Despite record FDI, manufacturing employment has lagged. Examine.

India attracted US$667.41 billion in FDI during April 2014–March 2024, nearly 67% of the inflows of the previous 24 years [1]. Yet employment gains have lagged, because capital deepened without altering the structure of Indian manufacturing.

The investment record is genuine

• Manufacturing FDI equity reached US$165.1 billion in 2014-24, 69% higher than the preceding decade [1].
• The Production Linked Incentive (PLI) scheme commits ₹1.91 lakh crore across 14 sectors, drawing large-scale industry participation [4].

Why jobs have not followed

• Output share stagnant: manufacturing has averaged about 16.3% of nominal GVA, staying in a narrow band for two decades [2]. A sector that does not expand its share cannot absorb labour at scale.
• Capital-intensive channels: FDI and PLI flow mainly to large, technology-intensive firms (electronics, automobiles, pharmaceuticals), where output per worker is high but employment elasticity is low.
• The scale barrier: MSMEs contribute 38.4% of manufacturing output and employ about 23% of the workforce, yet NITI Aayog finds firms unable to scale up — blocked by collateral-heavy credit, high interest rates and long procedures [3]. Jobs follow firm size, and firm size has not grown.
• Skill deficit: scarcity of formally trained workers limits both production standards and expansion [3].
• Incentive uptake is uneven: only ₹28,748 crore of the ₹1.91 lakh crore outlay had been disbursed by 31 December 2025 [4], and a Parliamentary Standing Committee found jute PLI covering merely 19% of targeted beneficiaries up to October 2023 [5] — labour-intensive units cannot meet investment thresholds.

Record FDI has built capacity in strategic sectors, but employment depends on the growth of mid-sized, labour-absorbing firms that investment totals do not capture. Lowering PLI entry thresholds for labour-intensive sectors, cash-flow-based lending for small manufacturers, and a skilling pipeline aligned to the 14 PLI sectors can convert capital into jobs — aligning Make in India with SDG-8 on decent work.