“Make in India and the World: How India’s Manufacturing Drive is Redrawing Global Defence and Economic Maps”

 Analytical Conversations: From Trendlines to Thought Lines

 “Make in India and the World: How India’s Manufacturing Drive is Redrawing Global Defence and Economic Maps”

 

Executive Summary

Launched in September 2014, “Make in India” was positioned as a transformative initiative to reposition India from a services-led economy to a global manufacturing hub. Its goals were ambitious: raise manufacturing’s share of GDP to 25%, create 100 million jobs, and integrate India into global value chains. The programme’s policy mix included liberalised FDI rules, Production Linked Incentive (PLI) schemes, infrastructure modernisation, and regulatory simplification.

Ten years on, the results are mixed but meaningful. India has become a major site for mobile-phone assembly, pharmaceuticals, and defence production. FDI inflows touched record highs, and export diversification gained traction. Yet, the manufacturing share of GDP remains stuck at ~12.5% (2024), far short of the original target.

Globally, Make in India has created supply-chain ripples:

• China faces marginal decoupling pressures but retains its industrial dominance.
• Germany and France view India both as a market and as a competitor in mid-range manufacturing.
• The United States treats India as a “friendshoring” partner, though competition for advanced manufacturing remains intense.

Critically, headline GDP numbers mask subtler truths. When adjusted for ownership (GNP) and capital replacement (NNP/NDP), India’s structural challenges emerge: foreign-owned capital dilutes resident income gains, and depreciation-adjusted indicators reveal sustainability gaps.

 

1. What Make in India Set Out to Do

At its 2014 launch, Make in India’s headline goals were:

• Raise manufacturing’s share of GDP from ~15% to 25% by 2022.
• Create 100 million jobs in manufacturing.
• Position India as a major global value-chain player.

The policy toolkit included:

1. Regulatory liberalisation: FDI allowed up to 100% in several sectors (defence, railways, insurance).
2. Incentives: PLI schemes (electronics, pharma, auto components, textiles, batteries, semiconductors).
3. Infrastructure drives: industrial corridors, port modernisation, logistics upgrades.
4. Institutional reforms: single-window clearances, digitised approvals, skilling missions.

 

2. Macroeconomic Snapshot (2024–2025)

Indicator	India	China	U.S.	Germany	France
GDP (current US$, 2024)	~$3.9–4.0T	~$18–19T	~$29T	~$4.6T	~$3.1T
Real GDP growth (2024–25 est.)	6.4%	~4–5%	~2–3%	~1–2%	~1–2%
Manufacturing share of GDP	12.5%	25%	11–12%	17–18%	10–12%

Sources: World Bank (2024), MoSPI (2025), TheGlobalEconomy.com

• India’s headline GDP growth outpaces advanced economies, but manufacturing lags as a share of GDP.
• China’s manufacturing is nearly double India’s share, while Germany continues to outperform as a manufacturing powerhouse despite slower growth.
• The U.S. and France remain services-heavy, though each pursues targeted industrial policy.

 

3. The Manufacturing Share Gap

Despite record FDI inflows, India’s manufacturing share fell in the 2010s and only partially recovered:

• India: 12.5% of GDP in 2024 — far below the 25% target.
• China: ~25% — showing resilience despite slowing GDP growth.
• Germany: ~17–18% — sustained by high-value sectors.

Interpretation: Structural transformation is hard. India’s labour market and demand conditions favour services, while manufacturing requires capital deepening, spatial industrialisation, and productivity scaling. Make in India’s wins are sector-specific, not economy-wide.

 

4. FDI, PLI, and Pockets of Success

FDI inflows (2014–2024): ~$667 billion (GoI). Several years hit all-time records.

Sectoral highlights:

• Electronics: India is now the second-largest mobile phone producer; exports surged from <$10 billion (2014) to >$25 billion (2024).
• Pharma: “Pharmacy of the world” reputation strengthened; API (active pharma ingredient) production boosted by PLI.
• Defence: Domestic procurement increased; exports reached >$2.5 billion in 2024, including drones and naval equipment.

Interpretation: PLI works best where India already has market size, talent pools, and cost advantages. The challenge is to replicate this success beyond a handful of sectors.

