India Won’t Grow Without Taking on the World

Ever since Prime Minister Narendra Modi announced his “Make in India” policies shortly after being elected prime minister in 2014, New Delhi has chased the dream of a prosperous manufacturing sector. There have been some successes — when it comes to making mobile phones, for example.

Yet, to a stunning degree, these efforts have failed. The value added by Indian manufacturing grew 8.1% between 2001 and 2012. In the decade from 2013, for most of which Modi has been in power, the figure slowed to 5.5%. The share of manufacturing in India’s gross domestic product has stagnated around or just over 15%, depending on how you measure it.

The trouble is that Indian manufacturers appear less and less interested in becoming export powerhouses. In 2012-13, exports approached 20% of sales. Last year, they dipped below 7%, and the proportion will likely be even lower this year.

If not for the growth in mobile phone exports, the numbers would be even more dire. And, in fact, the relative success of that sector is a reminder of what’s gone wrong for everyone else.

The crucial player is Apple Inc., which bet on “making in India” for its global supply chain many years ago. It pushed large parts of its supplier ecosystem, including subcontractors such as Foxconn Technology Co., into India as part of a global strategy.