FDI in manufacturing, Make in India: A decade in review

According to publicly available data, foreign direct investment (FDI) in the manufacturing sector from 2014 to 2024 amounted to USD165.1 billion. This was a 69% increase compared to the previous decade, which saw inflows of around USD97.7 billion.

The Make in India initiative was launched in September 2014 to promote domestic manufacturing and encourage foreign investment. By 2020, Make in India 2.0 had targeted 27 strategic sectors, including key manufacturing segments such as the automotive industry, pharmaceuticals, medical devices and information technology and information technology enabled services. Ten years after the original programme and five years after version 2.0, legal, fiscal and social reforms continue to be introduced and provisions amended to strengthen India’s global manufacturing position.

An example is the National Single Window System (NSWS), introduced in 2021 as a unified digital platform to simplify business approvals. It integrates pre-establishment and pre-operation approval mechanisms of 32 central departments and 29 state governments. These include access to key approvals such as company incorporation and startup registration. NSWS clears FDI-related approvals for sensitive sectors or those dealing with direct and indirect presences in countries bordering India.

The Production Linked Incentive Schemes (PLI schemes), launched in 2020, aim to boost domestic manufacturing and reduce reliance on imports. Helping 14 strategic sectors, including pharmaceuticals, medical devices and automobiles, they offer financial incentives to eligible companies linked to higher production and incremental sales. Not all economists believe the PLI schemes have had a positive impact because a rise in import volumes raises doubts as to whether India is manufacturing products or merely assembling them. It cannot be denied, however, that investments in sectors such as pharmaceuticals and automobiles have greatly increased during the past decade.

The Government e-Marketplace (GeM) portal is a national online procurement platform, which enables government bodies to procure goods and services from registered vendors. For foreign investors, GeM provides direct access to public procurement opportunities and broadens market access.

Complementing these schemes, Project Development Cells have been established in some ministries. They work closely with state governments to prepare investment-ready projects with required approvals. They also address investor concerns through inter-agency co-ordination and ensure a predictable foreign investment environment across various sectors. The National Manufacturing Mission, announced in the 2025–2026 budget, promises to offer attractive prospects for foreign collaboration and investment by focusing and improving on the ease of doing business, developing future-ready workforces, technology access, and quality products.

India has made significant progress in enhancing its business environment during the past decade. However, some legal and policy challenges remain. The NSWS does not offer complete integration with several state-level approval requirements. These include consent to establish under state pollution control boards and registration under state-specific shops and establishments legislation. Investors continue to navigate separate, protracted departmental processes. This leads to delay, increased compliance costs and uncertainty.

Despite the ambitious rollout of the PLI schemes, a number of companies face delays in receiving performance-linked incentives. Many approved manufacturers have yet to start production. This highlights execution gaps, shaking investor confidence.

Bidders for public procurement orders with direct or indirect links to countries sharing a land border with India are subject to stricter registration requirements. This deters foreign players because the Ministry of Finance does not differentiate between the various investment sectors.

The long-term success of the Make in India initiative and liberalised FDI reforms relies on continual and flexible amendments to existing systems. These will remove structural and implementation hurdles, and ensure administrative and judicial clarity. Such programmes are not mere economic tools but key components of a wider legal superstructure essential for India’s sustained growth.

Akila Agrawal is senior partner and Sreetama Sen is a partner at Cyril Amarchand Mangaldas. The authors would like to thank associate Megha Mehta for her contribution