 

5. Effects on China — Partial Decoupling

• FDI Diversion: Some firms shifted low/medium-tech assembly to India, Vietnam, and Mexico.
• China’s Response: Doubling down on “Made in China 2025”, semiconductors, robotics, and domestic demand.
• Net Effect: India gains marginal projects, but China retains scale dominance and high-tech leadership.

China’s manufacturing value-added (MVA) in 2024 was >$4.5 trillion, compared to India’s <$500 billion — a tenfold gap.

 

6. Effects on Germany and France — Market vs Competition

• Opportunities: India’s demand for machinery, autos, and aerospace creates new export and JV opportunities.
• Shifts: Some suppliers relocate parts of supply chains to India.
• Risks: If India scales labour-intensive exports, price competition could affect EU mid-range sectors (e.g., textiles, basic machinery).

Germany’s advantage: Strong clusters in engineering-intensive industries.
France’s advantage: Aerospace (Airbus in India), defence, and luxury.

Conclusion: India is complementary, not substitutive — EU strengths are in high-value niches.

 

7. Effects on the U.S. — Friendshoring and Competition

• Reshoring: U.S. incentives (CHIPS Act, IRA) keep frontier industries at home.
• Friendshoring: India is an attractive partner for electronics assembly and pharmaceuticals.
• Competition: For some sectors (EVs, electronics), India competes with Mexico and Vietnam more than with the U.S.

Strategic View: Washington sees India as a resilience partner, not a rival, in global supply chains.

 

8. GDP vs GNP, NNP, NDP — Why Gross ≠ Net

• GDP: Output within borders.
• GNP: Output accruing to residents. With foreign-owned FDI inflows, GNP may grow slower than GDP.
• NNP/NDP: Adjust for depreciation. High replacement needs reduce the “net” product available for consumption.

India’s case:

• GDP rose by ~9.7% nominal in 2024–25.
• But net factor income outflows widened, as foreign firms repatriated profits.
• Depreciation (consumption of fixed capital) absorbed ~10–12% of GDP, lowering NNP significantly.

Implication: Headline GDP gains ≠ citizen welfare. The policy must focus on domestic ownership, reinvestment, and durable capital formation.

 

9. Constraints to Transformation

1. Capital intensity gap — India lags in robotics, automation, and R&D investment.
2. Logistics costs — ~13–14% of GDP (vs 8–9% in advanced economies).
3. Skill pipeline — uneven vocational and technical training.
4. Land & federal complexity — state-level variations create bottlenecks.
5. Ownership effects — foreign-dominated sectors risk “hollow” GDP growth.

 

10. Policy Lessons

• Move from PLI to ecosystem building: clusters, logistics, R&D, vocational hubs.
• Focus on GNP/NNP metrics to assess resident welfare.
• Incentivise domestic reinvestment and technology transfer in FDI contracts.
• Encourage green/circular manufacturing to lower depreciation and environmental costs.
• Introduce state-level competitiveness indices tied to incentives.

 

11. Global Strategic Lessons

• China: Must accept structural diversification; double down on high-tech and domestic demand.
• Germany & France: Collaborate with India via JVs, skill-sharing, and R&D centres; keep premium niches secure.
• United States: Maintain frontier industries at home, but treat India as a friendshoring base for resilient supply chains.

12  Defence Products Under Make in India

India’s defence sector is one of the most visible beneficiaries of Make in India.

Key Achievements:

1. HAL Tejas (Light Combat Aircraft) – Indigenous fighter aircraft, now being exported (Malaysia expressed interest).
2. INS Vikrant (Aircraft Carrier) – Commissioned in 2022, fully built in India — a landmark in naval self-reliance.
3. Akash Missile Systems – Indigenously produced surface-to-air missiles, exported to Armenia.
4. BrahMos Supersonic Cruise Missile – Joint venture with Russia; exports started to the Philippines in 2022.
5. Drones & UAVs – Defence start-ups supported by iDEX developing surveillance and combat drones.
6. Artillery & Armoured Vehicles – Domestic production of Dhanush howitzers and upgrades of Arjun tanks.
7. Naval Exports – Offshore patrol vessels supplied to Mauritius, Vietnam, and other friendly nations.
8. Electronics Warfare Systems – DRDO-developed systems integrated into Army and Navy platforms.

