Scaling & Balancing Manufacturing Sectors in India

Brief Context

Apple’s evolving supply chain strategy is reshaping the global manufacturing landscape—and India is emerging as a key beneficiary.

Source Content

Syllabus: GS3/Economy

Context

• Apple’s evolving supply chain strategy is reshaping the global manufacturing landscape—and India is emerging as a key beneficiary.
  • As of 2025, India now produces 18% of the world’s iPhones, up from just 1% a few years ago, however, China still accounts for over 75% of global iPhone production.

Manufacturing in India

• It encompasses industries engaged in the production, processing, and assembly of goods, contributing significantly to the country’s economic growth and employment.
• It includes textiles, electronics, automobiles, pharmaceuticals, chemicals, and renewable energy components.
• Vision: India aims to increase manufacturing’s share of GDP from the current 17% to 25% by 2047, as part of its Viksit Bharat vision.

Why is India Far Behind Than China in Manufacturing Sector?

• Scale and Ecosystem Depth: China has spent decades building a deep, vertically integrated manufacturing ecosystem, especially in electronics, machinery, and renewable energy.
  • However, India is still developing its industrial clusters and supply chain networks, which limits scalability and efficiency.
• Infrastructure and Logistics: It enables rapid production and delivery.
  • However, India has improved but logistics costs remain high, and infrastructure gaps persist, especially in hinterland regions.
• Investment and Policy Continuity: China attracted massive FDI by offering predictable policies, tax incentives, and streamlined approvals.
  • India’s regulatory environment has improved, but bureaucratic delays and policy shifts still deter some investors.
• Skilled Workforce and Productivity: China trained millions of workers in precision manufacturing.
  • India has a large labor force, but skill mismatches and lower productivity levels hinder high-tech manufacturing growth.
• China’s Strategic Industrial Policy: China’s Made in China 2025 plan aggressively supports high-tech sectors through subsidies, R&D funding, and export incentives.
  • India is responding with PLI schemes and quality control orders, but matching China’s long-term industrial strategy remains a challenge.
• China’s Dual Circulation Strategy: It emphasizes self-reliance in critical tech and a strong domestic supply chain base.

Key Strategies and Reforms

• Expansion of PLI Schemes & Global Supply Chain Integration: The government has rolled out PLI schemes across 14 sunrise sectors, including semiconductors, medical devices, and renewable energy components, to boost domestic production and exports.
• Omnibus Technical Regulation (OTR)-2024: It consolidates safety and quality standards across over 400 products, aligning Indian manufacturing with global benchmarks.
• Quality Control Orders (QCOs): The Bureau of Indian Standards (BIS) has ramped up QCOs to ensure that both domestic and imported goods meet high-quality standards, protecting consumers and local industries.
• Infrastructure and Logistics: Initiatives like Gati Shakti and the National Logistics Policy aim to reduce logistics costs and improve supply chain efficiency—critical for scaling manufacturing.
• Skill Development and Employment: With over 6 crore people employed in manufacturing as of 2020, the sector is a major job creator.
  • The government is investing in vocational training to meet the demands of Industry 4.0.
• National Manufacturing Mission: It was announced as part of the Union Budget 2025-26 to strengthen India’s manufacturing sector, covering small, medium and large industries, emphasizing:
  • Ease and cost of doing business
  • Future-ready workforce development
  • Revitalization of MSMEs
  • Access to cutting-edge technology
  • Production of globally competitive quality products.
• Infrastructure and Logistics Development: The government has invested in industrial corridors, smart cities, and logistics improvements to enhance manufacturing efficiency.
  • The National Infrastructure Pipeline (NIP) and National Monetization Pipeline (NMP) aim to modernize industrial infrastructure.
• FDI and Trade Policy Reforms: Over the last decade, total FDI inflows amounted to $709.84 billion, accounting for 68.69% of the overall FDI inflow in the past 24 years.
  • Policy measures such as GST implementation, corporate tax reductions, and streamlined regulatory processes have improved the business environment.
• Focus on Clean-Tech Manufacturing: India is scaling up clean-tech manufacturing, focusing on solar PV cells, EV batteries, wind-energy components, and hydrogen technology.
  • These efforts align with India’s climate goals and aim to reduce import dependence.

Source: BS