India's Bold Manufacturing Overhaul Aims for $1.3 Trillion Export Target by 2035
In a strategic shift from previous approaches, India is embarking on an ambitious plan to triple its annual goods exports to $1.3 trillion by 2035 through comprehensive structural reforms in manufacturing rather than relying on massive spending packages. According to government officials involved in policy drafting, this represents Prime Minister Narendra Modi's third major attempt to revitalize the manufacturing sector, with a renewed focus on regulatory easing and targeted sector development.
Learning from Past Initiatives
The new approach comes after two previous manufacturing pushes yielded modest results at best. The 2014 "Make in India" campaign and the 2020 $23 billion incentive package both failed to achieve the government's goal of doubling manufacturing's share of GDP to 25%. A government official involved in the current policy development noted that past initiatives led to incremental progress, but what's needed now is "a bold, focused and cohesive strategy to drive transformative change."
Strategic Sector Focus with Modest Funding
The manufacturing push will concentrate on 15 priority sectors that span the technological spectrum:
- High-end semiconductors and electronics
- Advanced metals and materials
- Labor-intensive industries like leather manufacturing
- Energy storage technologies
- Other strategic manufacturing areas
Funding for this initiative will be relatively modest compared to previous efforts, with approximately 100 billion rupees ($1 billion) allocated for infrastructure development across about 30 manufacturing hubs. Additionally, $218 million in grants will support advanced technology areas like semiconductor production and energy storage systems.
The National Manufacturing Mission Structure
The framework for this initiative, called the National Manufacturing Mission, was announced in last year's budget but details remained undisclosed until now. The program will feature several key components:
- A new government panel chaired by a minister and including senior bureaucrats like the cabinet secretary
- Case-by-case financial support decisions replacing blanket pre-budget fiscal packages
- Manufacturing hubs selected based on existing infrastructure, geographic advantages, and port proximity
- Coordinated efforts with state governments to ensure steady, affordable electricity supplies
Cutting Red Tape as Primary Strategy
The central focus of the new approach is regulatory simplification rather than subsidy distribution. Government officials identified regulatory and compliance burdens as "the biggest impediment to Indian manufacturing." The panel's specific responsibilities will include:
- Ensuring faster regulatory clearances and approvals for land acquisition
- Facilitating cheaper financing options for large-scale projects
- Coordinating with states to harmonize labor and business compliance regulations
- Reducing permit requirements for power, land, and water access
- Minimizing overlaps between quality and standards inspections
- Aligning tariffs with industry requirements and national priorities
This regulatory coordination addresses a longstanding challenge in India's federal system, where divergent policies between central and state governments have increased costs for companies operating across multiple states and hampered manufacturing investment.
Implementation Timeline and Details
While the National Manufacturing Mission framework was established last year, specific policy details could be announced in the upcoming February 1 budget, though officials noted this decision will be made closer to the date. The Finance Ministry and NITI Aayog, the government think tank responsible for policy preparation, have not yet commented publicly on the initiative.
The manufacturing hubs will be strategically developed across the targeted sectors, with infrastructure investments designed to create ecosystems that support production efficiency and export competitiveness. By focusing on structural reforms and regulatory easing rather than massive spending, India aims to create a more sustainable manufacturing growth model that can achieve the ambitious $1.3 trillion export target by 2035.
