Session 6
Last Session
• Definition of Industry
• Manufacturing largest share in industry
• Declining share of Manufacturing value added
• Dominance of MSMEs
• Vulnerability to shocks
• K shaped recovery
• Manufacturing growth required to generate employment and also to
reach dreams of Atmanirbhar Vikshit Bharath
Poor performance
• Possible reasons
• Infrastructure
• High financing costs
• Inadequate quality power
• Limited design capabilities/ neglect of R&D
• Inadequate skilled labour
Comparative disadvantage at 8.5% to 11%
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
PLIs
• Total Outlay INR 1,97,411 crores : Distributed over 14 sectors (as of
late 2023)
• 6 to 8% of revenues could come from Govt. as incentives if
production targets are met
• Expected to benefit MSMEs through cascading effects through the
value chain
• A number of MSMEs are direct beneficiaries under PLI schemes esp in
Bulk Drugs, Medical Devices, Pharma, Telecom, White Goods, Food
Processing, Textiles & Drones
Specialty Steel Mobile Manufacturing
3% and Specified Electronic
Components
21%
Critical Key Starting
Automobiles and Auto materials/Drug
Components Intermediaries and
29% Active Pharmaceutical
Ingredients
3%
Manufacturing of
Medical Devices
2%
Electronic / Technology
Products
3%
Food Processing
6%
Textile Products: MMF High Efficiency Solar PV
and Technical Textiles Modules
5% 2%
Advance Chemistry Cell Drones and Drone Telecom & Networking
(ACC) Battery Pharmaceuticals drugs
ComponentsWhite Goods (ACs & LED) Products
9% 8%
0% 3% 6%
# PLI Schemes INR (Cr) Years
1Mobile Manufacturing and Specified Electronic Components 40,995 5
2Critical Key Starting materials/Drug Intermediaries and Active Pharmaceutical Ingredients 6,950 10
3Manufacturing of Medical Devices 3,420 8
4Electronic / Technology Products 5,000 4
5Food Processing 10,900 6
6High Efficiency Solar PV Modules 4,500 5
7Pharmaceuticals drugs 15,000 5
8Telecom & Networking Products 12,195 5
9White Goods (ACs & LED) 6,238 5
10Drones and Drone Components 120 3
11Advance Chemistry Cell (ACC) Battery 18,100 5
12Textile Products: MMF and Technical Textiles 10,683 5
13Automobiles and Auto Components 57,042 5
14Specialty Steel 6,322 5
Benefit Results (2024 Dec)
• Investments of INR 1.46 Lakh crore realized
• Incremental production/sales of INR 12.50 lakh crore
• Employment generation 9.5 lakh
• Exports> INR 4 lakh crore
• Significant contributors: electronics, food processing, pharmaceuticals
• 764 applications
• Food Products 182 approvals
• Automobiles & Auto Components 95 approvals
• Textile Products: MMF Segment 74 approvals
• White Goods : 66 approvals
• Speciality Steel: 67 approvals
• https://pib.gov.in/PressReleasePage.aspx?PRID=2086811
Textiles
• Significant sources of employment generation, with an estimated 4.5 crore people
directly engaged in this sector, including a large number of women and the rural
population.
• PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks
• parks are expected to create a total of one lakh direct and two lakh indirect
employment
• Textile PLI Scheme with an approved outlay of ₹10,683 crore over five years
starting from 1st January 2022 to promote investments and increase the
production of Man-Made Fibre (MMF) Apparel, MMF Fabrics and Products of
Technical Textiles.
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Electronics
• Expected to be a key driver of manufacturing output and employment
growth- expected to grow over 15% over last year $115bn in 2024
• Domestic production doubled between 2017-22
• Target $300bn by 2026-27
• 2nd largest producer of mobiles
• India still dependent on china for semi-conductors, PCBs
• Foxconn looking to make chips in India
• Over 200m phones sold last year
• 18% value added by India
• 38% by China
• 24% in Vietnam (cheaper 1/10th the cost)
• https://www.youtube.com/watch?v=vXAxdCfx0-Q
• https://www.youtube.com/watch?v=Yb9ciDafCM4
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
PLI in electronics
• Large Scale Electronics Manufacturing
• IT hardware
• Promotion of Manufacturing of Electronic Components and
Semiconductors (SPECS)
• Programme for Development of Semiconductors and Display
Manufacturing Ecosystem INR 76,000 crore
• India possesses 20 per cent of the world’s semiconductor design engineers but
a minuscule share in the intellectual property (IP): Design Linked-Incentive
(DLI) scheme
• support of 50 per cent of eligible expenditure on the design, subject to a ceiling of ₹15
crore per applicant and a deployment-linked incentive of 4 per cent to 6 per cent of net
sales achieved over five years, subject to a ceiling of ₹30 crore per applicant
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Pharma
• India’s domestic pharmaceutical market is estimated to grow to US$ 65 billion
• 3rd worldwide in the production of pharma products by volume and 14th by value
• largest provider of generic medicines globally, occupying a 20 per cent share in global
supply by volume, and is the leading vaccine manufacturer globally with a market
share of 60 per cent.
