1、Manufacturing needs to embrace servicificationPlease see important disclaimer and disclosures at the end of the document.OCTOBER 2024Kunal Kumar KunduIndia Economist+91 80 6731 8266 INDIA CHARTBOOK2OCTOBER 2024SUMMARYSUMMARYWhile India aims to ride the manufacturing bandwagon to push the economy ont

2、o a path of higher growth,manufacturings share in Indiasgross value added(GVA)has barely budged in a decade in real terms,while in nominal terms it is significantly lower.Our analysis shows that the Make in India policy announced in 2014 has underperformed the original objectives,while the Productiv

3、ity LinkedIncentive(PLI)Scheme announced in March 2020 has promise but has delivered less than expected to date.As per a recent review by the Ministry of Commerce&Industry,6 of 14 sectors did not avail of any subsidy under the PLI scheme and only INR29bn in subsidies was disbursed by the government

4、out of the allocated INR1.97tn as of FY23.Additionally,six months after introducing an EV policy aimed at attracting international giants like Tesla,VinFast,Mercedes and BMW,the government has decided to scale back its efforts to attract them given the lackluster response to the initiative,which off

5、ered lower import duties in exchange for manufacturing commitments in India.We believe that the success of such policies,especially those banking on subsidies to attract investors,depends on multiple other enabling policies.These include the removal of import barriers and embracing FTAs;focusing on

6、procedural easing,including the simplification of GST;removing entry barriers for MSMEs,especially in labour-intensive industries within the PLI fold;and raising public investment in health and education.While this is a continuous process,we believe that a faster way of raising the share of manufact