Economy
Industrial Policy and MSMEs
Make in India and Manufacturing Policy
Make in India, National Manufacturing Policy 2011, PLI schemes, industrial corridors, the National Manufacturing Mission, and the new IIP and core industries index.
Prerequisites
- Industrial Policies of India (1948–1991): the 1991 reforms opened the economy, but did not raise manufacturing’s share.
- Basic Concepts of the Economy: GDP, GVA and the sectors of the economy.
- MSMEs: Definition, Institutions and Schemes: most manufacturing firms are MSMEs.
The Hook: Five of Nine
Connect
Every month the government publishes an Index of Core Industries: the basic industries on which all other manufacturing depends. Since July 2026 the index has nine members. Chhattisgarh is a major producer in at least five of them: coal (Korba and the SECL fields), iron ore (Bailadila), steel (Bhilai and the private plants of Raipur and Raigarh), cement (the Raipur–Baloda Bazar belt) and electricity (Korba, Sipat).
So the state already makes the inputs. The question for the nation, and for Chhattisgarh, is how to make more finished goods at home: phones, medicines, machines, chips. That is the question Make in India and the PLI schemes try to answer.
Why it matters: Prelims asks launch dates, targets, PLI sectors, and IIP/ICI facts (now changed with the new 2022-23 base). Mains GS-III asks you to evaluate why India has not become a manufacturing hub and what policy should do.
The Problem: Manufacturing Has Stayed Small
For three decades after 1991, manufacturing’s share of India’s GDP stayed in the mid-teens percent, while services grew fastest. Economists call this a form of premature deindustrialisation: the economy moved from farms to services without the factory-job stage that East Asian economies passed through. Since manufacturing can absorb large numbers of semi-skilled workers, this matters for jobs.
National Manufacturing Policy, 2011
| Feature | Detail |
|---|---|
| Year | 2011 |
| Targets | Raise manufacturing’s share of GDP to 25% by 2022; create 100 million jobs; manufacturing growth of 12–14% a year |
| Instrument | National Investment and Manufacturing Zones (NIMZs): large integrated industrial townships |
Make in India (मेक इन इंडिया)
| Feature | Detail |
|---|---|
| Launched | 25 September 2014 |
| Nodal department | DPIIT (then DIPP), Ministry of Commerce and Industry |
| Logo | A lion made of gear wheels |
| Targets (inherited from NMP 2011) | Manufacturing growth of 12–14% a year; 100 million additional jobs; manufacturing at 25% of GDP (deadline later extended to 2025) |
| Four pillars | New processes (ease of doing business), new infrastructure (corridors, smart cities), new sectors (FDI opened in defence, railways, insurance and others), new mindset (government as facilitator) |
| Sectors | Initially 25 sectors; Make in India 2.0 covers 27 (15 manufacturing sectors coordinated by DPIIT, 12 service sectors by the Department of Commerce) |
| Investment facilitation | Invest India, the national investment promotion and facilitation agency |
Supporting reforms
| Reform | Detail |
|---|---|
| FDI liberalisation | Most sectors under the automatic route; caps raised in defence, insurance and others |
| Ease of Doing Business | India rose from 142nd (Doing Business 2015) to 63rd (Doing Business 2020) in the World Bank ranking. The World Bank discontinued the Doing Business report in 2021 |
| Business Reform Action Plan (BRAP) | DPIIT’s ranking of states on business reforms |
| Startup India | Launched 16 January 2016; DPIIT recognition, tax and compliance relief, Fund of Funds |
| GST | 1 July 2017: one national market |
| Corporate tax cut | September 2019: lower rates, including a concessional 15% rate for new manufacturing companies that began production by 31 March 2024 |
Atmanirbhar Bharat and the PLI Schemes
Atmanirbhar Bharat Abhiyan (आत्मनिर्भर भारत अभियान) was announced on 12 May 2020, during the COVID-19 crisis, with a stimulus package of about ₹20 lakh crore. Its manufacturing arm is the Production Linked Incentive (PLI) scheme.
