Modi’s ‘Make in India’—a case study in what happens when strategy is replaced by storytelling

From day one, Make in India was driven by optics than economics. There were global summits, slick visuals, and media blitzes. But the real machinery never showed up.

Prime Minister Narendra Modi speaks during the inauguration ceremony of the 'Make In India' week in Mumbai on 13 February 2016 | Photo: Reuters/Danish Siddiqui

A year into the Narendra Modi government’s third term, India stands at a pivotal crossroad — rich in youth, abysmally poor in preparation, and fast losing ground in the global race to revive industrial capacity. Other nations have accelerated domestic manufacturing. Make in India, by contrast, has not just stalled. It has shrunk.

This isn’t a story of missed targets. It’s a story of misplaced priorities.

Back in September 2014, a roaring lion entered the stage. With great flourish, the Prime Minister unveiled the “Make in India” campaign — a repackaged version of the UPA’s National Manufacturing Policy. The ambition? To lift the share of manufacturing in India’s GDP from 16 per cent to 25 per cent by 2022.

But behind the glitzy branding — with the Make in India logo ironically designed by an American firm for Rs 11 crore — the policy backbone was worryingly absent. The deadline quietly shifted to 2025. And now, the gap between promise and performance couldn’t be any wider.

As per the first revised estimates, far from growing, the share of manufacturing has slid below 13 per cent in 2023-24. Even more starkly, sector jobs have plummeted — from 5.1 crore in 2016-17 to just 2.7 crore in 2020-21.

This isn’t about one policy falling short. It’s a case study in what happens when economic strategy is replaced by economic storytelling, when slogans substitute systems, and most importantly, when citizens end up footing the bill for political theatre.

Slogans without scaffolding

From day one, Make in India was driven more by optics than economics. There were global summits, slick visuals, and media blitzes. But the real machinery — investments, infrastructure, skilling, and sector support — never really showed up.

Let’s look at infrastructure, the cornerstone of any manufacturing surge. Building it requires serious capital, much of which must come from the government, since private players are understandably wary of investing in slow-return projects like roads and industrial corridors. Yet, instead of doubling down, the government looked the other way.

The result is a steady drop in Gross Fixed Capital Formation (GFCF), the most direct measure of investment into productive assets. According to World Bank data, GFCF peaked at 36 per cent of GDP in 2007. Post-2014, under the Modi government, it’s been on a decline — falling to 30 per cent of GDP in 2024.

No map, no momentum 

Make in India didn’t just suffer from underfunded infrastructure — it also lacked a roadmap. There was no prioritisation of key manufacturing sectors. No serious attempt to build industrial clusters. And no plan to train the workforce that was supposed to fill those factory floors.

Consequently, the confidence of global investors fizzled. Foreign Direct Investment (FDI) — which would have surged if the campaign had momentum — actually dropped. From 8.8 per cent of total capital formation in 2020, FDI slid to just 2.3 per cent by 2024.

What remains is a roaring lion logo made in America, and a slogan with no scaffolding underneath.

Incentives are not a strategy 

Supporters of the Modi government often point to Production-Linked Incentive (PLI) schemes as evidence of manufacturing revival. Certainly — in niche sectors like smartphones — PLI brought some spark. But it’s a narrow win.

Incentives alone don’t build resilience. If the fundamentals — like smooth logistics, fair labour laws, and research and development — aren’t strong, no amount of subsidies can prop things up.

This would mean India being less competitive, as every product would cost more to move, make, and export.

Cash crunch disguised as reform 

While the country was told to dream big, small businesses were struggling to breathe. Then came demonetisation — a shockwave that hit exactly where India’s manufacturing heart beats: the small and medium enterprises (SMEs).

Cash, the oxygen of daily operations, vanished overnight. These weren’t firms sitting on digital dashboards and deep capital — they were people whose daily survival depended on liquidity. The note ban, justified by Modi as a strike against black money, ended up paralysing a legitimate economy.

No less than 99.3 per cent of demonetised notes came back into the system. By 2019, currency in circulation not only returned to pre-demonetisation levels but actually exceeded them. No monster slain. So, what was achieved? Just working hands stopped in motion.

