China’s 32% vs India’s 3.2%: NITI Aayog earmarks 12 sectors to shore up share in global manufacturing
NITI Aayog released a report titled "Key Sectors to Position India as a Global Manufacturing Hub," prepared in collaboration with Crisil Intelligence
The report identifies 12 priority sectors: automobiles, electronics, steel, capital goods, defence and drones, chemicals, solar PV, textiles, pharmaceuticals and medical devices, telecom equipment, leather and footwear, and food processing
It flags that India's share of global manufacturing value addition grew only marginally, from about 1.5% in 1995 to 3.2% in 2023, while China's share rose from about 5% to nearly 32% over the same period
Manufacturing's share in India's Gross Value Added (GVA) has stayed largely stagnant at around 17-17.5% for two decades
The report calls for moving beyond low-value, assembly-led manufacturing toward deeper participation in global value chains through better infrastructure, industrial clusters, technology absorption, skilling, and export diversification through balanced free trade agreements
Manufacturing's Share in GDP — The 25% Target
Raising manufacturing's share of GDP has been a recurring policy goal since the National Manufacturing Policy (NMP), 2011, which sought to lift manufacturing's contribution to GDP from about 16% to 25% by 2022 (later pushed to 2025) and create 100 million additional jobs. This target has consistently been missed, with manufacturing's GVA share stuck around 17%, which is the structural problem the new NITI Aayog report addresses.
Key Details
- National Manufacturing Policy, 2011 — administered by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
- Original target: 25% share of GDP by 2022, revised timeline to 2025; goal never achieved
- National Investment and Manufacturing Zones (NIMZs) were the policy's flagship instrument for industrial clusters, later subsumed into later industrial corridor programmes
- Successor initiatives: Make in India (2014) and Atmanirbhar Bharat (2020) carried forward the same GDP-share ambition
The NITI Aayog report is essentially a fresh diagnostic on why the 2011 target was missed, using the stark India-China comparison (3.2% vs 32% of global manufacturing value) to argue for sector-specific, rather than broad-brush, industrial policy.
Production Linked Incentive (PLI) Scheme
The PLI scheme, launched in 2020, is India's principal current instrument for boosting manufacturing competitiveness. It gives financial incentives to firms based on incremental sales of goods manufactured in India, aiming to attract investment, build scale, and integrate Indian manufacturers into global value chains — directly overlapping with several of the 12 sectors NITI Aayog has now flagged (electronics, automobiles, textiles, telecom equipment, solar PV, pharmaceuticals).
Key Details
- Covers 14 sectors with a total outlay of approximately ₹1.97 lakh crore (revised from the original ₹1.97 lakh crore/₹1.91 lakh crore estimate across rounds)
- Administered by the respective line ministries (e.g., MeitY for electronics, Ministry of Textiles for textiles) under DPIIT coordination
- As of the latest official data, the scheme has driven cumulative investment exceeding ₹2 lakh crore and cumulative exports exceeding ₹8 lakh crore across approved sectors
- Distinct from the earlier Special Economic Zones (SEZ) approach, which relied on tax exemptions rather than direct output-linked incentives
The NITI Aayog report's 12 sectors are broader than the 14 PLI sectors but substantially overlap, indicating a shift from broad tax-based incentives toward sector-calibrated interventions like viability gap funding and cluster development.
Global Value Chains (GVC) and India's Position
Global Value Chains refer to the fragmentation of production across countries, where different stages of manufacturing (design, components, assembly, distribution) happen in different economies based on comparative advantage. China's rise from 5% to 32% of global manufacturing value reflects deep GVC integration through component manufacturing and assembly-to-export capacity, a model India has struggled to replicate at scale.
Key Details
- India's manufactured exports remain concentrated in lower value-addition segments compared to China and Vietnam in electronics and textiles
- The report notes India's telecom equipment sector exports only about USD 0.6-1 billion annually against USD 4-5 billion of imports, illustrating a persistent trade deficit in higher-value manufactured inputs
- India's chemicals sector holds around 8% share of certain major import markets, with domestic consumption projected to reach USD 290-310 billion by FY 2030
- Textiles: India ranks 6th globally in exports with a 4.1% share, well behind China and Vietnam
The report's core prescription — deepening domestic value addition, promoting joint ventures and technology transfer, and diversifying export markets — is a direct response to India's shallow GVC integration relative to China.
- India's share of global manufacturing value: ~1.5% (1995) to 3.2% (2023)
- China's share of global manufacturing value: ~5% (1995) to ~32% (2023)
- Manufacturing's share in India's GVA: ~17-17.5%, stagnant for two decades
- Report jointly prepared by NITI Aayog and Crisil Intelligence, released August 2026
- 12 sectors identified: automobiles, electronics, steel, capital goods, defence and drones, chemicals, solar PV, textiles, pharmaceuticals and medical devices, telecom equipment, leather and footwear, food processing
- PLI scheme (2020): 14 sectors, outlay of about ₹1.9-2 lakh crore
- National Manufacturing Policy (2011) target of 25% GDP share by 2022 remains unmet