The National Manufacturing Policy and Make in India Explained

The National Manufacturing Policy is the 2011 Government of India policy that set the goal of raising the share of manufacturing in gross domestic product (GDP) to 25 per cent and creating 100 million additional jobs within a decade. It was approved by the Union Cabinet in late 2011 and announced by the Department of Industrial Policy and Promotion (DIPP), now part of the Department for Promotion of Industry and Internal Trade (DPIIT). Its signature idea was the National Investment and Manufacturing Zone (NIMZ), a very large planned industrial area with ready infrastructure and simpler regulation.

The National Manufacturing Policy also became the policy foundation on which later initiatives such as Make in India (2014) and the Production Linked Incentive (PLI) schemes were built. This explainer describes what the policy said, how NIMZs work, how the policy relates to Make in India and PLI, what was achieved, and why the manufacturing target remained difficult to meet.

Quick Facts: National Manufacturing Policy

Key Takeaways

• The National Manufacturing Policy of 2011 aimed to lift manufacturing to about 25 per cent of India’s GDP and generate about 100 million additional jobs over roughly ten years.
• National Investment and Manufacturing Zones are large industrial townships of at least 5,000 hectares, planned with infrastructure, a governance structure and special regulatory relief.
• Make in India, launched in September 2014, widened the manufacturing push with a sector list, investor facilitation and a drive to ease the business environment.
• Production Linked Incentive schemes, introduced from 2020, shifted the emphasis from general promotion to targeted financial rewards for incremental production in selected sectors.
• The 25 per cent GDP target for manufacturing was not reached, because the sector’s share in India’s economy has stayed in the mid-teens for years.
• The National Manufacturing Policy remains important as the first comprehensive national framework that treated manufacturing as a strategic job-creation sector in the post-reform era.

What is the National Manufacturing Policy?

The National Manufacturing Policy is a comprehensive policy framework announced in 2011 to expand manufacturing output, increase industrial employment and make Indian manufacturing globally competitive. It was India’s first national policy devoted specifically to manufacturing as a distinct engine of growth, rather than treating it as a by-product of general industrial or trade policy.

The policy was a response to a clear economic concern. Since the economic reforms of 1991, India’s growth had been led by services, while manufacturing’s share of GDP had stayed relatively flat. A large number of workers were still dependent on agriculture and informal activity, and the country needed jobs for a growing young workforce. The National Manufacturing Policy proposed that manufacturing should create a large share of these jobs.

The policy also followed earlier institutional steps, including the creation of the National Manufacturing Competitiveness Council in the mid-2000s to advise the government on competitiveness. It built on the Industrial Policy Resolutions of 1956 and 1991 but placed the emphasis squarely on global competitiveness, employment and infrastructure.

What were the objectives of the National Manufacturing Policy?

The National Manufacturing Policy had four main objectives: to raise the manufacturing sector’s share of GDP, to create jobs, to build domestic value addition and technological depth, and to enhance the global competitiveness of Indian industry. The policy set specific quantitative goals for the first two.

Headline goals

• Increase the growth rate of manufacturing to about 12 to 14 per cent over the medium term, higher than overall GDP growth.
• Raise manufacturing’s share of GDP to about 25 per cent within a decade.
• Create about 100 million additional jobs in manufacturing within the same period.
• Increase domestic value addition and the technological depth in manufacturing.
• Enhance the global competitiveness of Indian manufacturing through improved quality, standards and costs.
• Ensure growth that is inclusive, with attention to rural migrants, women and the urban poor.
• Ensure sustainability, particularly in energy, environment and resource use.

The policy was explicit that these goals required action by both the central and state governments, because land, labour regulation, power and many clearances fall under state jurisdiction.

What are the key features of the National Manufacturing Policy?

The key features of the National Manufacturing Policy are a package of measures across regulation, infrastructure, skills, technology, finance and sustainability, anchored by the National Investment and Manufacturing Zones. The policy was designed as a toolkit rather than a single scheme, and several of its components required follow-up action.

What is a National Investment and Manufacturing Zone (NIMZ)?

A National Investment and Manufacturing Zone (NIMZ) is a large, planned industrial region of at least 5,000 hectares, designed as an integrated township with world-class infrastructure, a clear governance structure and regulatory flexibility to attract manufacturing investment. The NIMZ was the policy’s most distinctive tool and was intended to function as a new type of industrial city.

The central government proposed to approve zones but left the main responsibility for land acquisition and development with state governments. A zone was to have a special administrative body, an environmentally planned layout, ready connections to ports and transport, housing for workers and common facilities such as effluent treatment.

