India is making a decisive push towards industrial self-reliance with the launch of the National Manufacturing Mission, unveiled in the Union Budget 2025-26. With manufacturing contributing only 16-17% to GDP, far below global benchmarks, this initiative aims to scale up domestic production, reduce import dependency, and integrate India into global supply chains.
The Mission focuses on five core pillars—ease of doing business, workforce upskilling, MSME growth, technology adoption, and quality enhancement—to drive expansion in high-tech industries like solar PV, EV batteries, green hydrogen, and grid-scale energy storage.
Labour-intensive sectors such as footwear, leather, and toys receive targeted incentives, with expected job creation in millions. Additionally, MSMEs gain enhanced credit access, and tax reforms incentivize domestic manufacturing. This structured approach lays the foundation for India’s rise as a global manufacturing powerhouse.
The Economic Survey highlighted that manufacturing contributes just 16-17% to India’s GDP, significantly lower than other major economies. To achieve long-term economic resilience, India must scale up domestic production, reduce its reliance on imports, and integrate deeper into global supply chains. With a young workforce and rising domestic demand, a robust manufacturing sector can absorb labor, boost exports, and position India as a key global player in high-tech industries.
With India home to the world’s youngest workforce, a strong industrial base will help create millions of jobs, ensuring that India’s demographic advantage translates into economic gains. Nations like China and South Korea first strengthened their manufacturing industries before expanding into high-value service sectors, securing long-term economic stability. Experts argue that India must follow a similar trajectory, using manufacturing as a foundation for sustained growth in technology, R&D, and innovation-driven industries.
Driven by this thought process, India’s Union Budget 2025-26 announced the launch of the National Manufacturing Mission, aimed at bolstering India’s industrial ecosystem, reducing import dependency, and integrating domestic manufacturing into global supply chains. This initiative aligns with the Economic Survey 2024, which emphasized the urgent need to boost manufacturing to achieve sustained economic growth, job creation, and global competitiveness. The mission will provide policy support, execution roadmaps, and a governance framework for both central ministries and state governments, ensuring a structured, outcome-driven approach to industrial expansion.
Five core pillars driving the National Manufacturing Mission
The Mission is structured around five key focus areas, addressing critical bottlenecks in India’s industrial ecosystem:
- Ease and Cost of Doing Business – Streamlining regulations, improving logistics, and reducing operational costs.
- Future-Ready Workforce – Equipping workers with advanced skills for high-tech industries, automation, and AI-driven manufacturing.
- MSME Growth – Expanding access to finance, fostering innovation, and strengthening micro, small, and medium enterprises.
- Technology Adoption – Encouraging investments in Industry 4.0 technologies, robotics, and digital manufacturing solutions.
- Quality and Standardization – Enhancing product certification, compliance standards, and global competitiveness.
It will focus on developing key high-tech sectors, ensuring India reduces reliance on imports while enhancing value addition in:
- Solar PV cells and modules
- Electric vehicle (EV) batteries, motors, and controllers
- Electrolyzers for green hydrogen production
- Wind turbines and high-voltage transmission equipment
- Grid-scale battery storage solutions
The Economic Survey 2024 pointed out that high logistics costs and dependence on imported components hinder India’s competitiveness. “The National Manufacturing Mission will address these gaps by promoting local production and attracting investment in advanced technologies,” says Yogesh Pandit, Director (Product Acceleration), FSID. The Production-Linked Incentive (PLI) scheme, with an outlay of ₹16,092 crore for FY25, will boost Clean Tech, electronics, and energy storage industries, strengthening supply chains against global disruptions.
Strengthening Labour-Intensive Industries
Recognizing the employment potential in labour-intensive sectors, the government introduced targeted interventions for:
1. Footwear and Leather Industry
A focused product scheme will enhance productivity, quality, and competitiveness in the footwear and leather sector, supporting:
- Design capacity expansion
- Component manufacturing
- Machinery upgradation for both leather and non-leather footwear
Expected Impact:
- 22 lakh new jobs
- ₹4 lakh crore turnover
- ₹1.1 lakh crore in exports
2. Toy manufacturing
The National Action Plan for Toys aims to establish India as a global toy manufacturing hub by:
- Developing dedicated manufacturing clusters
- Enhancing skill training programs
- Creating a sustainable and innovative toy production ecosystem
“Sustainable, high-quality Indian-made toys have the potential to dominate international markets and create lasting cultural impact,” says Sukriti Mendiratta, Founder, Panda’s Box. Aravind Melligeri, CEO, Aequs, highlights that every US$ 10 million in toy sector revenue can generate 1,000 new jobs, making it a key employment driver.
Empowering MSMEs & rural entrepreneurs
Recognizing that MSMEs are the backbone of India’s manufacturing ecosystem, the government has introduced major financial support measures:
- Credit guarantee cover doubled from ₹5 crore to ₹10 crore
- Investment and turnover limits increased by 2.5x and 2x, respectively
- ₹5 lakh credit card for MSMEs to improve access to working capital
Additionally, a National Institute of Food Technology, Entrepreneurship, and Management will be set up in Bihar to strengthen food processing, create rural employment, and boost agricultural value chains.
Empowering the Food Processing Sector
The budget reinforces its commitment to ‘Purvodaya’, focusing on Eastern India’s food processing sector by:
- Establishing a National Institute of Food Technology, Entrepreneurship, and Management in Bihar
- Enhancing value addition to farm produce
- Creating skilling and entrepreneurship opportunities for rural youth
This initiative aims to increase farmer incomes, reduce agricultural waste, and create employment in food processing and supply chain industries.
Indirect Tax Reforms to Boost Manufacturing
To support domestic production, the government has implemented key tax and tariff reforms:
- Basic Customs Duty (BCD) on interactive flat panel displays (IFPDs) increased from 10% to 20% to promote local production.
- BCD on open-cell components reduced to 5% to lower costs for domestic TV and display manufacturers.
- Duty exemptions on cobalt powder, lithium-ion battery waste, lead, zinc, and 12 additional critical minerals to strengthen India’s energy storage and electronics industry.
- New tax incentives for technical textiles, supporting domestic manufacturing of agro-textiles, medical textiles, and geo-textiles.
Pankaj Mohindroo, Chairman, ICEA, commended these tariff adjustments, stating that they create a more competitive cost structure and deepen integration with global supply chains.
“Industry 4.0 is reshaping global supply chains, and India must align itself with these trends. Our youth have the talent and technical expertise to drive this transformation,” Sitharaman stated. The government will also support the domestic electronic equipment industry, integrating AI, automation, and smart manufacturing into India’s production landscape.
The National Manufacturing Mission signals a critical step forward in India’s approach to industrial development—one that moves beyond piecemeal reforms and short-term incentives to a long-term, structured, and sector-specific growth strategy.With ₹16,092 crore allocated to manufacturing incentives, targeted support for labour-intensive industries, and tax reforms, India is laying the foundation for a globally competitive, self-reliant industrial ecosystem. If executed effectively, this mission will not only position India as a global manufacturing hub but also ensure long-term economic stability, innovation, and industrial growth.