Numbers at a Glance:

• Defence exports: Grew 17x in the last decade — from ₹1,500 crore in 2014 to ₹21,000 crore (~$2.5B) in 2024.
• Domestic procurement: 75% of the 2023–24 defence capital budget reserved for Indian vendors.
• FDI: FDI limit in defence raised to 74% (automatic route), and 100% in select cases.

 

The defence manufacturing ecosystem under Make in India is not only about reducing imports but also about creating a self-reliant defence economy that aligns with India’s broader goal of a $5 trillion economy. According to SIPRI (Stockholm International Peace Research Institute), India was among the world’s top three defence importers in the past decade, with nearly 60–65% of equipment sourced from abroad. This heavy reliance created strategic vulnerabilities, especially during conflicts when supply chains could be disrupted.

With the establishment of two Defence Industrial Corridors — Uttar Pradesh and Tamil Nadu — the government is building clusters where MSMEs, startups, and PSUs can collaborate. Over 500+ projects have been announced in these hubs, ranging from light combat aircraft (Tejas Mk-II) to advanced radar systems, UAVs, and electronic warfare equipment. The private sector’s entry (Tata, Mahindra, L&T) has reshaped the market that was earlier dominated by DPSUs (HAL, BEL, BEML).

Global players like Lockheed Martin, Boeing, and Airbus are now setting up joint ventures in India to meet local offset obligations. This not only builds jobs (estimated 2–3 million direct & indirect) but also nurtures a defence export base — India exported over ₹21,000 crore worth of defence equipment in FY 2024–25, compared to just ₹1,500 crore in 2016.

 

Interpretation:

Defence is where Make in India achieved both strategic and industrial wins. Unlike mobile phones (assembly-heavy), defence projects involved deep domestic R&D (HAL, DRDO) and private start-ups. However, bottlenecks in large-scale production and dependency on imported components (engines, avionics) still limit full autonomy

Here’s a visual comparison chart of the Defence Sector Before vs. After Make in India.

It highlights:

·         Imports falling (USD billions)

·         Exports shooting up (₹ crore)

·         Domestic manufacturing share rising

·         Jobs created nearly tripling

Global Effects of India’s Defence Manufacturing Push

🔹 1. China

• Challenge: China has long been the low-cost supplier of electronics, drones, and dual-use components to the world. As India ramps up production (especially drones, missiles, semiconductors), some African and Southeast Asian buyers are diversifying toward India.
• Strategic tension: India’s growing military exports to nations like Vietnam and Philippines directly counter China in the South China Sea.

 

🔹 2. United States

• Opportunity + Rivalry:
• US companies (Lockheed Martin, Boeing, GE) are setting up JVs in India to fulfill offset obligations and cut costs.
• But, India’s self-reliance also means less import demand from the US defence industry.
• Geopolitics: The US sees India as a counterweight to China, so it encourages Make in India, even if it reduces some direct arms sales.

 

🔹 3. Russia

• Mixed Impact:
• Russia was India’s largest defence supplier (over 60% share historically).
• With Make in India, India is demanding more technology transfer rather than pure imports (e.g., BrahMos JV, Su-30 MKI upgrades).
• Russia’s war in Ukraine has disrupted supply chains, pushing India to fast-track indigenous development — weakening Russia’s monopoly.

 

🔹 4. Germany & France (Europe)

• Germany: Strong in submarines, tanks, and high-tech electronics, sees India as a manufacturing + co-development hub. Example: Thyssenkrupp’s submarine tech being considered for Indian shipyards.
• France: Already a big winner — Rafale jets, Scorpène submarines, Safran engines. France collaborates in Make in India projects, giving it a deeper market foothold as India reduces reliance on Russia.

 

🔹 5. Developing Nations (Africa, Southeast Asia, Latin America)

• India has started exporting helicopters, radars, patrol vessels, drones to smaller nations at lower costs than Western suppliers but with better quality than Chinese suppliers.
• This makes India a new defence supplier for the Global South, altering the global arms trade map.

 

🔹 6. Global Arms Market Structure

• By 2030, India could become a top-10 defence exporter, which would eat into market shares of Russia and China, while creating co-production opportunities for the US, France, Germany, and Israel.
• The arms race balance shifts: India moves from being the world’s largest importer to a competitive exporter, changing bargaining dynamics in global diplomacy.

 

✅ In summary:

• China → challenged (competition in Asia, reduced dependence).
• US & Europe → collaborative (new joint ventures, but also competition).
• Russia → losing dominance (supply chain + policy pressures).
• Global South → gaining alternative supplier (India as an affordable partner).

