75 Years of India’s Industrial Policy and Performance and Prospects for a Manufacturing-Led Transformation

Rapid job-creating economic growth through manufacturing-led transformation is imperative for India to realize its development aspirations of building a developed economy by 2047 and to address the challenge of employment creation. Industrial policy and emphasis on the real economy is a global trend in the context of the fractured trading system. As global companies restructure their supply chains on China +1 lines, India can potentially leverage its geopolitical and demographic sweet spots to build manufacturing capacities to feed growing domestic and global demand and tap the opportunities presented by the digital and green industrial revolutions. To tap these opportunities, a strategic approach is needed to harness the potential of manufacturing, for which many useful lessons are available from the experiences of East Asian countries. In that context, India should build on PLI to a more proactive targeting approach to investment promotion that would help to attract better quality investments meeting its development needs. India also needs to make the regional and global trade rules supportive of its ambitious manufacturing-led transformation. Finally, to be effective, the different elements of industrial policy as outlined above need to be pursued in a coordinated manner through a high-powered institutional architecture for a coordinated implementation of industrial policy. An updated Industrial Policy Resolution providing a framework for accelerated growth of the manufacturing sector, generating jobs and prosperity in an inclusive and balanced manner, and a roadmap for achieving it is also desirable.