Make in India at Twelve: Manufacturing Near 15% of GVA, Domestic Chips Mandated for Smart Meters

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New Delhi. Twelve years after Make in India was launched on September 25, 2014, an analysis in The Hindu of 12 metrics covering growth, investment, employment and exports finds that manufacturing has not materially raised its share of India’s growth, jobs or global exports, and that gains from incentive schemes are confined to a handful of sectors. On the old data series, manufacturing grew faster than the overall economy in only half of the 12 years; on the new series it did so from 2023-24 to 2025-26, but the gap is shrinking fast. On the old Index of Industrial Production (IIP), the monthly measure of factory output, manufacturing beat the overall index in only three of 12 years. Gross Value Added (GVA) is output minus the inputs used to make it; the new series shows manufacturing’s share rising only from 14.6% in 2022-23 to 15.6% in 2025-26. Non-petroleum goods exports grew 53%, from $253.5 billion to $388.3 billion in 2025-26. UNCTAD data put India’s share of world merchandise exports at about 0.8% in 2002 and 1.7% in 2013, where it still stood in 2025-26. Private gross fixed capital formation (GFCF), spending on machinery, buildings and other fixed assets, has been falling as a share of GDP since 2022-23. Manufacturing FDI grew more slowly than total FDI in 7 of 12 years, though its share rose from nearly 48% to 55%. RBI data show capacity utilisation below the 80% level beyond which firms usually add capacity, and strong credit to small firms appears to be funding working capital, not new investment. The 14 Production-Linked Incentive (PLI) schemes of 2020 and 2021 drew ₹2.4 lakh crore of investment by March 2026, nearly 83% of it in five sectors: solar modules, pharmaceutical drugs, automobiles and components, specialty steel, and large-scale electronics. The Indian Express reported from New Delhi that Power Secretary Pankaj Agarwal told FICCI’s 2nd Indian Power Sector Conference that the government plans to require domestically designed chips in smart meters by mid-2028, citing cybersecurity. A chip now costs $8 to $10, and he said no separate incentive is needed because government procurement assures a market. Under the Revamped Distribution Sector Scheme, 20.33 crore smart meters are sanctioned, and 5.73 crore installed. Chief Economic Adviser V. Anantha Nageswaran separately urged indigenisation that keeps exports competitive, not isolated protectionism. The syllabus link is GS3 on industrial policy and employment.

Static syllabus linkage

1. Make in India inherited its 25% target from the 2011 manufacturing policy. The National Manufacturing Policy, 2011 aimed to raise manufacturing’s share of GDP to 25% within a decade and to create 100 million manufacturing jobs. It also proposed National Investment and Manufacturing Zones (NIMZs). Make in India, launched on September 25, 2014 and led by what is now the Department for Promotion of Industry and Internal Trade (DPIIT), kept these goals and set a manufacturing growth target of 12-14% a year. It focused on 25 sectors, investor facilitation through Invest India, and ease-of-doing-business reforms. The Hindu’s finding of a share of 15.6% in 2025-26 should be read against that 25% goal.
2. PLI pays for incremental output, not for investment alone. Production-Linked Incentive schemes, launched from 2020, give eligible firms a cash incentive calculated as a percentage of their incremental sales of goods made in India over a base year, for a fixed number of years. The Union Budget for 2021-22 announced an outlay of about ₹1.97 lakh crore for PLI schemes across 13 key sectors, and the programme now comprises 14 schemes. Because payment depends on output, the design rewards scale and favours sectors where large firms can grow quickly. That helps explain why investment has gathered in a few sectors such as electronics, solar modules and pharmaceuticals.
3. Public procurement is a legal tool for local preference. The Public Procurement (Preference to Make in India) Order, 2017 was issued by the then Department of Industrial Policy and Promotion under Rule 153(iii) of the General Financial Rules, 2017. As revised in 2020, it classifies suppliers by local content: a Class-I local supplier has at least 50% local content, and a Class-II local supplier has more than 20% but less than 50%. Class-I suppliers get purchase preference, and nodal ministries can notify higher local-content requirements for specific items. A mandate for design-in-India chips in smart meters bought under a government scheme uses this kind of power. The Semicon India programme (December 2021, ₹76,000 crore) set up the India Semiconductor Mission under the Ministry of Electronics and Information Technology, whose Design Linked Incentive scheme supports chip designers; a procurement mandate gives such designers what the incentive alone cannot, a guaranteed first customer.
4. The Revamped Distribution Sector Scheme is built around prepaid smart meters. The Revamped Distribution Sector Scheme (RDSS) was approved by the Union Cabinet in 2021 with an outlay of about ₹3.04 lakh crore, including gross budgetary support of about ₹97,631 crore. Its aim is to make distribution companies (discoms) financially viable by bringing aggregate technical and commercial (AT&C) losses down to 12-15% nationally and closing the gap between the average cost of supply and the average revenue realised. Grants are tied to reform milestones, and the Power Finance Corporation and REC Ltd are the nodal agencies. Smart meters at consumer, transformer and feeder level let a discom measure where power is lost or stolen. That is why their chips are critical infrastructure.

