The Union government has ambitious plans to transform India into a global manufacturing hub. Earlier this year, Union minister Ashwini Vaishnaw had expressed confidence that India would become a ‘product nation’, producing innovative goods from deep tech sectors. Despite these ambitious goals and significant investments, the dream of making India a product nation remains distant. The path to achieving this vision requires overcoming critical challenges in research, innovation, and policy execution.
A product nation is a country that produces and exports a substantial volume of high-value goods, becoming a net producer rather than a net importer. This transformation drives economic growth and ensures that the benefits of value addition remain within domestic industries. Japan serves as a prime example. Known for its cutting-edge products in sectors like automobiles, electronics, and robotics, Japan’s success is attributed to strategic industrial policies, a robust education system, and a culture of quality and innovation. Similarly, South Korea, China, and southeast Asian nations also have emerged as manufacturing powerhouses in the last three decades.
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Indian ambition to become a product nation
In recent years, global priorities have shifted from services to product-based economies. India must align with this trend to remain competitive. A focus on manufacturing would boost exports of high-value goods, drive innovation and technological development, create millions of jobs—both skilled and unskilled—and enhance self-reliance, reducing dependency on imports.
Electronics manufacturing is a key area where both the government and industry are working toward this goal. The Production-Linked Incentive (PLI) scheme, coupled with reforms to curb imports from China, has catalysed growth in this sector. According to the ministry of electronics and information technology (MeitY), India’s electronics manufacturing sector is expected to grow from $68 billion currently to $300 billion by 2026.
Challenges for India’s manufacturing ambitions
India’s path to becoming a product nation is obstructed by several challenges. Firstly, insufficient investment in research and development hampers innovation. Without robust R&D, initiatives like Make in India risk being reduced to mere assembly of imported components rather than fostering indigenous production. Substantial investment in R&D is critical to bridge this gap and develop cutting-edge products. Secondly, there is a lack of focus on design and innovation. India’s design capabilities are often directed toward creating products for global companies rather than developing indigenous solutions.
Value capture in electronics happens in design and branding. While India has made strides in manufacturing, the absence of a robust focus on design undermines its potential to add significant value. Thirdly, policy and regulatory challenges persist. Although the government has introduced initiatives like semiconductor manufacturing plants and the PLI scheme, gaps remain in providing sufficient support for product design and development. A dedicated fund to incentivise domestic design and manufacturing could help address this issue. Moreover, identifying key products essential for India’s growth and prioritising their local production is crucial.
Recent developments indicate progress toward India’s goal of becoming a product nation. For instance, Tata Electronics has secured a majority stake in Pegatron’s iPhone manufacturing plant in Tamil Nadu, marking a significant step in enhancing domestic production capabilities. However, challenges remain, as evidenced by the investigation into Ola Electric over service standards and product quality, highlighting the need for stringent quality control measures.
Steps to realise the vision
To become a product nation, India must prioritise R&D by allocating higher budgets for research and encouraging collaboration between academia, industry, and government to drive innovation. Strengthening design capabilities through Design in India initiatives that focus on creating high-value products for domestic and global markets is essential. Enhancing policy support by establishing clear, industry-friendly policies to incentivise manufacturing and address regulatory bottlenecks will create a conducive environment for growth.
Investing in human capital by reforming education and skill development programs to align with the needs of a product-driven economy is crucial. Fostering global partnerships, such as collaborating with countries like Taiwan to leverage their expertise in manufacturing and innovation, can provide valuable insights and opportunities.
The rise of inward-looking and protectionist policies globally presents additional challenges. As countries focus on bolstering their domestic industries, India has a challenge at hand if it were to emerge as a global manufacturing hub. The government remains optimistic about achieving net producer status by the end of this decade, but this will require sustained effort, strategic planning, and robust execution.
India’s journey to becoming a product nation is fraught with challenges, but the potential rewards are immense. By addressing the gaps in R&D, design, and policy support, the country can position itself as a global manufacturing powerhouse. The transformation will not only boost economic growth but also create a self-reliant India capable of designing and manufacturing for the world.