Industry is made up of manufacturing, construction, mining and utilities. Taken together, these sub-sectors contribute about 28% of Gross Value Added (GVA) and employ roughly 25% of the workforce (FY 2025-26; PLFS 2025). The sector-wise picture is shown below.

• Manufacturing produces far more output per worker than construction does. Construction, by contrast, acts as the default exit door for workers leaving farms, because it offers low-paid and largely informal jobs that require few skills.
• Why PLI and Make in India target manufacturing: The aim is to move workers into the highest-productivity sector of industry, because this raises both national output and workers' wages at the same time.

• Inverted-U pattern: As economies grow, the manufacturing share of output first rises, then peaks somewhere between 25% and 35%, and finally falls as services take over. This same path was seen earlier in South Korea and China.
• Why the target has been missed: The target has not been missed because manufacturing is shrinking. It has been missed because services and construction have grown just as quickly, so manufacturing's relative weight in the economy has stayed flat even though its absolute size keeps rising.
• The second attempt: The National Manufacturing Mission (NMM) resets the same 25% goal to the year 2035 and is led by NITI Aayog. Its focus areas are ease of doing business, support for MSMEs, skilling of workers, and adoption of technology.

• Coverage: The PLI scheme was launched in 2020 and now covers 14 sectors. It has created about 14.39 lakh jobs, counting both direct and indirect employment.
• The key idea: Incentives are paid only on the extra output or sales a firm achieves above a base year, and not merely on the amount it invests or promises to invest. This rewards actual results, unlike the old system of tariff protection, which tended to breed inefficiency, or input subsidies, which gave no guarantee of higher output.
• Uneven results across sectors: Electronics has been the standout success, and India is now the world's second-largest maker of mobile phones. Pharmaceuticals have also done well, with India now a net exporter of bulk drugs. Automobiles and telecom, however, are still building up their capacity.
• The catch — assembly versus depth: India assembles smartphones domestically but still imports most of the parts that go into them, such as semiconductors, printed circuit boards and camera modules. To address this, the government has added a second PLI aimed specifically at electronics components.
• Overall verdict: The PLI scheme has built specific pockets of world-class capacity, but it has not yet produced the broad, economy-wide shift that would be needed to reach the 25% manufacturing target.

• Steel: Crude steel production reached 168.4 million tonnes in FY26, and India has regained its status as a net exporter of steel. Most of this capacity is domestic, standing at 220 million tonnes and targeting 300 million tonnes by 2030. The weak spot is coking coal, of which roughly 85% is imported; the government aims to cut this to 65% by 2030-31.
• Textiles: India is the world's sixth-largest textiles exporter, holding about 4% of the global market, but this share has been static rather than rising. Most output serves the domestic market. The PM MITRA parks and the textiles PLI together aim to grow the industry to a size of $350 billion by 2030.
• Pharmaceuticals: India supplies about 20% of the world's generic medicines by volume, which gives it clear global leadership in this segment. However, it still depends heavily on imported Active Pharmaceutical Ingredients (APIs), which the PLI for bulk drugs is designed to correct.
• Electronics: Electronics is the fastest-growing export category, rising from $38.56 billion to $47.96 billion, and it is now India's third-largest export. Even so, imports stood at $116 billion, meaning the trade deficit in electronics is larger than total electronics exports. The growth lies in assembly rather than in components.
• Automobiles: Automobile exports rose from 4.13 million units to 5.36 million units between FY21 and FY25, supported by strong PLI-linked investment in electric vehicles.

A sector can show high output and strong exports yet remain shallow if its key inputs are imported. This creates a strategic vulnerability, because supply shocks or export controls abroad can disrupt production at home. This concern is the underlying logic behind the Aatmanirbhar Bharat policy.

