Manufactured in Confusion

When Prime Minister Narendra Modi launched the ‘Make in India’ programme in 2014, it was envisioned as a turning point — an ambitious bid to transform the country into a global manufacturing hub, create millions of jobs, and drastically reduce dependence on imports, particularly from China. The goal was clear: raise manufacturing’s share of GDP from around 15% to 25% by 2025 and position India as a self-reliant industrial powerhouse.

Yet, over a decade later, the results present a mixed picture. While India has made notable strides in assembling products such as smartphones, solar modules, and select defence equipment, the country’s manufacturing sector still leans heavily on Chinese components, raw materials, and technology. The nature of dependence has shifted — from finished goods to upstream goods — but China remains deeply embedded in India’s supply chain.

Government trade data underscores the scale of this challenge. In the 2024–25 fiscal year, India’s trade deficit with China hit a record $99.2 billion, up from $85.08 billion in 2023–24. Imports from China surged to $113.5 billion, driven largely by electronics, electric batteries, and solar cells. March 2025 alone saw a 25% year-on-year jump in imports to $9.7 billion, while exports to China fell by 14.5% in the same month. Over the full year, India exported only $14.3 billion worth of goods to its neighbour. As a result, China ended the fiscal year as India’s second-largest trading partner after the US, with bilateral trade worth $127.7 billion — overwhelmingly tilted in Beijing’s favour.

The Production Linked Incentive (PLI) scheme, introduced in 2020 with ₹1.9 trillion in incentives across 14 sectors, was intended to strengthen domestic manufacturing capabilities. In certain areas — such as electronics exports, semiconductor investments, and solar module production — there have been visible gains. For example, tariffs and incentives have helped reduce the share of Chinese solar imports from over 90% to 56% for cells and 66% for modules. However, manufacturing’s share of GDP has slipped to below 14%, a decline from when ‘Make in India’ began.

Crucially, even India’s manufacturing “success stories” often rest on Chinese foundations. Around 70% of drone components come from China. In smartphones, while 99% of devices sold in India are assembled domestically, local value addition remains low — just 6–8% for iPhones and 25–30% for certain Samsung models. India’s dependence extends into critical sectors like pharmaceuticals, where over 70% of active pharmaceutical ingredients are imported from China, despite targeted PLI schemes.

China’s competitive edge lies in its complete manufacturing ecosystem — deeply integrated supply chains, close links between research institutions and factories, and a highly skilled workforce. India, on the other hand, has excelled in software and services but struggles with large-scale manufacturing. This gap forces domestic companies to rely on Chinese expertise and inputs, slowing the country’s progress toward self-sufficiency.

Geopolitical tensions have further complicated matters. The border clashes of 2017 and 2020 triggered bans on Chinese apps, tighter foreign investment norms, and visa restrictions for Chinese nationals. While these measures were framed as national security safeguards, they also disrupted supply chains and made it harder for Indian manufacturers to secure critical inputs. Despite this, bilateral trade has continued to grow, with imports increasingly dominated by upstream goods like display modules and battery parts.

In 2025, there are signs of a policy recalibration. Indian manufacturers such as Dixon Technologies, Zetwerk, and Micromax are exploring joint ventures with Chinese companies for parts and sub-assemblies. Dixon has already partnered with China’s HKC to manufacture semiconductor display modules in India. Some policymakers argue that integrating with Chinese supply chains could help India scale up manufacturing more rapidly, while others caution that deepening this dependency could erode strategic autonomy.

One of the biggest hurdles remains India’s chronic underinvestment in research and development. Indian conglomerates spend far less on R&D than global peers, leading to fewer patents and slower technology adoption. In critical industries like EV batteries, semiconductors, and robotics, India trails China by years. Startups, too, have been criticised for focusing on consumer apps rather than advanced technologies, often citing complex regulations and slow approvals as reasons for relocating abroad.

The risk, as flagged by recent analysis, is that India could become “multi-dependent” — on China for upstream goods, on the US for advanced technology, and on Russia for energy and defence supplies. While greater Chinese investment could generate jobs and expand manufacturing capacity, it must be balanced against the long-term goal of strategic and technological self-reliance.

‘Make in India’ was meant to be the rallying cry for industrial independence. A decade later, the vision is still alive, but its path is tangled with the very dependence it sought to end. The challenge now is to turn assembly lines into innovation hubs, supply chains into self-sustaining ecosystems, and policies into lasting industrial transformation — without letting the “Made in China” tag remain stitched into India’s growth story.