above 90 pc, according to government data cited in parliamentary disclosures.
Even capital goods used in domestic factories show similar patterns, with machinery categories such as embroidery equipment and saw blades showing over 90 pc import dependence on China, as reported by StratNews Global.
This has led to a sharper assessment from trade researchers. The Global Trade Research Initiative (GTRI), has described India’s relationship with China as shifting from a trade imbalance to a structural production dependence, with China supplying a large share of industrial inputs across multiple sectors.
“India’s manufacturing model has expanded in output terms but not in depth. We are seeing growth in final-stage production and assembly, but the upstream layers metals, chemicals, electronics components remain heavily import dependent. This creates a situation where value addition is limited and supply chain vulnerability remains high, even when exports rise,” adds Raghav.
This dual reality creates a contradiction at the heart of India’s manufacturing story. On one hand, policy frameworks and investment incentives continue to project rapid industrial expansion. On the other, core indicators such as GDP share, export competitiveness and input dependence suggest a more limited transformation.
“India has prioritised headline announcements and assembly-led growth, but not built strong upstream industries. A 12-13 pc manufacturing share after more than a decade of policy focus is not just underperformance, it reflects a missed structural opportunity. Without building intermediate goods capacity, dependency will remain locked in,” warns Raghav.
The result is a sector that is growing in visibility and policy attention, but not yet in structural depth.
“The key issue is not manufacturing activity, but manufacturing capability. Unless India builds competitive intermediate industries, especially in electronics, chemicals and machine tools, it will remain integrated at the lower end of global value chains. That limits both export strength and employment intensity.”
As global supply chains shift and geopolitical tensions reshape trade flows, the gap between India’s manufacturing ambition and its underlying industrial capacity is becoming harder to ignore.