(GIST OF YOJANA) Indian industries: Issues, Challenges, and Opportunities

GIST OF YOJANA : Indian industries: Issues, Challenges, and Opportunities

DECEMBER-2025

Indian industries: Issues, Challenges, and Opportunities

Context:

Indian industry has significantly transformed from a pre-independence focus on small-scale handicrafts and textiles to a State-led industrialisation model post-independence. Since liberalisation in 1991, India has shifted from a largely agrarian economy to an emerging industrial hub, with rapid expansion and diversification of industries, effectively integrating into global supply chains while demonstrating resilience against global competition.

Background:

India’s industrial landscape has transformed since the 1990s from a state-controlled economy to a liberalised, globally integrated system focused on innovation, sustainability, and competitiveness.
Key priorities include boosting high-tech manufacturing, enhancing employment intensity, reducing import dependence for exports, and pursuing sustainable development through local resources and skill development.
The country’s abundant natural resources and youthful workforce create a strong foundation for growth and innovation.
The industrial sector, encompassing mining, manufacturing, utilities, and construction, has maintained a GDP share of 28-30% over the past three decades, with manufacturing at 14-16% and construction at 8-10%.
Since Independence, the primary sector’s contribution has declined from about 50% to approximately 15%, while the tertiary sector has expanded. India’s manufacturing output comprises roughly 2% of the global total.

Present policy challenge for growth:

Indian industries include textiles, automobiles, pharmaceuticals, IT, electronics, and renewable energy, experiencing uneven growth across sectors and regions due to systemic challenges.
The 1991 Industrial Policy deregulated the sector, allowing privatization and foreign investments, leading to increased competition and exports.
However, concerns remain over stagnation in manufacturing, reliance on imports, low labor intensity, and monopolistic tendencies.
The fragmented nature of the industrial sector, dominated by MSMEs, poses challenges in achieving economies of scale and competitiveness.
Furthermore, regulatory inefficiencies and high logistics costs hinder growth, despite ongoing infrastructure improvement initiatives.
Industrial sectors also face challenges from cross-subsidies that inflate operational costs.

The fourth industrial revolution (Industry 4.0):

The fourth industrial revolution (Industry 4.0) presents both opportunities and challenges for Indian industries, driven by technologies such as artificial intelligence, robotics, and the Internet of Things. These innovations are enhancing productivity and fostering growth, but require investment and skilled labor.
Industries like pharmaceuticals, electronics, renewable energy, and aerospace can capitalize on this technological shift. Furthermore, changing consumer behavior towards systems solutions and the shared economy is reshaping business models.
Additive manufacturing enables customized production, reducing reliance on traditional factories. India’s demographic dividend, characterized by a young workforce and consumer base, offers significant growth potential with proper skilling and policy support.
The Production Linked Incentive (PLI) scheme aims to attract substantial investment across 14 sectors, generating jobs and boosting the electronics and defense industries, aligned with broader manufacturing goals.

Conclusion:

We are service led/consumption led economy moving from 10* to 4th largest during the last 10 years with strong integration into global value chains. Huge investments in physical and digital infrastructure and tax reforms have nurtured a conducive business environment. The National Manufacturing Mission seeks to integrate policies, improve governance and boost a sustainable manufacturing ecosystem to transform India 21st century industrial powerhouse.