India is preparing a renewed push to triple its exports by 2035, pivoting towards structural reforms in manufacturing rather than large fiscal outlays, as the government bets that easing regulatory hurdles can succeed where earlier incentive-heavy drives fell short.
The government aims to lift annual goods exports to $1.3 trillion by prioritising manufacturing across 15 sectors, including high-end semiconductors, metals and the labour-intensive leather industry, to two government officials familiar with the plan told Reuters.
The initiative marks PM Modi’s third major attempt to raise manufacturing’s contribution to economic growth, after earlier efforts to increase the sector’s share of gross domestic product to 25% fell short. Those included the flagship “Make in India” campaign launched in 2014 and a $23 billion production-linked incentive package announced in 2020.
“In past years, several government initiatives to boost manufacturing growth have led to modest, incremental progress at best. What is needed is a bold, focused and cohesive strategy to drive transformative change,” a government official involved in drafting the policy said.
Unlike previous programmes, the new approach places limited emphasis on subsidies. Officials said the government plans to spend about 100 billion rupees ($1 billion) to build infrastructure for roughly 30 manufacturing hubs across the targeted sectors, while providing grants worth $218 million for advanced areas such as semiconductor manufacturing and energy storage.
Funding levels will be restrained because the focus is on reducing regulatory and compliance burdens, which officials described as the biggest impediment to Indian manufacturing, rather than relying on large-scale fiscal incentives.
Financial support for industries will be assessed on a case-by-case basis by a new government panel, which will make recommendations to administrative departments.
This model replaces the pre-budget fiscal packages that characterised earlier manufacturing schemes, the officials said.
The framework, known as the National Manufacturing Mission, was announced in last year’s budget, though detailed guidelines were not disclosed at the time. Officials said further details could be unveiled in the February 1 budget, with the final decision to be taken closer to the date.
The Finance Ministry and government think tank NITI Aayog, tasked with preparing the policy, did not respond to Reuter's requests for comment.
FOCUS ON CUTTING RED TAPE
The panel's focus will be to ensure faster regulatory clearance, approvals for land and cheaper financing for large projects, the officials said. It will be chaired by a minister and composed of bureaucrats, including the cabinet secretary, they said.
It will oversee the building of manufacturing hubs for the 15 sectors, and work with state governments to assure steady and cheap electricity supplies for such units, the sources said.
Manufacturing hubs have been identified based on existing infrastructure, geographic advantages and proximity to ports, the officials said.
Divergent policies by India's federal and state governments have weighed on investment and hampered manufacturing. States have followed different regulations for labour and business compliance, increasing costs for companies operating in multiple states.
The proposed panel would coordinate with states to ease regulations such as those requiring multiple permits for power, land and water.
It would also recommend cutting red tape by reducing overlaps between quality and standards checks, and suggest aligning tariffs to industry requirements and "national priorities", some sources said.