How PLI works
A firm gets a cash incentive (a percentage, typically in single digits) on its incremental sales of products made in India over a base year, for about five years, provided it meets minimum investment and sales thresholds. Unlike older subsidies, it pays for output achieved, not for inputs.
| Fact | Detail |
|---|---|
| First PLI | 2020, for mobile phones and electronic components |
| Sectors | 14 |
| Total outlay | ₹1.97 lakh crore |
| Results (as of 31 March 2026, official) | Actual investment of over ₹2.40 lakh crore; employment of over 14 lakh (direct and indirect) |
The 14 PLI sectors:
| Group | Sectors |
|---|---|
| Electronics and telecom | (1) Mobile phones and specified electronic components; (2) IT hardware (electronic/technology products); (3) telecom and networking products |
| Health | (4) Pharmaceutical drugs; (5) critical key starting materials, drug intermediates and APIs; (6) medical devices |
| Mobility and energy | (7) Automobiles and auto components; (8) advanced chemistry cell (ACC) batteries; (9) high-efficiency solar PV modules; (10) drones and drone components |
| Industry and consumer | (11) Specialty steel; (12) white goods (ACs and LED lights); (13) food products; (14) textiles (man-made fibre and technical textiles) |
Chhattisgarh angle
Specialty steel is the PLI sector closest to Chhattisgarh’s industrial base. The state is also trying to move up the value chain into electronics: a semiconductor SEZ of Polymatech Electronics at Nava Raipur Atal Nagar received approval in 2026. See Industrial Policy and SEZs in Chhattisgarh.
Semiconductors
The Semicon India Programme (approved December 2021, outlay ₹76,000 crore) and the India Semiconductor Mission support chip fabs, assembly-testing (ATMP/OSAT) units and display fabs.
Infrastructure for Manufacturing
| Initiative | Detail |
|---|---|
| Industrial corridors | Under the National Industrial Corridor Development Programme, run by NICDC. The first was the Delhi–Mumbai Industrial Corridor (with Japanese support), with nodes such as Dholera (Gujarat) and Shendra-Bidkin (Maharashtra). In August 2024 the Cabinet approved 12 new industrial smart cities (about ₹28,600 crore). None of these is in Chhattisgarh |
| PM GatiShakti National Master Plan | 13 October 2021: a GIS-based platform to plan multimodal infrastructure across ministries |
| National Logistics Policy | 17 September 2022: to cut logistics costs |
| Dedicated Freight Corridors | Eastern and Western DFCs, for faster freight |
National Manufacturing Mission (Budget 2025-26)
Announced in the Union Budget 2025-26 to cover small, medium and large industries and further Make in India.
| Feature | Detail |
|---|---|
| Five focal areas | Ease and cost of doing business; future-ready workforce; a vibrant MSME sector; availability of technology; quality products |
| Clean-tech focus | Solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, high-voltage transmission equipment, grid-scale batteries |
| Status (as of mid-2026) | A policy and coordination framework for ministries and states, rather than a scheme with its own published outlay |
Measuring Industry: IIP and the Core Industries Index
Both indices were re-based to 2022-23 in 2026: a fresh, exam-ready change.
| Point | Index of Industrial Production (IIP) | Index of Core Industries (ICI) |
|---|---|---|
| Compiled by | National Statistics Office (NSO), MoSPI | Office of the Economic Adviser, DPIIT |
| Frequency | Monthly | Monthly |
| Base year | 2022-23 (new series released in 2026; old base 2011-12) | 2022-23 (new series from 20 July 2026; old base 2011-12) |
| Coverage | Manufacturing (about 76% weight), mining (about 11%), electricity and gas (about 11%), plus a new sector: water supply, sewerage and waste management | Now nine core industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity, and newly added iron ore |
| Highest / lowest weight | Manufacturing is by far the largest | Electricity highest (30.932%), fertilisers lowest (2.731%) |
Old-book trap
Most guidebooks still say “eight core industries” with refinery products as the heaviest (28.04% in the 2011-12 series). In the 2022-23 series (from July 2026) there are nine core industries, iron ore is the new entrant, and electricity has the highest weight. Read a question carefully: if it names the base year or the current series, use the new facts.
Analysis for Mains: Has Make in India Worked?
| Gains | Shortfalls |
|---|---|
| Strong rise in mobile phone and electronics assembly; India became a major exporter of smartphones | Manufacturing’s share of GDP did not reach 25%; it remains in the mid-teens |
| Higher FDI inflows after liberalisation | Much electronics output is assembly with low domestic value addition, relying on imported components |
| Defence indigenisation and exports grew | Job creation below targets; capital-intensive units hire few |
| PLI drew actual investment of over ₹2.4 lakh crore (by March 2026) | PLI benefits concentrated in a few sectors and large firms; slow disbursement in some sectors |
| Better logistics and ease of doing business | Land, labour-law and skill bottlenecks; high logistics costs persist |
Way forward:
- Move from assembly to components and design (deep value chains).
- Labour-intensive sectors (textiles, leather, food processing, toys) for jobs.
- Skilling linked to industry; women’s participation in factory work.
- MSME integration into PLI value chains.
- States as partners: land banks, single-window clearances, and logistics.
