Why has India failed to replicate an East Asian manufacturing-led growth path?

East Asia grew by moving farm labour into labour-intensive export factories, then climbing into components and technology. India's "Make in India" (2014) sought the same shift — a 25% manufacturing share of GDP and 100 million jobs [2] — but twelve years on, manufacturing's share in output, employment and global exports has barely moved [1]. The failure is structural, not merely of effort.

Assembly without deepening

• India entered global chains at the final-assembly stage; high-value chips, displays and batteries remain imported, so domestic value addition stays low.
• Hence exports can surge while manufacturing's share of GVA stagnates — old-series data show it lower in 2025-26 than in 2014 [1].
• East Asia moved from assembly to components within a decade; India's component base is only now being seeded.

Wrong sectoral bet for jobs

• Incentives favoured capital-intensive sectors (electronics, autos, steel) that add output without absorbing labour, so employment share did not rise [1].
• The Economic Survey 2016-17 had urged betting on apparel and footwear to "reclaim low-skill manufacturing" [4] — precisely the space Bangladesh and Vietnam captured.

Narrow, self-limiting policy design

• PLI gains are concentrated in a handful of sectors: electronics alone absorbed about ₹15,554 crore of incentives against ₹2,377.56 crore for the entire automobile sector [3].
• Incentives are time-bound per firm, too short to build ecosystems needing decade-long capital.
• India's high, fragmented tariffs on intermediates raise input costs; the Economic Survey 2025-26 calls for a shift "from an import substitution model" toward competitiveness and deeper GVC integration [5].

Enabling-environment deficits

• Land, labour and building regulation are largely State subjects; compliance costs fall hardest on MSMEs, which the Survey deems critical to supply-chain participation [5].

India's shortfall reflects a chosen model — subsidising assembly at home rather than competing within global chains. Rationalising duties on components and capital goods, anchoring incentives in component manufacturing, and State-led deregulation can convert assembly into genuine manufacturing depth — making the 25% ambition a structural transformation rather than a target repeatedly deferred.