Make In India Failure? 5 Shocking Truths Holding Back India’s Economic Dreams

India’s Make in India initiative, launched to transform the nation into a global manufacturing hub, faces critical challenges that threaten its economic ambitions. While boosting sectors like electronics through incentives, the campaign’s protectionist policies—such as high import tariffs and bureaucratic red tape—have deterred foreign investors, contributing to a 56% FDI decline since 2020. Complex land laws, uneven state-level reforms, and infrastructure gaps further stall projects, as seen in Tesla’s delayed entry and Apple’s supply chain hurdles.

Despite successes in smartphone exports ($11 billion in 2023), India’s isolation from trade blocs like RCEP and lagging logistics (ranked 38th globally) contrast sharply with Vietnam’s FDI-friendly approach. To achieve its $100 billion annual FDI target, India must recalibrate: rationalizing tariffs, harmonizing state policies, and joining strategic trade agreements.

Emulating Asian Tigers’ balance of globalization and self-reliance—rather than leaning into isolation—could turn ambition into sustainable growth, ensuring Make in India drives progress without stifling it. 

Make In India Failure? 5 Shocking Truths Holding Back India’s Economic Dreams

India’s ambitious Make In India campaign, launched in 2014 to position the country as a global manufacturing powerhouse, faces mounting scrutiny. While the initiative has spurred domestic production in sectors like electronics and renewable energy, critics argue that its protectionist undertones and structural challenges may be counterproductive, potentially hindering India’s progress toward becoming a $5 trillion economy.  

The FDI Conundrum: Protectionism vs. Globalization 

A core goal of Make In India is to attract foreign direct investment (FDI) by boosting local manufacturing. However, India’s FDI inflows have declined sharply since their 2020 peak, dropping 56% by 2023—starker than the regional average and far below Vietnam’s resilient inflows. The government’s target of securing $100 billion annually in FDI from 2024–2029 appears increasingly elusive, with inflows averaging just $70 billion between 2019–2023.  

Key challenges undermining FDI include:  

• High Import Tariffs: India’s tariffs on electronics, automobiles, and textiles rank among the world’s highest, discouraging foreign firms reliant on global supply chains. For instance, Apple’s phased manufacturing program faced delays due to import barriers on components.  

• Bureaucratic Hurdles: Complex land acquisition laws, inconsistent state-level policies, and sluggish permit approvals delay projects. Tesla’s paused entry into India, citing lack of regulatory clarity, exemplifies this issue.  

• Infrastructure Gaps: Poor logistics and unreliable power supply raise operational costs. The World Bank’s Logistics Performance Index ranks India 38th, below China (19th) and Thailand (34th). 

The Global Context: Isolation vs. Integration 

While Make In India emphasizes self-reliance, global trends lean toward diversified supply chains post-pandemic. Countries like Vietnam and Mexico have capitalized on this by offering streamlined regulations and trade agreements. India, meanwhile, risks isolation. For example, its exclusion from major trade blocs like RCEP (Regional Comprehensive Economic Partnership) limits access to Asian markets, pushing investors toward competitors.  

Successes Amid Struggles 

The initiative isn’t without wins. Production-Linked Incentive (PLI) schemes have boosted smartphone manufacturing, with exports hitting $11 billion in 2023. Companies like Samsung and Foxconn have expanded local operations, creating jobs. However, these successes remain sector-specific and haven’t offset broader FDI declines.  

The Path Forward: Balancing Acts 

To achieve its goals, India must reconcile protectionism with globalization:  

• Tariff Rationalization: Gradual reduction of input tariffs for critical industries (e.g., semiconductors) could attract FDI without sacrificing domestic goals.  

• State-Level Reforms: States like Tamil Nadu and Maharashtra, which streamlined land approvals and infrastructure, saw higher investments. Replicating these models nationally is crucial.  

• Trade Diplomacy: Joining trade pacts like the Indo-Pacific Economic Framework (IPEF) could integrate India into global networks while safeguarding key industries. 

Conclusion: A Call for Pragmatism 

Make In India’s vision of self-reliance isn’t inherently flawed, but its execution risks alienating the foreign capital and expertise needed for growth. Learning from the Asian Tigers—which combined export-oriented policies with infrastructure investments—could offer a blueprint. For India to thrive, it must balance nationalist ambitions with global economic realities, fostering an ecosystem where both local and international players innovate and grow.  

As the world navigates a fragmented economic landscape, India’s ability to adapt will determine whether Make In India becomes a catalyst for progress or a cautionary tale of protectionism gone awry.