Fiscal incentives alone cannot make India a manufacturing hub without trade-policy reform. Critically analyse in the context of raw-material duties and Quality Control Orders.

Sports goods show the gap well. The new ₹1,856.67-crore Khelo India Sports Goods Manufacturing Scheme [1] has arrived, yet India holds only about 0.5% (about $275 million) of global sports equipment exports [2]. Subsidies can create scale, but only trade reform makes competitiveness last.

Why fiscal incentives alone fall short

• Cost gap: Indian makers are 15–20% costlier than makers in China and Pakistan [2]. Raw materials are the biggest cause, with 10–20% customs duty on inputs not available at home [3].
• Raw-material duties: Carbon fibre, PU/TPU and EVA are the inputs for balls, rackets and protective gear, and all of them attract duty. An inverted duty structure taxes some inputs more than the finished goods made from them [3].
• Quality Control Orders (QCOs): These restrict cheaper imports. As a result, some domestic metals cost 10–15% more than in China [3].
• Limits of the subsidy: Turnover-linked support goes up to 15% and only to firms investing ₹10 crore or more [1]. Even at its maximum it covers only the lower end of the gap. It also ends in FY 2033-34, before NITI's 2036 target [3].
• Policy contradiction: The State subsidises output while taxing the inputs that output needs.

Why incentives still matter

• Scale and infrastructure: The scheme gives 20% capex support to anchor investors putting ₹100 crore or more into Sports Goods Manufacturing Zones, linked to the BHAVYA industrial parks [1]. This tackles land, logistics and mechanisation, which duty cuts cannot fix.
• Market access: It pays 70%/50% of first-time/renewal International Sports Federation certification costs [1], removing a non-tariff barrier.
• Technology: Research centres co-funded by ANRF focus on material sciences [1]. India makes 75–80% of the world's cricket bats [1] but is weak in synthetic goods.
• QCOs have a purpose: They assure quality and curb sub-standard dumping. Scrapping them entirely could hurt domestic input makers.

Way forward

• Zero or concessional duty on raw materials and capital goods used for exports [3]. Calibrated QCO exemptions for export units.
• Correct inverted duties and speed up duty drawback refunds [3].
• Accredited testing labs in the Jalandhar and Meerut clusters.

Fiscal incentives and trade reform are complements, not substitutes. Subsidies build scale, while rational duties and calibrated QCOs make the cost advantage permanent. If the scheme is aligned with NITI Aayog's tariff recommendations, India's export share could rise toward 11% by 2036 [3]. That would make Atmanirbhar Bharat about competing in exports, not about shutting imports out.