The Bizarre Tale Of How Narendra Modi's Mega Hyped Make In India Has Busted

(MENAFN- The Arabian Post)

By Nitya Chakraborty

Prime Minister Narendra Modi is known as the super salesman of jumlas. Beginning from Jan Dhan account of Rs. 15 lakh for everyone to generating two crore jobs for youth every year, all the hyped up propaganda of the BJP led government since 2014 have turned into a big flop. Even in the last few years, the BJP's election machinery or the official agencies never mentioned these two promises of the Prime Minister. But his most talked about and ambitious programme was the Make in India announced soon after his take over at the centre, followed by US$ 23 billion Productivity Linked Incentive(PLI) scheme, the flagship of MII programme in 2021. Modi declared that India would be turned into a production hub of the world with the share of manufacturing going up to 25 per cent of the country's GDP in 2025 as a result of implementation of Make in India programme.

Now 2025 is here. The Government has discreetly without any official announcement has allowed the $ 23 billion PLI scheme meant for Make in India to lapse. The scheme will not be expanded beyond the 14 pilot sectors and production deadlines will not be extended. The government failure was massive. The leadership given by the PMO in framing the policies of Make in India and the associated PLI scheme grossly failed to inspire the companies and do away with the regulatory and bureaucratic hurdles.

One principal objective was to organize switch over some of the China bound U.S. and other foreign investments to India. The objective was not only fulfilled, the share of the manufacturing in the country's GDP stuck at 14.3 per cent now as against the promised 25 per cent by 2025 as per Prime Minister Narendra Modi's announcement. The paradox is that at the time of starting of PLI scheme, the share of manufacturing in GDP was 15.4 per cent. So under the Narendra Modi leadership, the manufacturing sector share in GDP went down instead of going upon the last four years of PLI scheme..

Reuters news agency released the terrible news for Indian industry on Friday last week leading to immediate reactions from the foreign investors as also competitors, especially China. Still till Wednesday, no statement has been issued by the government officially on the expiry of the PLI scheme though the entire Indian industry people are assessing its impact. Many of the participants in the PLI scheme have started working on to reset programmes.

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According to Reuters,, many firms that participated in the program failed to kickstart production, while others that met manufacturing targets found India slow to pay out subsidies, according to government documents. As of October 2024, participating firms had produced $151.93 billion worth of goods under the program, or 37 per cent of the target that Modi government had set, according to an analysis of the program compiled by the commerce ministry. India had issued just $1.73 billion in incentives – or under 8per cent of the allocated funds, the document said.

Indian Trade experts feel that excessive red tape and bureaucratic caution continued to stymie the PLI scheme's effectiveness. As an alternative, India is considering supporting certain sectors by partially reimbursing investments made to set up plants, which would allow firms to recover costs faster than having to wait for production and sale of another. The latest decision takes place in the context of the trade talks between India and the U.S. in New Delhi under the shadow on Trump's threat of imposing reciprocal tariffs on Indian goods. The alternative plan replacing PLI scheme has to take into account the new trade war situation globally.

Biswajit Dhar, a leading foreign trade expert felt that the PLI scheme was possibly the last chance India had to revive the country's manufacturing sector. According to him, if this kind of mega scheme fails, how can we have any expectation that anything is going to succeed? According to him, the incentives programme was possibly the last chance India had to revive the manufacturing sector.

Interestingly, China was the first country which reacted through an analysis in the English daily Global Times the same day Reuter story was released about the expiry of the $ 23 billion PLI scheme. In an analysis on the reasons for PLI scheme failure, Global Times writes

“Four years after launching its $23 billion Production-Linked Incentive (PLI) scheme aimed at challenging China's manufacturing dominance, India's flagship“Make in India” initiative has become a cautionary example of institutional inertia. As revealed by Reuters on Friday, this once highly anticipated and ambitious program has veered off course.”

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According to World Bank data, manufacturing accounts for only around 13 percent of India's GDP – far lower than China's 26 percent and Vietnam's 24 percent. As the GT analysis points out these figures reflect a deeper systemic malaise. The reality of India's manufacturing development demonstrates that the human factor remains decisive requiring a departure from colonial institutions and ideological frameworks. This constitutes not merely institutional adjustment and innovation but more profoundly, a protracted revolution of thought.

The GT analysis observes“The path forward lies in systemic institutional reform that suits India's realities. To join the ranks of manufacturing powers, India must shed the shackles of its colonial inheritance: streamline governance structures, advance local empowerment and foster an industrial workforce through educational equality. This requires moving beyond the PLI scheme's“financial band-aid” approach toward a comprehensive alignment between the machinery of the state and the demands of modern industry.”

Global Times is the English daily of People's Daily group run by the Chinese Communist Party. So its views reflect the views of the Chinese government. The timing is important. Since the talks between Narendra Modi and Chinese president Xi Jinping at Russian city Kazan on October 22 at the sidelines of BRICS summit, India- China relations have improved. Indian Prime Minister in his interview to the U.S. journalist Lex Fridman mentioned of India's emphasis on competition and cooperation with China , not conflict. There was a signal that India would really deal with the issues with China from a friendly approach. Economic cooperation was one of them.

The last economic survey of the Modi government mentioned of the opportunities for Indian industry through Chinese investments in India. Chinese imports are continuing but there are restrictions on investments. There are signals that as a part of the alternative plan for getting increased FDI inflow in the manufacturing sector, Chinese investments might be welcomed. removing some of the present barriers. Indian manufacturers are interested in that. It is high time that the Prime Minister opts for sustainable manufacturing programme based on fundamentals of the economy rather than promising ambitious showpieces that are not achievable. (IPA Service )

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