India Aims to Increase Manufacturing Share in GDP from 17% to 25%, Union Minister Puri Says
India is striving to boost its manufacturing sector’s contribution to the gross domestic product (GDP) from the current 17% to 25%, according to Union Minister Hardeep Singh Puri. Speaking at the 118th Annual Convention of the PHD Chamber of Commerce and Industry, Puri highlighted that India possesses the necessary resources, low labor costs, growing manufacturing expertise, and entrepreneurial capabilities to emerge as an alternative supply source amid the global realignment of supply chains.
Puri underlined that India’s manufacturing sector currently accounts for 17% of the nation’s GDP and employs over 27.3 million individuals. He referred to Prime Minister Narendra Modi’s call for ‘Make in India, Make for the World’ during the World Economic Forum, signaling India’s readiness to increase the manufacturing share to 25% by 2025.
The minister acknowledged various economic reforms and policies implemented by the Indian government, such as the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), asset monetization, labor law reforms, Performance-linked Incentives (PLI), the National Infrastructure Pipeline, and the Gati Shakti Mission. These initiatives have addressed several structural deficits and laid the foundation for a robust industrial base.
India’s industrial strength is evident in its position as the second-largest producer of steel, cement, and coal. The country also boasts the second-largest construction of the built environment and the fourth-largest railway and road networks. The automotive industry is thriving, with India being the largest producer of two-wheelers and the fourth-largest producer of four-wheelers.
Puri highlighted the transformative impact of the Performance-linked Incentives (PLI) scheme, which has revolutionized manufacturing across 14 strategic sectors. As a result of these incentives, there has been a 76% increase in foreign direct investment (FDI) in the manufacturing sector. It is estimated that over the next five years, the PLI schemes will generate an additional 6 million jobs.
Regarding India’s energy sector, Puri mentioned the country’s commitment to both traditional fuel exploration and energy transition. India aims to increase the net geographic area under exploration from 8% to 15% by 2025. Additionally, the nation is a global exporter of petroleum products and possesses the fourth-largest refining capacity worldwide. Noteworthy milestones have been achieved in the biofuel revolution, with ethanol blending increasing from 1.53% in 2013-14 to 11% in 2023. Indian government has also launched the National Green Hydrogen Mission with an allocation of INR 19,744 crores to develop a green hydrogen ecosystem.
In line with India’s efforts towards green energy transition, support for electric vehicles through the PLI scheme will be provided, with plans to establish alternative fuel stations at 22,000 retail outlets by May 2024.
India’s ambition to enhance the manufacturing sector’s share of GDP represents a significant step towards economic growth and self-reliance. With favorable policies, growing expertise, and a focus on innovation, the country aims to become a global manufacturing hub, providing ample opportunities for job creation and economic prosperity.
