The plan seeks to increase manufacturing’s share of GDP to 25% by 2035 from around 13% currently, while aligning with a proposed US-India trade deal that is expected to ease tariff barriers. The US had earlier imposed a 50% tariff on Indian goods as punishment for importing Russian oil and allegedly funding the Russia-Ukraine war.
However, Mint reported on October 22 that the India-US trade deal is close to being finalized and is likely to reduce duties to around 15-16% from the earlier 50% charges. The move would increase the competitiveness of Indian exports against other Asian economies such as Japan (15% tariff), Vietnam (20%) and Indonesia (19%).
The broader intent of the mission, announced in the Union Budget for FY26, is to position India more effectively within global value chains and increase its contribution to global manufacturing output.
An inter-ministerial committee comprising NITI Aayog, Department of Promotion of Industry and Internal Trade (DPIIT), and the Ministry of Electronics, Steel, Heavy Industries and Renewable Energy, among others, has proposed Viability Gap Funding (VGF) to spur investment in priority sectors and specialized manufacturing areas, according to a proposal reviewed by Mint.
Under the proposal, the NMM will provide strategic oversight of the country’s manufacturing ecosystem – setting clear output and export targets and ensuring ministries remain aligned. Importantly, the mission will not change the mandates of existing departments, but will act as a coordinating body.
NMM aims to support India’s 66 million micro, small and medium enterprises (MSMEs) and enhance competitiveness in small, medium and large scale industries under the “Make in India” initiative. Finance Minister Nirmala Sitharaman said the mission will provide policy support, implementation plans and governance framework for central ministries and states to improve domestic value addition in emerging sectors such as solar photovoltaic cells, electric vehicle (EV) batteries, motors and controllers, electrolysers, wind turbines, high voltage transmission equipment and batteries in the network.
NMM was originally assigned ₹100 crore, according to a Press Information Bureau (PIB) bulletin dated August 15.
Seven-area focus
To further detail India’s industrial pressure, the government plans to map and monitor manufacturing in seven regional clusters, each with distinct strengths.
- Southwest (around Bengaluru and Chennai): high-tech industries such as semiconductors and aerospace.
- North West (Delhi-NCR, Punjab, Haryana): food products, consumer durables and electric vehicles.
- North Central (Agra, Prayagraj): auto parts, leather and non-metal products.
- North East (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura): medicines and botanical products.
- West (Gujarat, Maharashtra): capital goods, electronics and pharmaceuticals.
- East (West Bengal): base metals including iron and steel.
- South (Tiruppur, Hosur): automotive components, capital goods and electronics.
Email queries to DPIIT, Ministry of Electronics and IT, Ministry of Heavy Industries, Ministry of New and Renewable Energy, Ministry of Steel and NITI Aayog sent on October 22 remained unanswered till press time.
Cluster advantage
Experts say that the cluster approach is essential to reduce costs and strengthen competitiveness.
“India has several clusters like Tirupur for garments and Ludhiana for cycles that have been successful and that too with a global footprint. Clusters should be set up so that the required raw materials are available within or near the cluster or those raw material manufacturers are encouraged to set up their plants in that cluster,” said Vinod Kumar, president of the India SME Forum.
“Furthermore, infrastructure such as ports and transport should be easily accessible given the export requirement. All machinery, quality testing and intellectual property (IP) formalities should be done within the cluster, offering ease of doing business to businesses,” Kumar added.
Key things
- The National Manufacturing Mission aims to significantly increase India’s contribution to GDP in manufacturing.
- Cluster-based approaches can increase competitiveness and reduce manufacturers’ costs.
- Global partnerships to share technology and knowledge are critical to long-term success.
For long-term success, experts emphasize the importance of technology partnerships and quality standards.
Amit Kumar, Partner and Head of Climate Ecosystem at Grant Thornton Bharat, emphasized the need for global partnerships for technology transfer and knowledge sharing and a focus on the international market in addition to meeting domestic demand.
“Businesses, including smaller businesses, need to focus on the global market and focus on product quality. Further, like in countries like Germany, the global linkage of technology and know-how by Indian businesses would greatly boost manufacturing in India,” said Kumar of Grant Thornton Bharat.
According to World Bank data cited in the draft proposal, India’s share of global manufacturing output is 2.9% compared to China’s 31.6%. The proposal states that this low contribution partly reflects the faster growth of India’s services sector, but also the underperformance of the manufacturing sector itself.
By identifying 15 key sectors and empowering 66 million SMEs, the NMM aims to close this gap, increase domestic value addition and integrate India deeper into global value chains.