• Semiconductors: India imports 90% to 95% of the semiconductors it needs. NITI Aayog estimates that the import bill could reach around $240 billion by 2035. A realistic goal is only 35% to 50% self-sufficiency by 2035, because full import substitution is not feasible in this timeframe.
• Electronics components: About 40% of electronics components are sourced from China. This means India's growth in assembly rests on a parts supply chain that is largely controlled by foreign suppliers.
• The policy response: The government has launched the Electronics Components Manufacturing Scheme (ECMS) and the India Semiconductor Mission, and is pursuing coking coal diversification. All of these measures target inputs rather than final output.
• The China-plus-one verdict: India has successfully captured the assembly and final-production layer in sectors such as electronics and steel. It has not, however, captured the components and materials layer, which remains concentrated in China and Taiwan.
• The link to Viksit Bharat: Higher-productivity manufacturing is the main way for India to convert its demographic dividend into formal jobs. The policy focus must therefore shift from output-linked incentives, which build scale, toward component-level self-reliance, which builds depth.

• The multiplier effect: Every rupee of government capital expenditure generates roughly 2.5 to 3.5 rupees of GDP, through construction jobs, demand linkages with steel and cement, and lower costs for businesses. This 'crowding-in' effect is why capital expenditure, rather than revenue spending, anchors India's fiscal strategy.

• Capital expenditure rose roughly fourfold in eight years, even as the fiscal deficit fell from 9.2% of GDP in 2020-21 to a targeted 4.3% in FY27. This was financed by reprioritising spending and by buoyant revenue, rather than by additional borrowing.
• The financing gap: Public capital expenditure on its own is not enough to meet India's infrastructure needs. There are two main responses. The first is the use of InvITs and REITs to recycle completed assets. The second is the FY27 Budget's Infrastructure Risk Guarantee Fund, which de-risks the construction phase for private players.

• The base layer: Roads carry the highest share of both freight and passenger traffic, because only roads can provide first-mile and last-mile access to every location.

• Bharatmala (2017): This programme marked a shift away from the Golden Quadrilateral approach, which mainly connected large cities, toward economic corridors that serve freight clusters such as industrial zones, ports and farm belts.
• The logistics link: Indian truck speeds average about 47 km/h against a target of 85 km/h, whereas the United States exceeds 100 km/h and China reaches about 90 km/h. Slow speeds push up logistics costs, so closing this gap directly improves the competitiveness of Indian manufacturing.

• Best for bulk freight: Railways are best suited to carrying bulk goods over long distances, such as coal, ore, cement and foodgrains. Freight, not passenger traffic, is the financial backbone of the Railways.
• Electrification: About 99.6% of the broad-gauge network is now electrified, up from around 20% in 2014. The Railways have set a net-zero carbon target for 2030.
• Traffic: The Railways carried a record 741 crore passengers in 2025-26 and run roughly 22,000 to 25,000 trains every day.
• Dedicated Freight Corridors (DFC): The Eastern and Western corridors, together about 2,843 km long, have been fully commissioned. They separate freight from passenger traffic on the busiest routes, namely Delhi–Mumbai and Delhi–Howrah.
• High-Speed Rail: The FY27 Budget announced seven new high-speed rail corridors, including Mumbai–Pune and Delhi–Varanasi. The idea is to use rail as a substitute for short-haul air and road travel, following the path taken earlier by China and Japan.

• Airports: The number of airports grew from 74 in 2014 to 163 in 2025-26, mainly through the UDAN scheme, which revived old airstrips, together with new greenfield airports.
• Traffic: Airports handled 350.49 million passengers in FY26. India is already the third-largest domestic aviation market and is heading toward becoming the third-largest overall, after China and the United States.
• UDAN: The UDAN scheme uses Viability Gap Funding to make regional routes attractive to airlines, so that the government does not have to operate the routes itself. It has connected 93 unserved or underserved aerodromes.

• The gateway for trade: Almost all of India's merchandise trade by volume moves by sea, so the efficiency of ports directly determines the country's export competitiveness.

• Sagarmala (2015): This programme pursues port-led development through port modernisation, better connectivity, and development of coastal communities. Sagarmala 2.0 extends the focus to shipbuilding, ship repair and ship recycling.
• The weak spot: India's merchant fleet accounts for only 1.2% of global tonnage, even though the country handles about 3% of global maritime trade. As a result, India spends heavily on chartering foreign vessels.

