The writer is senior fellow, Peterson Institute for International Economics, former chief economic adviser to the Indian government and adviser to the government of Tamil Nadu
India’s rise as a major economy has long been held back by its failure to develop a robust manufacturing sector. The share of manufacturing in GDP has remained stubbornly low, even declining over the past decade despite the government’s enormous subsidy programme to encourage firms to “Make in India”. Can this failure be reversed, given the opportunity created by the stampede of capital away from China?
There are glimmers of hope. One state in southern India — Tamil Nadu — is experiencing a manufacturing boom, attracting the likes of Cisco, Corning, Foxconn, Ford, Google, Tata Electronics and Tata Jaguar Land Rover, and Nike suppliers. These investments are integrating India into global supply chains for electronics, automotives and footwear. What is the secret to its success?