Chhattisgarh angle for Mains
Chhattisgarh exports raw and intermediate goods (coal, iron ore, steel, power, cement) but captures less value in finished manufacturing. A good answer suggests downstream industry near the mines (steel products, engineering goods), food processing for the state’s paddy and forest produce, and skills for local youth, while respecting PESA and Fifth Schedule safeguards in tribal areas. The state’s Industrial Development Policy 2024–30, with employment-linked incentives, is the state-level counterpart of Make in India.
Memory Tricks
Make in India numbers: '25-25-100-12'
Launched on 25 September 2014; target 25% of GDP; 100 million jobs; 12–14% manufacturing growth. Then 25 → 27 sectors in Make in India 2.0.
PLI: '14 sectors, 1.97 lakh crore'
“Fourteen sectors, nearly two lakh crore.” Group them as E-H-M-I: Electronics (3), Health (3), Mobility and energy (4), Industry and consumer (4).
Nine core industries: 'Coal-Crude-Gas, Refine-Fert, Steel-Cement-Power, + Iron ore'
Three fuels, two processed (refinery products, fertilisers), three heavy (steel, cement, electricity), and the new ninth: iron ore. Heaviest now: electricity.
Don’t Confuse
| This | vs | That |
|---|---|---|
| National Manufacturing Policy: 2011, NIMZs | vs | National Manufacturing Mission: Budget 2025-26 |
| Make in India: 25 September 2014 | vs | Atmanirbhar Bharat: 12 May 2020 |
| Startup India: 16 January 2016 | vs | Stand-Up India: 5 April 2016 (SC/ST and women loans) |
| IIP: NSO, MoSPI | vs | ICI: Office of the Economic Adviser, DPIIT |
| ICI 2011-12: 8 industries, refinery products heaviest | vs | ICI 2022-23: 9 industries (+ iron ore), electricity heaviest |
| PM GatiShakti: 13 October 2021 | vs | National Logistics Policy: 17 September 2022 |
Common Mistakes
MCQ traps
- “PLI gives subsidy on capital invested.” False. It pays an incentive on incremental sales over a base year.
- “India has eight core industries.” Outdated since July 2026: the 2022-23 series has nine (iron ore added).
- “The IIP is compiled by DPIIT.” False. The IIP is compiled by the NSO (MoSPI); the ICI comes from DPIIT’s Office of the Economic Adviser.
- “India ranked 63rd in the World Bank’s Doing Business 2022 report.” There was no 2022 report; 63rd was in Doing Business 2020, and the series was discontinued in 2021.
- “Make in India achieved its 25% manufacturing share target.” False. Manufacturing’s share has stayed in the mid-teens.
Practice
All questions below are original practice questions written in CGPSC style. They are not previous-year questions.
Level 1: Foundation
- Make in India was launched on ______.
- The PLI schemes cover ______ sectors with a total outlay of ₹______ lakh crore.
- The industry newly added to the Index of Core Industries in the 2022-23 series is ______.
Answers
- 25 September 2014
- 14 sectors; ₹1.97 lakh crore
- Iron ore
Level 2: Prelims MCQs
Q1. Consider the following statements about the Index of Core Industries (ICI) series with base year 2022-23:
- It is compiled by the National Statistics Office under MoSPI.
- It includes iron ore as a core industry.
- Electricity carries the highest weight in it.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Answer and explanation
(b) 2 and 3 only. The ICI is compiled by the Office of the Economic Adviser, DPIIT; the NSO (MoSPI) compiles the IIP. The 2022-23 series, released from 20 July 2026, added iron ore (making nine core industries) and gives electricity the highest weight (30.932%).
Q2. Match List I (Initiative) with List II (Year of launch):
| List I | List II |
|---|---|
| A. National Manufacturing Policy | 1. 2014 |
| B. Make in India | 2. 2016 |
| C. Startup India | 3. 2011 |
| D. PM GatiShakti National Master Plan | 4. 2021 |
- (a) A-3, B-1, C-4, D-2
- (b) A-1, B-3, C-2, D-4
- (c) A-3, B-2, C-1, D-4
- (d) A-3, B-1, C-2, D-4
Answer and explanation
(d) A-3, B-1, C-2, D-4. NMP came in 2011, Make in India on 25 September 2014, Startup India on 16 January 2016, and PM GatiShakti on 13 October 2021.
Q3. Under the Production Linked Incentive (PLI) schemes, the incentive is given mainly on:
- (a) the capital invested in new plant and machinery
- (b) the incremental sales of goods manufactured in India over a base year
- (c) the number of workers employed
- (d) the value of goods exported only
Answer and explanation
(b). PLI rewards output: a percentage of incremental sales over a base year, subject to minimum investment and sales thresholds. This makes it performance-linked, unlike capital subsidies.
