The return of industrial policy is welcome but it needs far more
SummaryBeyond the PLI scheme, the wider context is far more important.
The story of industrialization in India since 1991 is somewhat dismal, compared with the performance of other Asian countries. Between 1990 and 2019, India’s share in world manufacturing value added (in current prices at market exchange rates) increased from 1.3% to 3.1%, while that of China jumped from 1.3% to 28.7% and that of Asia (excluding Japan) rose from 8.3% to 45%. This outcome refutes the claims of market enthusiasts who argued that economic liberalization would increase efficiency and foster growth of the manufacturing sector.