Special features of NIMZs

• A minimum contiguous land area of 5,000 hectares, with a high share devoted to manufacturing activity.
• Government support for external trunk infrastructure such as access roads, rail links and power and water connections.
• Simplified compliance, including self-certification and reduced inspection under specified labour and environment laws.
• A clear exit policy for units that wish to shut down, with provisions for worker transition.
• Development of skilled workforce through institutions inside or near the zone.
• Focus on green manufacturing and efficient resource use.

NIMZs are conceptually related to Special Economic Zones, but there is a key difference. SEZs were designed mainly for export activity and are treated as foreign territory for trade operations, while NIMZs were intended to serve both the domestic and export markets and to be full industrial cities rather than enclaves.

How did NIMZs progress in practice?

NIMZs progressed slowly in practice, because the approvals and the land assembly proved much harder than the policy expected. The central government gave in-principle approval to a number of zones across several states, including locations such as Prakasam in Andhra Pradesh, Medak in Telangana, Kalinganagar in Odisha and Tumakuru in Karnataka, among others.

Many of these sites faced difficulties in acquiring contiguous land, particularly after the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013 raised compensation and consent requirements. Financing the trunk infrastructure was another constraint. As a result, only a few zones moved beyond the planning stage to see significant industrial activity.

The idea of integrated, large-scale industrial areas did not disappear. It was absorbed into later initiatives, notably the National Industrial Corridor Development Programme, which developed greenfield industrial cities along transport corridors, and into state industrial parks and land banks.

How does the National Manufacturing Policy relate to Make in India?

The National Manufacturing Policy is the earlier framework, while Make in India, launched on 25 September 2014, is the broader campaign that reinvigorated and expanded its goals. Make in India retained the objective of raising manufacturing’s share in GDP and creating jobs, and later documents reiterated the 25 per cent target with a revised timeline.

Make in India was organised around four ideas: new processes, new infrastructure, new sectors and a new mindset. It identified a list of priority sectors, ranging from automobiles and electronics to textiles, food processing and defence, and it set up a facilitation cell to help investors. It also liberalised foreign direct investment (FDI) limits in several sectors, such as defence, railways infrastructure and insurance, over subsequent years.

Key differences in emphasis

• The National Manufacturing Policy was primarily a policy document with a focus on zones and regulation, while Make in India was a mission-style campaign with a strong investor outreach and branding effort.
• Make in India placed greater stress on ease of doing business, online approvals and FDI liberalisation.
• Make in India named sectors for priority attention, whereas the National Manufacturing Policy was more sector-neutral.
• Make in India was later complemented by Startup India, Digital India and the Skill India Mission, forming a wider ecosystem.

What are Production Linked Incentive schemes and how do they fit in?

Production Linked Incentive (PLI) schemes are financial incentives, paid as a percentage of incremental sales of goods manufactured in India, designed to attract large investment in selected sectors and to build domestic manufacturing capacity and exports. They were first announced in 2020 for mobile phones and electronic components and were extended to a number of other sectors.

PLI represents a change in policy style. The National Manufacturing Policy mainly offered an enabling environment, such as zones, simplified rules and infrastructure. PLI adds performance-linked financial support: a company receives an incentive only if it meets investment and production thresholds over a defined period. The sectors covered include electronics, pharmaceuticals, medical devices, automobiles and auto components, advanced chemistry cell batteries, solar modules, textiles, food processing, white goods and telecom equipment, among others.

PLI schemes are related to the Atmanirbhar Bharat (self-reliant India) approach announced in 2020. Their aim is to help Indian firms reach scale, adopt advanced technology and become part of global value chains. In 2025 the government also announced a National Manufacturing Mission to bring together efforts on small and medium enterprises, technology, skills and exports.

What progress has been made in Indian manufacturing?

India has made visible progress in manufacturing output, exports and specific sectors, but the overall share of manufacturing in GDP has remained in the mid-teens rather than reaching 25 per cent. Progress has been uneven across sectors, with notable gains in some and slower change in others.

Areas of visible progress

• Electronics and mobile phones: India shifted from being largely an importer to being a large assembler and exporter of smartphones.
• Automobiles and auto components: India remains among the world’s largest producers of two-wheelers, tractors and passenger vehicles and a growing exporter.
• Pharmaceuticals: India is one of the largest suppliers of generic medicines worldwide.
• Defence production: Domestic production and exports have grown, helped by procurement policies and FDI liberalisation.
• Infrastructure: Expressways, dedicated freight corridors, ports and industrial cities have improved the base for factories.

