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Manufacturing has been a major focus of the annual Budget presented on February 1 by Nirmala Sitharaman. India has long aimed to raise manufacturing’s share in GDP to around 25%, from about 16–17% a few years ago. However, the current share remains significantly lower.

In an increasingly uncertain geo-political and economic environment, India needs to strengthen its manu-facturing base by enhancing productivity and improving product quality to remain globally competitive. The Budget reinforces the Make in India initiative and allocates funds to seven strategic and frontier sectors to reduce import dependence.

The Seven Focus Sectors

Biopharma SHAKTI – ₹10,000 crore allocated over five years to strengthen India’s biopharmaceutical ecosystem, promote biologics and biosimilars, reduce import dependence, and combat non-communicable diseases.

Electronics – Expansion of the electronic component manufacturing scheme to ₹40,000 crore to promote domestic chip production.

Infrastructure and Materials – ₹10,000 crore for a container manufacturing scheme and support for construction equipment, along with rare earth corridors in four states.

Textiles and Sports – Integrated Textile Programme and Tex-Eco initiative, along with a dedicated scheme for high-quality sports equipment manufacturing.

MSMEs – ₹10,000 crore SME Growth Fund and a ₹2,000 crore top-up to the Self-Reliant India Fund to improve liquidity. Measures have also been proposed to maximize the potential of the Trade Receivables Discounting System (TReDS).

Customs and Duty Relief – Increased duty-free input limits up to 3%, expanded benefits for footwear, and a 30-day duty deferral for trusted manufacturers.

Trade and R&D – Facilitation of SEZ-to-DTA sales and tax exemptions for R&D-related capital goods in bonded zones.

In addition, public capital expenditure has been pegged at ₹12.2 lakh crore, with ₹2,000 crore earmarked over five years for carbon capture technologies and a new Coastal Cargo Promotion Scheme to strengthen maritime logistics.

Assessing the Manufacturing Push

India’s push to raise manufacturing’s share in GDP stems from multiple factors. First, global uncertainties—including disruptive tariff policies under Donald Trump—have heightened volatility in international trade. Second, India seeks deeper integration into global manufacturing networks through free trade agreements (FTAs) and bilateral trade deals. Third, technological upgradation is essential for competitiveness.

Economist Biswajit Dhar, former professor at Jawaharlal Nehru University, pointed out that earlier initiatives such as Make in India (launched in 2014) and the Production Linked Incentive (PLI) scheme aimed to raise manufacturing’s share to 25% of GDP. However, over the past decade, manufacturing’s share declined to around 13% of GDP. The PLI scheme has shown success mainly in mobile manufacturing and, to a limited extent, pharmaceuticals.

What More Needs to Be Done?

India must reduce dependence on Chinese imports, revive and reorganize industrial clusters, and stimulate private investment. Enhancing purchasing power is critical, which requires strengthening the vast unorganized sector—where nearly 92% of India’s workforce is employed.

In summary, sustainable manufacturing growth will require a dual approach: revitalizing the domestic unorganized sector to generate employment and demand, while simultaneously nurturing sunrise industries through tech- nological advancement and strategic investment. If implemented effectively, these measures could help India move toward becoming an advanced economy.