Topic 8 of 20
GS Paper 3 Industrial Policy Make in India at 12: stagnant shares, idle capacity and concentrated PLI gains

Bigger Numbers, Same Share: Why Make in India's Real Constraint Is Demand, Not Incentives

Source The Hindu, PIB, Arivark, Invest India

In 2013, India's share of global merchandise exports was 1.7%. In 2025-26, twelve years after Make in India was launched, it is still 1.7%. Everything in between grew, except India's place in the world market.

| | Topic 8 of 20

Summary

Twelve years after the Make in India campaign was launched on September 25, 2014, an analysis of 12 metrics by The Hindu finds that manufacturing has not materially raised its share of growth, employment or global exports.

Non-petroleum goods exports grew 53% to $388.3 billion in 2025-26 from $253.5 billion in 2014, but India's share of global merchandise exports has stayed at about 1.7% since 2013. Under the old series, manufacturing's share of GVA is lower now than in 2014; the new series shows a marginal rise from 14.6% in 2022-23 to 15.6% in 2025-26.

Private gross fixed capital formation, as a share of GDP, is lower than in 2014-15. RBI data show capacity utilisation still below 80%, the level at which firms typically build new capacity. The 14 Production-Linked Incentive schemes drew ₹2.4 lakh crore of investment by March 2026, but nearly 83% went to just five sectors.

WHY IN NEWS FOR UPSC & STATE PCS

The Make in India initiative completed 12 years on September 25, 2026. A data-led review of growth, investment, employment and export metrics shows patchy performance, with gains under recent incentive schemes confined to a handful of sectors.

Standard News

A Factory at Three-Quarters Capacity Does Not Need a New Shed

Every headline number about Make in India has grown.

  • Non-petroleum goods exports rose 53%, from $253.5 billion in 2014 to $388.3 billion in 2025-26.
  • PLI schemes drew ₹2.4 lakh crore of investment.
  • Manufacturing's share of total FDI rose from nearly 48% to 55%. Yet the one number that measures whether India is actually gaining ground has not moved. India's share of global merchandise exports was about 1.7% in 2013. It is about 1.7% today.

From the

aggregate to the factory floor The owner's decision. To see why, leave the national accounts and stand inside a mid-sized manufacturer. The owner decides whether to invest by looking at one thing: are the existing machines busy?

RBI data show capacity utilisation across Indian manufacturing has been creeping up but remains below 80%. That is roughly the level at which firms decide existing capacity is no longer enough and begin building more.

  • Below that line, the rational choice is to run existing lines harder, not to build new ones.
  • The owner borrows for working capital, to buy inputs and pay wages, but not to expand. What the credit data show. That is exactly the pattern in the data. Bank credit to industry, led by MSMEs, has grown strongly. But without sustained rapid growth in output, experts read it as working-capital borrowing rather than fresh investment. What the investment data show. Private gross fixed capital formation - what companies spend on factories and machines - is a smaller share of GDP than it was in 2014-15. In the new series, overall GFCF as a share of GDP has been falling since 2022-23. The diagnosis. None of this is a supply-side failure that a better incentive could fix. It is a demand-side constraint. Firms are not building because they cannot yet fill what they already have.

Why

PLI money pooled in five sectors The same logic explains the most striking PLI statistic. Nearly 83% of the ₹2.4 lakh crore went to just five of the 14 sectors:

  • solar modules - pharmaceutical drugs - automobiles and components - specialty steel - large-scale electronics An output-linked incentive rewards production. It can only draw investment where firms are already confident that demand exists to absorb new output. These five sectors had that confidence, whether from established ecosystems, export markets or policy-driven demand. The other nine did not and a subsidy on output cannot manufacture a buyer. Who pays for the concentration. The groups left behind are identifiable: producers in sectors where PLI money did not arrive and the workers they would have hired. Manufacturing has not materially raised its share of employment. Concentrating capital in a handful of mostly capital-intensive sectors means output can rise without broad-based hiring.
When factories run below capacity, incentives shift where investment goes but not how much of it happens - which is why exports grew in rupees and dollars while India's share of the world market stood still. For GS3. Distinguish absolute growth from share. Then trace the mechanism: capacity utilisation, then the investment decision, then where incentives can and cannot reach.

Quick Facts

Key numbers & takeaways — revise these first

  • Make in India was launched on September 25, 2014.

  • Non-petroleum goods exports: $253.5 billion in 2014, $388.3 billion in 2025-26, a rise of 53%.

  • In the 12 years before 2014, non-petroleum goods exports grew more than 400%, from a much smaller base.

  • India's share of global merchandise exports: about 0.8% in 2002, 1.7% in 2013 and 1.7% in 2025-26, per UNCTAD.

  • Manufacturing share of GVA, new series: 14.6% in 2022-23, 15.6% in 2025-26.

  • Manufacturing's share of total FDI rose from nearly 48% in 2014-15 to 55% in 2025-26.

  • RBI capacity utilisation remains below 80%.

  • PLI schemes: 14 schemes launched in 2020 and 2021.

  • Cumulative PLI investment: ₹2.4 lakh crore as of March 2026.

  • Share of the top five sectors in PLI investment: nearly 83%.

  • Top five PLI sectors: solar modules, pharmaceutical drugs, automobiles and components, specialty steel, large-scale electronics.

Beyond The Headlines
GS Paper 3 Make in India at 12: stagnant shares, idle capacity and concentrated PLI gains

Connect the dots for your UPSC preparation.

Standard news covers the event. Log in to read our comprehensive analysis and uncover the hidden constitutional, structural, and ethical dimensions of this topic:

1

Why exports grew over 400% in the 12 years before 2014 but only 53% after and how much of that gap the base effect actually explains

2

How the old and new GVA series tell different stories about manufacturing's share and which one an answer should cite

3

The specific groups left outside PLI's five dominant sectors and why output-linked incentives favour capital-intensive industries

4

A demand-side way forward, from export competitiveness to domestic consumption, that could lift capacity utilisation past the investment threshold

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Make in India Manufacturing Industrial Policy PLI Scheme Capacity Utilisation Gross Fixed Capital Formation GVA Exports UNCTAD Private Investment Indian Economy GS3 Economy UPSC Mains

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