India is seeing a fresh wave of growth in manufacturing, with the goal of building a strong, self-reliant economy. The first phase of the Make in India campaign laid the groundwork for transforming India into a global manufacturing hub. This has gained further momentum with Make in India 2.0 – launched in February 2021 – with bigger goals, deeper sectoral coverage, and strong support from both the government and private sector.
Recap of Make in India Phase 1
The original Make in India initiative, launched in 2014, was designed to boost local manufacturing, create jobs, and increase exports. It focused on ease of doing business, faster approvals, and inviting foreign companies to set up plants in India.
Phase 1 highlights include:
- Several global firms entered India across sectors like mobiles, cars, and electronics.
- Industrial corridors and infrastructure projects were started.
- Job creation picked up in several states.
How PLI scheme is changing the game
A game-changer for Make in India 2.0 has been the Production Linked Incentive (PLI) scheme. This initiative offers financial incentives to companies that manufacture in India and meet defined output targets.
The PLI scheme is transforming several sectors:
- Incentives are encouraging companies to scale up manufacturing and enhance quality.
- Both Indian and global players are increasing investment in local production units.
- Exports are rising in sectors such as mobile phones, pharmaceuticals, and chemicals.
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Focus sectors: EVs, semiconductors, electronics, defence
Some industries are getting focused attention under the new plan, and for good reason. These sectors are future-oriented, with the potential to generate long-term economic value and employment. These include:
- Electric vehicles (EVs): With rising fuel costs and climate change concerns, EVs are expected to play a key role in the future of transport. The government is supporting battery production, charging stations, and local assembly.
- Semiconductor manufacturing in India: Chips are used in everything, from phones to cars. India is investing in building this base, which may help reduce import dependence and attract global tech players over time.
- Electronics: India is already a hub for mobile phone assembly. Now, it’s working to move up the value chain to make components, displays, and other high-tech parts.
- Defence manufacturing: More defence equipment is now being made locally. This may help reduce import costs and contribute to greater self-reliance. The focus is on drones, aircraft parts, and advanced systems.
- Renewable energy and green tech: India is expanding its solar and wind energy capacity. Government schemes are supporting local manufacturing of solar modules, batteries, and green hydrogen components, aligning with global climate goals.
These areas —EVs, electronics, semiconductors, and defence—have been prioritized under the government's Make in India 2.0 roadmap, which focuses on 27 key sectors for growth and self-reliance. In addition, the PLI schemes introduced by the government offer targeted incentives for companies in automotive (including EVs), electronics manufacturing, and semiconductor design and fabrication, encouraging investment and scale (Source: Press Information Bureau).
India’s role in global supply chains post-COVID
The pandemic changed how the world looks at supply chains. Countries want to reduce reliance on a single source for their manufacturing needs. This shift is known as the China+1 strategy, where companies are seeking out countries besides China to set up factories.
India has the potential to benefit from this because of:
- A large and young workforce
- Strong digital systems
- Political stability and improving infrastructure
As global firms diversify, India is seeing investments in areas like electronics, textiles, and auto parts.
Read Also: Thematic Investment Funds: Meaning, Features & How To Invest
Stocks and sectors to watch
India’s manufacturing growth isn’t happening in isolation. It’s part of a bigger global shift – also known as a megatrend. Supply chain changes, clean energy, digitisation and rising consumption have the potential to shape the future and create new investment opportunities. Here are some sectors to keep an eye on:
- Capital goods: Companies making machinery and tools used in factories.
- Auto and EV: Firms producing electric vehicles, batteries, and related parts.
- Defence and aerospace: Local companies working on defence contracts and aviation components.
- Semiconductors and electronics: Those involved in chip design, assembly, and components.
- Chemicals and pharma: Key inputs for global industries and exports.
Mutual funds investing in these sectors and themes can offer investors a way to tap into the long-term growth potential of these megatrends.
Conclusion
The Indian manufacturing story has the potential to become a long-term, structural shift. Backed by policies like the PLI scheme and global trends such as the China+1 strategy, India is positioning itself as a global manufacturing hub. For investors focused on long-term growth, Make in India 2.0 may be a story worth watching closely.
Sources: Press Information Bureau, Ministry of Electronics and Information Technology (MeitY). Invest India, Ministry of New and Renewable Energy.
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