Economic Survey says manufacturing strategy needs rejig to anchor India in global value chains

Economic Survey emphasised the need for a new manufacturing roadmap centred on scale, efficiency, innovation, and stronger global value chain linkages. The Survey described manufacturing as a strategic national asset amid geopolitical uncertainty and rapid technological change.

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Role of manufacturing in economic resilience

Chief Economic Adviser V. Anantha Nageswaran highlighted manufacturing as vital for generating employment, boosting productivity, advancing technology, and building export and strategic resilience.
He called for a mission-oriented strategy that goes beyond offering incentives. The Survey also noted the need to support the entire manufacturing ecosystem, from basic components to complex systems and high-value, IP-intensive areas.

Competitiveness and MSME participation

The Survey noted that real competitiveness in manufacturing hinges on innovation, skilled talent, solid infrastructure, efficient logistics, and support for MSMEs to scale up.
MSMEs, which are crucial to export-driven supply chains, often struggle with cash flow. Delayed payments have left around ₹8.1 trillion stuck, hampering their ability to grow and invest.

Global value chain integration

To better connect with global value chains, the Survey suggested revamping the industrial cluster model with a three-part strategy:

1. Focus on large, high-potential regions in well-connected brownfield areas.
2. Strengthen institutional frameworks like GIFT City’s financial authority.
3. Bring in private players to help plan and run essential infrastructure.

Advanced manufacturing and cost factors

Advanced manufacturing was flagged as a major opportunity to boost productivity and improve export competitiveness. The Survey recommended making it a core part of the National Manufacturing Mission.
It also stressed the importance of reducing the cost of capital for upstream, capital-heavy industries to improve the overall cost structure in global manufacturing systems.

Tariff rationalisation and logistics

The Survey pushed for continued tariff rationalisation, especially on intermediate goods and capital equipment, to cut costs and support India’s integration into global supply chains.
It also highlighted the importance of modern logistics (like the PM GatiShakti initiative), easier regulations, and a focused cluster approach to expand manufacturing to Tier-II and Tier-III cities, not just the big hubs.

Role of government and states

The Survey made it clear that the government’s role is important. The government needs to shape policy, streamline regulations, rationalise tariffs and taxes, price utilities wisely, and ensure timely approvals.
States, too, were urged to act as co-owners of India’s national manufacturing goals, playing an active role in enabling this transformation.