Reform measures such as the Goods and Services Tax (GST) introduced in 2017, the Insolvency and Bankruptcy Code of 2016, a lower corporate tax rate for new manufacturing companies announced in 2019 and the consolidation of labour laws into four codes are generally viewed as supportive of the manufacturing environment, although opinions differ about their pace and impact.

Why did India fall short of the 25 per cent manufacturing target?

India fell short of the 25 per cent target because of structural constraints including high logistics and power costs, fragmented land markets, a shortage of skilled labour, a large share of very small informal firms, uncertain regulation and weak integration with global value chains. These factors held back the growth of larger, labour-intensive factories that create mass employment.

Commonly cited constraints

• Land and clearances: Assembling land and obtaining multiple approvals took long, as the NIMZ experience showed.
• Scale: A large share of Indian manufacturing consists of small and informal units that find it hard to invest in technology or exports.
• Infrastructure and logistics: Higher logistics costs than competitors reduced the price competitiveness of exports.
• Skills: Employers reported gaps between available training and the needs of modern factories.
• Trade and tariffs: Dependence on imported components in several sectors and uncertain tariff policy affected competitiveness.
• Global conditions: Slow world trade after the 2008 financial crisis and later disruptions made export-led growth harder.

Economists also note that the target itself was ambitious. Few large economies have raised the manufacturing share by nearly ten percentage points in a single decade, and manufacturing’s share can decline as economies mature even while output grows.

Why does the National Manufacturing Policy still matter?

The National Manufacturing Policy still matters because it established the framework of ideas that later policies continue to follow, namely that India needs a large, globally competitive manufacturing sector for jobs, exports and strategic self-reliance. Its core themes of regulatory simplification, industrial townships, skills, technology and finance for small firms remain central to current debates.

The policy also illustrates the limits of enabling policy alone. Zones and incentives help, but they work only when land, logistics, power, skills and demand are in place at the same time. The shift from NIMZs to industrial corridors and from general promotion to PLI incentives reflects lessons learnt about what works.

For students and analysts, the policy is a reference point for assessing how India’s industrial strategy has evolved from the Industrial Policy Resolution of 1956, through liberalisation in 1991, to the post-2011 focus on competitiveness.

Bottom Line

The National Manufacturing Policy of 2011 set an ambitious aim of a 25 per cent manufacturing share in GDP and 100 million additional jobs, and its NIMZ concept pioneered the idea of large industrial cities. The target was not met, but the policy shaped Make in India, the industrial corridors and PLI schemes, which together form the current manufacturing strategy.

Frequently Asked Questions

What is the National Manufacturing Policy of India?

The National Manufacturing Policy is a 2011 policy of the Government of India that aims to raise manufacturing’s share of GDP to about 25 per cent and create about 100 million additional jobs over a decade. It covers regulation, infrastructure, skills, technology, finance and green manufacturing. Its key instrument is the National Investment and Manufacturing Zone.

What is a National Investment and Manufacturing Zone (NIMZ)?

A National Investment and Manufacturing Zone is a planned industrial township of at least 5,000 hectares with integrated infrastructure and simplified regulation. It is intended to serve both domestic and export production. States are responsible for developing the land, while the central government supports the trunk infrastructure.

How is Make in India different from the National Manufacturing Policy?

Make in India, launched in September 2014, is a broader campaign that built on the National Manufacturing Policy by naming priority sectors, easing business procedures and liberalising foreign investment. The National Manufacturing Policy of 2011 was a policy framework focused on zones, regulation and jobs. Both share the goal of raising manufacturing’s share of GDP.

What are PLI schemes?

Production Linked Incentive schemes are government programmes that give companies a financial incentive based on incremental sales of goods made in India. They were launched in 2020 and cover sectors such as electronics, pharmaceuticals, automobiles, batteries, solar modules and textiles. The aim is to build scale, technology and exports.

Did India achieve the 25 per cent manufacturing target?

No, India did not reach the target of manufacturing contributing 25 per cent of GDP. The share has remained in the mid-teens for years, even though output and exports have grown in several sectors. Causes include land and logistics constraints, skill gaps and the dominance of small informal firms.

Which ministry handles the National Manufacturing Policy?

The Ministry of Commerce and Industry handles the policy through the Department of Industrial Policy and Promotion, which is now the Department for Promotion of Industry and Internal Trade (DPIIT). State governments also play a major role because land, power and many clearances are state subjects. Other ministries support specific components such as skills and technology.

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