Time to re-imagine Indian manufacturing from the ground up

Mint

25-05-2025

China's President Xi Jinping has stepped up calls for greater self-reliance in the country's manufacturing sector, reinforcing a strategy that has long unsettled its global trade partners. His latest remarks came less than a week after Beijing and Washington agreed to a 90-day pause in their bilateral trade conflict. The message is unmistakably forward-looking: economic resilience, in Beijing's calculus, will come not from the Chinese economy's openness, but from fortified sovereignty.
India must take heed—not to mimic China's model, but to recognize the scale and seriousness with which Beijing is re-setting its industrial ambitions. While much attention has focused on traditional sectors, the scope of China's strategic planning stretches far beyond.
Also Read: How a manufacturing boom could help India close the gender gap
Programmes such as its Three-Body Computing Constellation, which seeks to process data in space rather than rely exclusively on ground-based infrastructure, and its New Infrastructure initiative, which aims to integrate its space, computing and artificial intelligence (AI) ecosystems into a common architecture, are designed to position China as a nation where manufacturing, data and national capability converge.
In this context, India's manufacturing strategy demands nothing less than an overhaul. There is now a clear recognition among global producers that excessive dependence on China is both economically and geopolitically risky. This strategic recalibration has opened a rare window for India.
Yet, intent must not be mistaken for preparedness. India's manufacturing sector continues to punch below its potential. Its contribution to GDP has remained stagnant for long, despite repeated policy pronouncements. Structural constraints—cumbersome regulations, poor contract enforcement, fragmented infrastructure and bureaucratic unpredictability—continue to erode investor confidence.
Policy instruments like our production-linked incentive (PLI) schemes represent a promising shift in direction, but their results have been patchy. For India to serve as a genuine alternative to China, it must build not only capacity, but also credibility and coherence.
The need for stronger manufacturing goes beyond economics. In the emerging global order, manufacturing is a proxy for national resilience and strategic autonomy. India cannot afford to see industrial policy as a narrow economic tool. It must be reframed as a national strategy.
Also Read: Ajit Ranade: India must diversify its exports of manufactured goods
The challenge is compounded by a fast shifting manufacturing frontier. Advanced manufacturing today is inseparable from frontier technologies—robotics, quantum materials, cyber-physical systems and AI. Nations that fail to integrate these capabilities into their industrial base will find themselves stuck in low-value assembly roles, increasingly expendable in the global value chain.
India risks exactly this fate, unless it invests in research and development institutions, translational science and sovereign technology ecosystems that can be scaled up at will. Tariff concessions and free trade agreements, while necessary, cannot compensate for the absence of deep industrial innovation.
India's democratic structure makes its path more complex but potentially more durable as well. The country can't mobilize capital and labour through central diktat. We must take a harder route, but one with greater long-term legitimacy and resilience. If we pursue a clear strategy, we can offer the world a unique proposition: a trusted, rules-based and pluralistic manufacturing ecosystem that is open, scalable and anchored in law.
Also Read: India can leap from cost competitiveness to innovation-led manufacturing
For this to materialize, however, India must abandon incrementalism. Manufacturing must be treated not as just another growth problem to be solved, but as a core aspect of our economic architecture.
It is through manufacturing that productivity is unlocked, technological depth is built and strategic heft is earned. While emerging technologies will inevitably displace certain categories of labour, they also offer us an opportunity to re-imagine industrial employment altogether.
The future of jobs will not lie in resisting automation, but in preparing the workforce to thrive alongside it. India must therefore invest in building a tech-enabled labour base, redesign vocational training for hybrid skill sets and create adaptive ecosystems where services, innovation and advanced manufacturing co-evolve.
Also Read: Madan Sabnavis: Can India's economy count on manufacturing as an engine of growth?
Global trade winds may temporarily shift in India's favour, but the ballast must come from within—through the strategic construction of systems that reward efficiency, absorb disruption and scale quality production without surrendering the sector's employment imperative.
Historical precedent reinforces the argument. The great powers of the past two centuries—from Industrial-Age Britain and post-war America to contemporary China—built their global influence on a bedrock of industrial strength. This isn't an anachronistic view. Even in this digital age, the ability to design, produce and distribute physical goods at scale remains central to economic progress. Software may be embedding itself in everything, but cannot replace hardware in times of geopolitical rupture.
This moment is not just about factory floors. It is about the kind of nation India wants to become. It is a test of whether the country can lead with systems, not slogans. A well-formulated manufacturing strategy would be a statement of intent to shape the future, rather than be shaped by it.
The author is a corporate advisor and author of 'Family and Dhanda'