Why this matters now
Manufacturing is vital for productive jobs and exports; its slow rise (the “premature deindustrialisation” concern) and policy responses (Make in India, PLI) are core GS-3 issues.
Evolution of industrial policy
India’s industrial policy evolved from the state-led, license-raj model (Industrial Policy Resolutions of 1948 and 1956, the public-sector “commanding heights”) to the liberalisation of the New Industrial Policy 1991 — which abolished most licensing, opened sectors to private players and FDI, and began PSU disinvestment. The focus today is competitiveness and ease of doing business.
Status and challenges
Manufacturing contributes around 16–17% of GDP (the target is ~25%). Challenges include high logistics and compliance costs, rigid land/labour markets, infrastructure gaps, import dependence (e.g. electronics components), and the dominance of a low-productivity informal sector.
The way forward
Recent measures — Make in India, the PLI schemes, PM Gati Shakti, the National Logistics Policy, labour-code consolidation and a lower corporate tax — aim to scale manufacturing, plug into global value chains, and create jobs. The push is toward high-tech sectors (electronics, semiconductors, EVs, defence).
UPSC angle
Know the policy arc (1948/1956 IPRs → license raj → 1991 liberalisation), the stagnant manufacturing share vs 25% target, the challenges, and the modern levers (Make in India, PLI, Gati Shakti, labour codes).
Frequently asked questions
What did the New Industrial Policy of 1991 do?
It abolished most industrial licensing, opened sectors to private players and FDI, reduced the public-sector monopoly and began PSU disinvestment.
What is manufacturing’s share in India’s GDP?
Around 16–17%, well below the ~25% policy target.
What are the main challenges for Indian manufacturing?
High logistics and compliance costs, rigid land/labour markets, infrastructure gaps, import dependence and a large informal sector.
How is the government boosting manufacturing?
Through Make in India, PLI schemes, PM Gati Shakti, the National Logistics Policy, labour-code reform and a lower corporate tax.