The chaiwala, the lathe worker, the shop floor boy — all stood still, not because they wanted to, but because the cash was gone, and so was the day.

Tax reform to compliance maze

Soon after, GST arrived. While the idea had promise — and was originally tabled by the UPA — its rollout was rushed and rigid. Small manufacturers, already bruised by demonetisation, were now expected to navigate a complex tax terrain.

Take the ‘reverse charge’ mechanism. It required small businesses to pay taxes on behalf of their vendors — often before getting paid themselves. That meant cash flow headaches and compliance traps.

A sector already struggling was left fending off yet another wave of disruption — not from competition, but from compliance. That the MSMEs still contribute 35.4 per cent of India’s manufacturing output isn’t a sign of strength. It’s a story of grit — businesses surviving despite the system, not because of it.

Silence that followed

As the dream drifted further from reality, the government simply fell silent. No press briefings were given, no parliamentary updates came, and no revised plans were announced.

Reports that might have sparked debate — or demanded course correction — were kept in the shadows. The Labour Bureau’s Annual Employment-Unemployment Survey (2016-17) on job losses post-demonetisation was buried until after the 2019 elections. Its contents were startling. India’s unemployment rate stood at 3.9 per cent in 2016-17 compared to 3.4 per cent in 2013-14.

Another survey by the National Sample Survey Office (NSSO) revealed that unemployment had jumped from around 2 per cent in 2012 to over 6 per cent by 2018. Even more worrying, for the first time, over half of India’s working-age population was out of work.

This was a structural fracture, and the silence around it said everything. Two members of the National Statistical Commission resigned in protest. They understood that when data disappears, so does accountability. Other vital datasets — like the Quarterly Employment Survey and a draft report  by parliament’s estimates committee on GDP — were also withheld. 

For a young, hungry nation poised for a demographic dividend, being told to “wait” without data, without direction, is frustrating and costly. This delay isn’t neutral. For a generation ready to work, build, and rise — being told to wait in silence is how momentum dies and disillusionment sets in.

Red tape, no relief

Now zoom into the daily life of a small manufacturer. They face over 1,400 regulatory obligations a year — each with a cost, a form, a deadline, and a potential penalty. All this bureaucracy drains Rs 15 lakh annually from a small business owner just to stay compliant. That money could go into hiring, upgrading machinery, or expanding output.

Meanwhile, access to credit remains a distant dream. Only 20 per cent of Indian MSMEs have access to the formal credit they need, compared to 37 per cent in China. That gap isn’t just a statistic, it’s the difference between expansion and exhaustion.

Even the government’s “45-day payment rule” — meant to ensure timely payments to MSMEs — backfired. To dodge compliance, larger companies began cutting off registered vendors, opting for informal, unregistered ones instead. Once again, poor design was dressed up as bold reform, leaving small businesses with fewer clients and even tighter cash flow.

Selective growth

While India’s manufacturing sector lost ground, one business group seemed to gain it — rapidly and with remarkable ease.

The Adani Group, with its expanding reach across airports, ports, energy, and media, grew at a pace that few — if any — could replicate. Even objections from the Finance Ministry and NITI Aayog regarding the 2019 airport bidding process weren’t enough to slow it down.

This isn’t about one company. It’s about the signal being sent: If the rules serve a few, the system fails the many.

Disruption dressed as reform

At its core, manufacturing is about stability. Predictable inputs, steady policy, long-term infrastructure, and skilled hands on the shop floor.

But over the past decade, the sector received disruption disguised as transformation. Slogans replaced strategy. Subsidies came without systemic repair. Policies jolted more than they generated.

Informal units have collapsed. Formal jobs never scaled. And India — which should have been riding the wave of its youth dividend — now finds itself grappling with an employment drought.

What the Lion left behind

In the end, Make in India will not be remembered for what it made — but for what it missed and what it revealed. It mistook noise for momentum.

Manufacturing doesn’t fail because of a lack of ambition. It fails when ambition isn’t built on architecture. A decade later, the lion isn’t roaring. The factories aren’t humming. And the workers are still waiting.

Pawan Khera is the chairperson of Congress’ media and publicity department. He tweets @Pawankhera. Views are personal.

(Edited by Prashant)