Why Ecosystems are Key to Manufacturing Competitiveness

India opened its economy but failed to build industrial depth

- BY AJAY SRIVASTAVA, FOUNDER, GTRI

WHEN INDIA LIBERALISED its economy in 1991, the goal was to modernise industry by opening markets, cutting tariffs and attracting foreign investment.

At that time, India’s imports were only $19.5 billion, exports were $17.9 billion and the trade deficit was just $1.6 billion. Three decades later, imports have crossed $755 billion and the trade deficit has widened to over $310 billion.

The bigger concern is what India imports today. More than half of imports are now industrial and manufactured products such as electronics, machinery, chemicals, metals and engineering goods. Electronics imports alone reached $116 billion in FY2026, while machinery and computer imports were another $71 billion. Industrial imports have grown by 217% over the last 15 years.

Since 1991, India has announced many manufacturing policies and schemes. These included the New Industrial Policy (1991), expansion of Export Processing Zones and later the SEZ Policy and SEZ Act (2000 and 2005), Auto Policy (2002), MSME manufacturing support schemes (2005), National Manufacturing Policy (2011), Delhi-Mumbai Industrial Corridor, National Investment and Manufacturing Zones, electronics incentive schemes such as M-SIPS and Electronic Manufacturing Clusters (2012), Make in India (2014), phased manufacturing programmes for mobiles and electronics (from 2016), National Policy on Electronics (2019), semiconductor incentive schemes (2021), defence manufacturing programmes, and finally the Production Linked Incentive (PLI) schemes from 2020 onwards.

How did a country that implemented so many manufacturing policies and action plans end up becoming increasingly dependent on imports of so many products?