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Sarun George Sunny
The Way I See It • 9d
Indian Manufacturing Sector is Falling: How Government Failures Derailed a $23 Billion Dream India’s manufacturing sector is falling, and the government’s ambitious $23 billion Production-Linked Incentive (PLI) scheme, launched in 2020 to boost domestic manufacturing and challenge China’s industrial dominance, is now set to end without an extension. Conceived to raise manufacturing’s share of GDP from 15.4% to 25% by 2025, the scheme has instead witnessed a decline to 14.3%. Despite enrolling over 750 companies, including giants like Foxconn and Reliance Industries, the initiative has been plagued by bureaucratic inefficiencies, poor execution, and lack of strategic clarity. Even companies that successfully met their production targets are struggling to receive the promised subsidies, with only $1.73 billion of the allocated funds disbursed by October 2024. A dismal 37% of the projected output has been achieved, revealing the deep flaws in the government’s approach. While pharmaceutical and mobile manufacturing sectors managed to find some success, critical industries like steel and solar panels have been left floundering due to inconsistent policies and bureaucratic red tape. The government’s last-minute effort to salvage the scheme by considering investment reimbursements feels like a desperate attempt to cover up its structural failures. If India truly wants to emerge as a global manufacturing powerhouse, the government must address these foundational issues instead of making lofty promises. Simplifying investment processes, enhancing infrastructure, and building a skilled workforce are critical steps that can’t be ignored. The PLI scheme’s failure isn’t just a missed opportunity — it’s a warning sign that urgent reforms are needed before it’s too late.
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