India's industrial strategy has a critical blind spot in its manufacturing approach, according to expert analysis. While policymakers have invested heavily in semiconductors, electric vehicles, batteries, drones, robotics, and artificial intelligence, they have largely neglected the thousands of industrial products that form the foundation of successful manufacturing economies. These essential products include machine tools, bearings, pumps, valves, electric motors, compressors, gears, fasteners, industrial chemicals, transformers, cables, and thousands of other engineering products that connect raw materials to finished goods. The analysis reveals that India's missing industrial middle layers are not merely an economic deficiency, but also a societal one, as social prestige has historically remained disproportionately concentrated around white-collar professions while vocational and technical trades often received lower social recognition.
Over the past two decades, India's industrial policy has focused overwhelmingly on frontier industries through initiatives such as Make in India, production-linked incentive (PLI) schemes, India Semiconductor Mission, FAME, National Green Hydrogen Mission, and electronics and drone programmes. As reported by Business Standard, these strategies have produced gains in electronics assembly and startup development in battery systems, drones, robotics, medical devices, and semiconductor packaging solutions. However, much of this manufacturing remains assembly-based with India continuing to import semiconductors, sensors, precision components, specialty materials, and industrial sub-assemblies due to a weak domestic supplier ecosystem. The challenge is that India has built elite cognitive sectors before constructing a broad industrial society beneath them, with growth remaining uneven as islands of high productivity exist alongside large sections of low-skilled and informal employment.
India's manufacturing competitiveness has declined significantly compared to China, which started from similar manufacturing levels in the late 1980s. According to the analysis, India protected upstream industries through tariffs while raising input costs for downstream manufacturers, making it more profitable for many firms to import than produce locally. High electricity tariffs, costly logistics, lending rates of 9-10 percent, regulatory uncertainty, and complex compliance requirements further weakened Indian manufacturer competitiveness. China's approach focused on strengthening its traditional manufacturing base while investing aggressively in emerging industries, creating a comprehensive manufacturing ecosystem that India currently lacks. The analysis notes that India lacks such a cushion as countries such as Brazil and Russia can partly rely on commodities, minerals or energy exports as fallback engines, making its long-term rise depend far more heavily on building industrial capability.
The expert recommends establishing a National Reverse Engineering Programme for Manufacturing (NREPM) to address India's industrial backbone gap. The programme would identify over a thousand industrial products that account for most of India's engineering imports, including bearings, pumps, nuts, bolts, compressors, machine tools, and fasteners. Indian Institutes of Technology, National Institutes of Technology, and Council of Scientific and Industrial Research laboratories would serve as anchor institutions, studying world-best designs, reverse engineering them, developing improved prototypes, and transferring technology to Indian manufacturers. Funding would come from the ₹1 trillion Research, Development and Innovation Fund (RDIF) under the Anusandhan National Research Foundation. The programme would focus on building technology capabilities from scratch, covering engineering products before expanding to organic chemicals, pharmaceuticals, synthetic textiles, and other industrial inputs where India has manufacturing capability but continues to depend heavily on imports.
The analysis emphasizes that India's goal should not be to become an assembly line for advanced products but to become a world's workshop for industrial products that enable advanced manufacturing. Unlike current PLI schemes that assume firms already have necessary technology, NREPM would focus on building technology capabilities from scratch. The programme would initially cover engineering products before expanding to organic chemicals, pharmaceuticals, synthetic textiles, and other industrial inputs where India has manufacturing capability but continues to depend heavily on imports. This approach mirrors the success of Germany's Mittelstand, Japan's precision manufacturing, and China's status as the factory of the world. The analysis notes that India's transition to developed-economy status will not be measured merely by stock market valuations, aggregate GDP rankings or isolated elite technology sectors, but by whether the country can build the industrial middle layers that convert economic growth into broad productivity, mass employment and rising prosperity across a population of continental scale.