 

13.  Closing Remarks

India’s Make in India journey is not just about creating factories, assembling machines, or pushing numbers of GDP, NNP, or GNP. It is about reshaping India’s identity — from a nation once dependent on imports to a nation now supplying strength, technology, and resilience to others.

While challenges remain — in scale, capital intensity, and global competitiveness — the symbolism of the roaring lion has become real. India today influences supply chains, unsettles China’s monopoly, negotiates with Germany and France as equals, and partners with the US on co-production rather than plain buying.

In a world where economic power is inseparable from defence self-reliance, Make in India is not just a policy — it is a strategic declaration that India will no longer borrow its future but build it.

 

References

1. Government of India — Make in India policy documents and FDI statistics.
2. MoSPI — National Accounts, 2024–25 Advance Estimates.
3. World Bank (2024) — World Development Indicators: GDP and Manufacturing Value-Added.
4. TheGlobalEconomy.com (2024) — Manufacturing share of GDP datasets.
5. OECD (2023) — Industrial Policy and EU Trade Shifts.
6. ChinaPower Project (CSIS, 2024) — China’s Manufacturing Competitiveness.
7. Financial Times (2024) — Global Supply Chain Diversification Reports.
8. Investopedia — Definitions of GDP, GNP, NNP, and NDP.
9. Press Information Bureau (2024) — PLI Achievements and FDI Inflows.
10. The Times of India (2024) — Electronics and Defence Export Growth.

Case-Cum Stories

1. Apple and the Indian iPhone

When Apple shifted part of its iPhone assembly from China to India, it was not just a corporate move but a geopolitical signal. In 2017, Foxconn began assembling iPhones in Tamil Nadu. By 2023–24, Apple exported >$12 billion worth of iPhones from India. Workers in Sriperumbudur now tell a story of local villages being connected to global supply chains. But ownership of technology still rests abroad — showing GDP gains may not equal GNP gains.

 

2. The Mobile Boom in Noida

Samsung’s Noida factory (inaugurated in 2018) became one of the world’s largest mobile phone manufacturing plants. Local small vendors began supplying packaging, plastics, and logistics. For students in nearby colleges, internships at Samsung replaced traditional clerical jobs — linking Make in India with skill exposure.

 

3. The Pharma Exporter’s Leap

An Indore-based mid-size pharmaceutical firm benefitted from PLI incentives, allowing it to expand production of generic oncology drugs. By 2024, it was exporting to Latin America and Africa. This shows how Make in India leveraged India’s drug R&D strengths to expand export footprints.

 

4. From Workshop to Auto Components Hub

In Pune, a traditional family-run engineering workshop supplying spare parts to local markets entered a JV with a German Tier-II auto supplier. Within five years, the firm began exporting precision components to Europe. This illustrates how German engineering expertise plus Indian cost advantage created a hybrid competitive edge.

 

5. Semiconductor Hope in Gujarat

The announcement of Vedanta–Foxconn’s semiconductor fab in Gujarat was hailed as a breakthrough. While the project faced delays, the narrative gave India a “symbolic win” — signalling intent in advanced tech manufacturing. Local engineering colleges began setting up chip design labs, preparing a talent pipeline even before silicon wafers rolled out.

 

6. Defence Start-Up in Drones

A Bengaluru-based defence start-up developed UAVs (unmanned aerial vehicles) for surveillance. By 2024, it had bagged export orders from the Philippines and African nations. Supported by iDEX (Innovations for Defence Excellence), this is a story of how Make in India opened space for start-ups in strategic defence tech.

 

7. The Textile Cluster in Tamil Nadu

A textile cluster in Tiruppur, known for exports of cotton garments, received PLI support to move into technical textiles (fire-retardant fabrics, medical textiles). Exports began flowing to Europe by 2023. Farmers supplying organic cotton in Tamil Nadu linked directly to industrial demand — integrating agriculture with Make in India’s vision.

 

8. French Luxury Meets Indian Craft

A French luxury brand collaborated with Indian artisans under Make in India incentives. Leather goods produced in India were exported under the French label. While this added GDP, it raised the question: how much of the “value” remains in India (craft labour) versus France (brand ownership)? This illustrates the GDP–GNP dilemma vividly.