In line with India’s goal of raising its factory output from about 13% of GDP to 25%, the government plans to boost its outlay for the National Manufacturing Mission to ₹10,000 crore, as reported. Its aim is to fund project viability gaps in identified sunrise sectors for factories to arise in India that can join global value chains.
As part of a broad industrial policy, output and export targets would be set to help manufacturing account for a quarter of our economy within a decade. Will this push work? Some fear that the subsidy will get spread too thin, while others point to unfinished land, labour and regulatory reforms as weak links.
Ultimately, the success of this mission’s export ambitions may depend less on US tariffs, which ongoing trade talks might settle, than on China’s industrial policy. Beijing has long deployed state resources to sharpen an edge that lets it dominate key sectors. The US seems unable to glare it down.
For better odds of India’s push proving able to counter China’s clout, we may need either an accord with Beijing or inventive leaps of R&D that grant us an industrial edge well beyond cost competitiveness. Let’s optimize our subsidy regime accordingly.