Why UPSC loves this

1. GS3 has asked directly why manufacturing has not taken off. Mains questions have asked about the reasons for India’s weak manufacturing share, the Make in India programme, and whether India can become a global manufacturing hub. The Hindu’s 12-metric scorecard gives a candidate data points on GVA share, export share, private GFCF, FDI, capacity utilisation and PLI concentration. Using these turns an answer that sounds like an opinion into one that shows evidence.
2. Prelims tests the vocabulary of industrial statistics. UPSC has asked about the IIP, its base year and weights, core industries, and the difference between GDP and GVA. Gross fixed capital formation and capacity utilisation are natural follow-ups. Questions on the PLI scheme and the Semicon India programme have appeared in the context of electronics self-reliance.
3. Energy security and cybersecurity now meet in the syllabus. GS3 covers both infrastructure (energy) and challenges to internal security through communication networks, including cybersecurity. Smart meters connect the two. A compromised chip across crores of meters is a grid-security risk, and questions on critical information infrastructure can use this example.

Analysis

1. The weak link is private investment, not incentives. Several of the 12 metrics point to the same cause. Private GFCF has been falling as a share of GDP, capacity utilisation remains below the 80% level that usually triggers new building, and industrial credit is paying for working capital. Firms do not add capacity while existing plants are not fully used, whatever incentive is offered. That means the binding constraint is demand, not the cost of setting up. So the solution lies partly outside industrial policy: in household incomes, consumption and export markets. PLI can help decide where a factory is built, but it cannot create the demand that justifies building it.
2. Concentration in five sectors was built into the PLI design. Nearly 83% of PLI investment in five sectors is not an accident. A scheme that pays on incremental sales rewards sectors with large, fast-growing markets and a few large firms able to scale up, such as phones, solar modules and drugs. Labour-intensive sectors like apparel, footwear and furniture have many small firms and thin margins, and gain little from such a design. Those are the sectors that would change the employment picture. The fair counter-view is that concentration may be efficient, because building a few globally competitive clusters is how East Asian economies began. The real question is whether those clusters spread to local suppliers over time.
3. Export share is the most telling measure, and it has not moved. Manufacturing that is competitive shows up in world markets. India’s share of global merchandise exports climbed from 0.8% to 1.7% in the decade before 2014 and has stayed at 1.7% since. The 53% rise in non-petroleum exports is real, but world trade also grew, so India simply kept its place. This matches the Chief Economic Adviser’s warning the same day that indigenisation must keep India export-competitive rather than become isolated protectionism. Tariff increases on inputs since 2018 may have protected some final-goods makers while making Indian products costlier to export.
4. The smart-meter mandate is sound strategy, but costs and timelines are real risks. Smart meters sit on the grid in crores of homes, so their chips form part of a network that a hostile actor could disrupt. That makes the security case for trusted design strong. Using public procurement to guarantee a market is the right tool, because a chip designer needs volume, and 20.33 crore sanctioned meters provide it. The risks lie in cost and delay: a domestic chip may cost more than the current $8 to $10 at first, and a mid-2028 mandate for a chip not yet validated could slow a scheme that has installed only 5.73 crore meters so far. A phased mandate, with independent security certification, would limit both risks.
5. The data revisions call for caution in both directions. The report uses old and new series of GVA and IIP, and they tell somewhat different stories. On the new series, manufacturing beat overall growth for three years, and its share rose by a percentage point. Critics of Make in India should not ignore that improvement, and its supporters should not rely on it. The three new-series years are few, and the report notes the gap is shrinking fast. What the reader can say with confidence is that no series shows the large structural change the 25% target imagined.

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