India’s Industrial Policy Drifts Amid Bold Claims and Faltering Delivery

The recent rollback of Quality Control Orders on the grounds of competitiveness once again underscores the lack of cohesion in India’s industrial policy and the wide gap between aspirations and achievements.  From 14 QCOs on 106 products in 2014, the Bureau of Indian Standards widened the net to almost 800 products before NITI Aayog highlighted the challenges that compliance poses to manufacturing units, particularly small enterprises. The confusion on the policy, instituted primarily as a response to surging imports of low-quality items from China, was starkly evident when the commerce and industry minister lauded the value of QCOs in building consumer confidence and deterring substandard imports just days before the rollback. 

The revocation of over 75 QCOs is emblematic of the fact that many of the headline proclamations for industrial development over the last decade largely generated suboptimal outcomes. A recent report highlights that India’s industrial policy interventions lag significantly behind those of other major economies. While many emerging markets rely on subsidies to stimulate industrial growth, India has leaned instead on import tariffs and trade-related measures such as QCOs to bolster domestic industry. 

The most visible policy of Make in India, announced in 2014 to boost the share of manufacturing in GDP to 25% by 2020, remains well short of the target, with the actual share static at around 17% since 2013-14. According to data from the World Bank, the share of manufacturing value added in India’s GDP was just 13% in 2024, the lowest in its database starting 1960. Data on unorganised sector enterprises collated by CEDA reveals that the number of manufacturing enterprises barely increased between 2010-11 and 2022-23 while manufacturing employment, dominated by self-employed enterprises, fell by more than 5 million since 2015-16. 

Over the years, various other policies have been announced with much rhetoric such as Make in India 2.0 in 2021, Production Linked Incentive scheme 2020 and national manufacturing mission 2025, which collectively demonstrate the underperformance of existing policies. The government’s self-congratulatory press releases on the progress of India’s manufacturing therefore appear somewhat misplaced at the current juncture and perhaps even dangerous, given that the ongoing reshaping of global industrial policies demands a strategic and bold response. 

The revamp of the Goods and Services Tax, or GST 2.0, is being hailed as a major reform and a boost to consumer demand while lowering inflation. While GST collections almost doubled between 2018-19 and 2024-25, it is found that these barely kept pace with the growth of nominal GDP, inching up from 6.2% of total GDP to 6.8% in this period. The ‘Diwali gift’ of rationalised GST rates is expected to positively impact GDP growth for the current year, however, operational issues such as non-inclusion of key sectors, multiple registrations and filings, dispute settlement and inverted duties have not been addressed. These have been regularly pointed out by industry members over the years and it may take many more versions of GST before it truly becomes a ‘good and simple tax’.

The PLI schemes for 14 sectors have been an in-principle hit with the industry participants, garnering ₹1.76 trillion in investments and creating 1.2 million jobs. The rise in smartphone exports has been a particular success story, and the country is beginning to move up from assembly to localisation. At the same time, the disbursements of incentives remain tardy at less than 11% of the planned ₹1.96 trillion.  Moreover, the benefiting enterprises are limited in number and the scheme faces expiry for many sectors in 2026-27. In some sectors such as specialty steel and white goods, several rounds of applications have been held. In general, barring a couple of sectors, the PLI scheme has proved to be somewhat of a damp squib.

The sluggish pace of manufacturing park development continues to undermine India’s broader industrial ambitions. The Delhi Mumbai Industrial Corridor was envisaged as early as 2006 as a project in partnership with Japan. The DMIC Development Corporation was converted in 2016 to the National Industrial Corridor Development Corporation with a proposed 11 corridors including 32 projects in four phases, of which four projects are completed, four are under implementation and another 11 were approved as late as 2024. Land acquisition, delayed processes, poor planning and gaps in promised infrastructure have hindered timely completion of projects.

In fact, several of these projects are also being mentioned under the National Investment and Manufacturing Zone policy, envisaged under the National Manufacturing Policy 2011, which face long time overruns as well. For instance, the Sangareddy National Investment and Manufacturing Zone, under implementation since 2014, continues to face significant delays, primarily due to governance challenges in land acquisition and inadequate rehabilitation of displaced landowners.

The government has also introduced various sectoral schemes to promote manufacturing. The PM Mega Integrated Textile Region and Apparel parks were announced in 2021 and seven such mega parks were approved in 2023 in different states to realise the Prime Minister’s 5F vision of ‘farm to fibre to factory to fashion to foreign’. These are expected to attract high investments and generate nearly 2 million jobs, including indirect jobs. The guidelines for the scheme were revised in August 2025 and the foundation stone of the first MITRA park in Dhar, Madhya Pradesh, was laid in September 2025. With less than 3 years to go for the end date of the scheme, its success is yet to be seen.

Similarly, the Petroleum, Chemicals and Petrochemicals Investment Region policy was introduced in 2007 where the central government was to provide viability gap funding for infrastructure in four mega regions. Eight years after the announcement, no funds had been released.  Revisions in the policy have been contemplated several times over the years. According to the department of chemicals and petrochemicals, employment and investment targets for three projects underway have not been met, while one project was cancelled by the concerned state. States have been slow to come on board, and technical issues and environmental concerns have delayed investments. 

Such instances of poor policymaking abound, ranging from skill development and agricultural reforms to labour codes, smart cities and ease of doing business. A lack of sustained ownership undermines progress, as policy initiatives are often driven by enthusiastic ministers or senior officials who exit shortly after the announcements. Coordination with key stakeholders, particularly state governments, is inadequate, and budgetary support tends to be either insufficient or spread thinly over extended timelines. The dissolution of the Planning Commission created a vacuum in strategic analysis, cohesive policy development and institutionalized monitoring. 

Today, India’s industrial policies appear increasingly haphazard and reactive, driven more by geopolitical compulsions than by a cohesive vision. With intentions hardly translating into implementation, India’s manufacturing remains a story of lofty declarations, fragmented planning and missed opportunities.

*Views are personal