Q4. Which of the following is not one of the 14 PLI sectors?
- (a) Specialty steel
- (b) Drones and drone components
- (c) Coal mining
- (d) Advanced chemistry cell batteries
Answer and explanation
(c) Coal mining. PLI targets manufacturing sectors such as electronics, pharma, autos, specialty steel, ACC batteries, solar modules, drones, white goods, food products and textiles. Mining is not a PLI sector.
Level 3: Mains Answer Writing
Q1. (60 words) What is the Production Linked Incentive scheme? How does it differ from earlier industrial subsidies?
Model answer outline
- Definition: PLI (from 2020; 14 sectors; ₹1.97 lakh crore) pays firms a percentage of incremental sales of India-made goods over a base year, for about five years.
- Difference: earlier incentives rewarded inputs (capital subsidy, tax holidays); PLI rewards output and scale, is time-bound, and targets sectors with global potential.
- Result: over ₹2.4 lakh crore actual investment by March 2026.
Q2. (150–200 words) “Make in India has succeeded in some sectors but not in raising manufacturing’s share of the economy.” Critically evaluate, and suggest how a mineral-rich state like Chhattisgarh can benefit.
Model answer outline
- Intro: Launched on 25 September 2014 with targets of 25% manufacturing share and 100 million jobs; reinforced by PLI (2020) and the National Manufacturing Mission (Budget 2025-26).
- Successes: smartphone and electronics manufacturing; FDI growth; defence indigenisation; ease-of-doing-business reforms (63rd in Doing Business 2020); PLI investment of over ₹2.4 lakh crore (March 2026).
- Shortfalls: manufacturing share stuck in the mid-teens; low domestic value addition in assembly; limited job creation; benefits concentrated in a few firms; logistics and skill gaps.
- Chhattisgarh: a supplier of core inputs (coal, iron ore, steel, cement, power); should build downstream steel products and engineering, food and forest-produce processing, and electronics (semiconductor SEZ, Nava Raipur); use the Industrial Development Policy 2024–30’s employment-linked incentives; respect PESA in Scheduled Areas.
- Way forward: components and design ecosystems; labour-intensive sectors; MSME linkages; skilling; state-level land and logistics reforms.
- Conclusion: Make in India has created islands of success; turning them into broad-based industrialisation needs value chains, jobs and state-level execution.
Quick Revision Table
| Fact | Detail |
|---|---|
| National Manufacturing Policy | 2011; 25% of GDP by 2022; 100 million jobs; NIMZs |
| Make in India | 25 September 2014; lion logo; DPIIT; 4 pillars |
| Make in India 2.0 | 27 sectors (15 manufacturing + 12 services) |
| Doing Business | 142nd (DB2015) → 63rd (DB2020); discontinued 2021 |
| Startup India | 16 January 2016 |
| Atmanirbhar Bharat | 12 May 2020; about ₹20 lakh crore package |
| PLI | 14 sectors; ₹1.97 lakh crore; incentive on incremental sales |
| PLI results (31 March 2026) | Investment over ₹2.40 lakh crore; over 14 lakh jobs |
| Semicon India | December 2021; ₹76,000 crore |
| PM GatiShakti | 13 October 2021 |
| National Logistics Policy | 17 September 2022 |
| Industrial smart cities | 12 approved, August 2024 (NICDP) |
| National Manufacturing Mission | Budget 2025-26; 5 focal areas; clean-tech |
| IIP | NSO (MoSPI); base 2022-23 (2026); manufacturing about 76% |
| ICI | DPIIT; base 2022-23 (from 20 July 2026); 9 industries; iron ore added; electricity heaviest |
Key Takeaways
Key Takeaways
- Manufacturing’s share has stayed in the mid-teens since 1991; NMP 2011 and Make in India (2014) aimed for 25%.
- PLI (2020) pays on incremental output: 14 sectors, ₹1.97 lakh crore.
- Infrastructure (corridors, GatiShakti, logistics policy) and the National Manufacturing Mission (2025-26) support the push.
- IIP and ICI were re-based to 2022-23 in 2026: ICI now has nine core industries, with iron ore added.
- Chhattisgarh supplies the core inputs; its opportunity is downstream, value-added manufacturing.
What’s Next
- Industrial Policy and MSMEs: Quick Revision: the whole chapter on one page
- External Sector: foreign trade policy, FDI and the WTO
- Major Industries and Steel in Chhattisgarh
- Industrial Policy and SEZs in Chhattisgarh
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