Production hiccups
The elephant has missed a golden opportunity to get the better of the dragon. An ambitious $23-billion programme, launched four years ago to incentivise domestic manufacturing and woo firms away from China, has been allowed to lapse by the Modi government. The Production-Linked Initiative (PLI) scheme will not be expanded beyond the 14 pilot sectors, while production deadlines will reportedly not be extended despite requests from some participating firms. Around 750 companies had signed up for the scheme, but many of them failed to kickstart production; those that met manufacturing targets were put off by the tardy payout of subsidies.
This disappointing development comes amid US President Donald Trump’s tirade against India over tariffs. Another sobering fact is that growth in India’s manufacturing sector fell to a 14-month low in February. It is apparent that the government’s flagship ‘Make in India’ campaign, which was launched in 2014 with the objective of transforming the country into a global hub for design and manufacturing, remains a work in progress. The time is ripe to ascertain why the PLI scheme, contrary to expectations, did not prove to be a game-changer. It was rolled out at a time when China was battling to maintain production levels amid its crippling zero-Covid policy, while the US was pushing multinationals to diversify production lines. India has tasted global success in pharmaceutical and mobile phone production, but China continues to be dominant in sectors such as steel and textiles.
India is projected to become the world’s third largest economy (behind the US and China) by 2028, thanks to its much-sought-after consumer market and an increasing share in the global output. There is scope for performing even better, provided New Delhi plays its cards right. China’s sluggish economic growth should spur India to give its manufacturing sector a new lease of life. It all boils down to seizing the initiative, even as tariff headwinds will test the famed resilience of the Indian economy.
