How the Indian Government is Promoting the Nation’s Manufacturing Sector

How the Indian Government is Promoting the Nation’s Manufacturing Sector

The new Modi government took charge amidst a difficult situation with a decade of low GDP growth at 4.5%. This was an all-time low manufacturing PMI, high inflation. The challenge was to reverse the trend and provide momentum energy and a single-minded commitment to growth. India has to grow at high rates over the next three decades and create jobs for its young population. A strong vigorous and dynamic manufacturing sector has to be central to India’s economic growth. 


Several measures have been taken to cut down red-tapism and to lay down the red carpet diminish human interface and make the system efficient with technology. The best business practices have been circulated to all states for application. The online application process for industrial licensing introduced with 24/7 basis accessibility without human interface through eBiz’s platform. 

Several components of defence products are completely delicensed. The dual-use items having military and civilian applications deregulated. The validity of industrial license extended to three years. All departments advised introducing online returns through a single form. Moreover, the regulatory bodies cannot undertake inspection without requisite approval. The visa-on-arrival scheme is being announced for business travellers.

Opening up of FDI

The government has allowed 100% FDI through automatic routes for suburban rail corridors, high-speed trains, dedicated freight lines, locomotives, coaches manufacturing, freight terminal and signalling system. The FDI in defence raised from 26% to 49% with modernization and state-of-the-art technology. The case to case basis has an allowance of FDI up to 100%. For foreign portfolio investment and defence, the FDI is permitted up to 24% through the automatic route.

FDI in the construction sector is being liberalized to develop smart cities and provide affordable housing for all. 

Smart cities and Corridors

To provide an impetus to India becoming a manufacturing nation, industrial corridors and smart cities are being developed. Work on five smart cities and the Delhi-Mumbai industrial corridor has moved towards implementation. The prospective plan for Chennai-Bangalore industrial corridor has been completed and three new industrial cities have been identified for development. 

The feasibility study for an industrial corridor on the east coast of India has been commissioned by the Asian Development Bank, for this, the Vizag Chennai industrial corridor will be phase one. The prospective plan and identification of new industrial nodes in Bangalore- Mumbai and Amritsar-Kolkata industrial corridors have been given a major thrust.

A new corridor linking northeast with Myanmar and connecting with all the other industrial corridors has been planned in partnership with the Government of Japan. A new national industrial corridor Development Authority is being created to coordinate, integrate and monitor the development of these industrial corridors in the country.

Development of smart cities using next-generation technology will enable India to technologically leapfrog in the process of urbanization. Around 21 new industrial clusters have been approved and developed with an ecosystem of supply chain responsiveness, lower logistic costs, availability of labour and technology up-gradation. These clusters will provide costs and productivity gains and drive India up in the manufacturing chain. 

The rationale behind boosting the manufacturing sector

India wants to emerge as a global manufacturing hub to become self-reliant. The government has focused on building a labour-intensive manufacturing sector to promote inclusive growth. The Indian leather development programme has emerged as the most successful skill development program in the country. It has provided training to more than 5 lakh youth and placed 83% of those trained in the leather industry.

Furthermore, to nurture innovation the government has taken up an initiative to upgrade the administration of intellectual property in the country. All applications and processes have been made online as the use of information technology strengthened.