• Cumulative FDI in the pharma sector crossed the US$ 20 billion mark in September
2022
• FDI inflows have increased four-fold over five years until September 2022, to US$
699 million, supported by investor-friendly policies and a positive outlook for the
industry.
• Strengthening the Pharmaceutical Industry (SPI) was launched on 11th March 2022
with a total financial outlay of ₹500 crore for five years from FY22 to FY26 with
multiple objectives.
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Automobiles
• 3rd largest automobile market
• largest manufacturer of two-wheeler and three-wheeler vehicles and the
world’s fourth-largest manufacturer of passenger cars
• 7.1 per cent to the overall GDP and 49 per cent to the manufacturing GDP
while generating direct and indirect employment of 3.7 crore
• (EV) market is expected to grow at a compound annual growth rate (CAGR)
of 49 per cent between 2022 and 2030 and is expected to hit one crore units
annual sales by 2030
• PLI Scheme with outlay of INR 25.9k crore
• https://www.business-standard.com/economy/news/auto-sector-will-
contribute-to-india-s-rise-as-3rd-largest-economy-pandey-
124011601050_1.html
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Make in India 2
• ‘Make in India 2.0’ is now focusing on 27 sectors, which include 15 manufacturing
sectors and 12 service sectors. Amongst these, 24 sub-sectors have been chosen.
• More than 100 MSMEs are among the PLI beneficiaries in sectors such as Bulk
Drugs, Medical Devices, Telecom, White Goods and Food Processing.
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
R&D
• India gross expenditure on R&D: 0.64% of GDP
• China: 2.1%
• South Korea: 4.8%
• USA: 3.5%
• Private sector R&D is low and highly concentrated, with pharmaceuticals,
IT, and transportation leading, while other sectors remain underfunded.
• India's approach to R&D incentives includes tax credits, grants, and patent
incentives, but more applied research, industry-academia collaboration,
and FDI attraction are needed.
• Bridging the R&D gap requires private sector commitment, a shift from
basic to applied research, and policy reforms to drive innovation-led
growth.
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Dept. of Science and Technology
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Infrastructure
• What comes to mind?
• Roads
• Railways
• Waterways
• Civil aviation
• Financial
• Energy
• Telecom/ Digital
• Housing & Sanitation
• The Union Government’s capital expenditure on infrastructure has grown at a
38.8% CAGR (FY20-FY24), emphasizing large-scale public investment to
enhance physical, digital, and social infrastructure
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Roads
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
National Logistics Pipeline Single Window Interface for
facilitating trade
• Logistics expenditure : 14% to 18% of GDP
• Global Benchmark 8%
• Bharatmala, Sagarmala, Parvatmala, Ude desh ki aam nagrik, National Rail
plan
• GST, e-sanchit, SWIFT, ICEGATE Consolidated online
• Targets: platform for
handling all indirect
• Reduce logistics cost to global benchmarks by 2030 tax documents
• Improve LPI to be among top 25 by 2030
• Create data driven decision support system
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Govt. initiatives
• PPP
• National infrastructure pipeline (NIP)
• National Monetization Pipeline (NMP)
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
PPP
• Build operate transfer
• Design Build Finance Operate Transfer
• Rehabilitate Operate Transfer
• Hybrid Annuity Model
PPP Approval committee cleared 79 projects worth INR 227k crore
between FY15 to FY23
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
NIP
• 111 lakh crore infrastructure investment 2020-25: 9,000 projects
approx. with total investment of 108 lakh crore
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
NMP
• National Monetization Pipeline: Creation through monetization:23 rd
August 2021: “asset creation through monetization”
• Taps pvt sector investment for new infra creation
• Estimated agg monetization potential under NMP is INR 6 lakh crore through core
assets of central government. FY 2020-25
• Limited time lease / license of a Govt. asset by a pvt. Entity. Funds received are
reinvested in new infrastructure or deployed for other public purposes
• 20+ asset classes across 12+ line ministries, top 5 sectors capture 83% of agg pipeline
value
• Roads (27%)
• Railways (25%) Criticized as a shortcut to privatization
• Power (15%)
• Oil and Gas pipelines (8%)
• Telecom (6%)
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
NMP
• Stadiums leased out for maintenance and functioning (Sports
Ministry) 2 year contracts (20k crore target)
• Toll-Operate-Transfer for roads under NHAI (1lkah crore target)
• Railways : 150 passenger trains to pvt. Companies
• Modernization of old stations
• Aviation: operated by pvt. players
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
CLAP
• Comprehensive Logistics Action Plan
• LEADS (logistics ease across different states)
• Ranking methodology in lines of world bank LPI
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
PM Gati Shakti
• Launched October 2021
• Digital mapping platform (GIS based) that brings together 24 infrastructure
and economic ministries: rail, road, shipping: integrated planning and
coordinated implementation
• Multimodal transport network approach
• Projects under NIP to be aligned with Gatishakti
• INR 20k Crores allocated in 2023
• Over 600 layers of data of different infra ministries mapped on national
master plan (NMP)
• Delhi Mumbai industrial corridor with telecom ministry laying 1300km
optical fibre cable
https://www.youtube.com/watch?v=i4woVC8plM4
Slides used by Deeparghya Mukherjee for the Indian Economy
Course, IIM Nagpur
Power Sector