• Cheapest but least developed: Inland waterways are the cheapest mode of transport but also the least developed. Rivers first need dredging and terminals before they become commercially viable, and this high upfront cost tends to deter investment.
• Growth: Cargo carried on waterways rose from 18.10 million tonnes in FY14 to 145.50 million tonnes in FY25. This is a dramatic increase, but it starts from a very low base, and waterways still carry under 2% of India's freight.
• The framework: The National Waterways Act of 2016 declared 111 national waterways. The flagship project is the Jal Marg Vikas Project on NW-1, running 1,390 km from Varanasi to Haldia. The 2026-27 Budget set a goal of operationalising 20 waterways.

• A universal input: Electricity is a universal input for every sector of the economy, including irrigation, industry, services and households.

• The next challenge: Renewable energy is intermittent, meaning it is not available at all times. Storage and grid balancing have not scaled up at the same pace as generation, and this mismatch is now the binding constraint on the power sector.
• Consumption targets: The Draft National Electricity Policy 2026 targets per-capita consumption of 2,000 kWh by 2030 and more than 4,000 kWh by 2047.

• Network effects: Digital networks become more valuable as more users join them, so they tend to grow very quickly once they take off. India's Digital Public Infrastructure, often called the India Stack, is now studied as a global model.

• The key lesson: UPI scaled up without waiting for universal broadband. It rode on basic mobile connectivity and interoperable banking rails, which proves that Digital Public Infrastructure can drive financial inclusion even in places where physical networks still lag behind.

• Why the model had to evolve: Banks are not well suited to funding long-gestation infrastructure, because they hold short-term deposits but infrastructure loans are long-term assets, creating a mismatch.
• InvITs and REITs: India now has 5 REITs and 17 InvITs, with a combined market capitalisation of about $33.2 billion, making it the fourth-largest such market in Asia. These instruments monetise completed assets in order to free up capital for new projects.
• NMP 2.0: The second National Monetisation Pipeline targets ₹10 lakh crore of asset monetisation by 2030.
• The PPP lifecycle: The Hybrid Annuity Model (HAM) is used for new construction, while InvITs are used for post-completion monetisation. This combination is now standard in the roads sector and is being extended to railways.

• Urbanisation: India's urban population is rising from 31% in 2011 toward about 40% by 2030, while the urban share of GDP is rising from 63% toward 75%. Urban infrastructure is therefore now a direct driver of national growth.
• Logistics cost: Logistics costs are estimated at about 14% of GDP at the baseline, and the National Logistics Policy targets a reduction to 8% by 2030. India's rank on the Logistics Performance Index improved from 54th in 2014 to 38th in 2023.
• The modal-mix problem: Roads carry 60% to 65% of freight and are the costliest mode, while rail carries 27% to 28% and waterways carry under 2%. The Dedicated Freight Corridors, coastal shipping and inland waterways all aim to shift freight off the roads.

• Tertiarisation: As economies mature, the share of services rises, driven by higher incomes, greater urbanisation and the outsourcing of tasks. Services are now India's largest sector, bigger than industry and agriculture combined.
• India's twist — services-led growth: Unlike the classic East Asian path, which ran from agriculture to manufacturing to services, India jumped straight to services. This raises a live debate: India may have skipped a proper manufacturing phase, which has hurt job creation, because services have a lower employment elasticity than manufacturing.

• The 1991 turning point: Liberalisation opened up services to foreign direct investment. IT and IT-enabled services then boomed, helped by an English-speaking, skilled workforce and the global outsourcing wave. Services became the primary engine of GDP growth from this point on.
• The Covid shock: Contact-intensive services such as trade, hotels and transport were hit hardest during the pandemic. The recovery afterwards shifted toward digital and capital-intensive segments such as IT, finance and Global Capability Centres.

• The core fact: Services contribute 54% of GVA but provide only 31.8% of jobs, according to PLFS 2025. Growth is concentrated in high-value, low-employment segments such as IT, finance and professional services, alongside a large, low-productivity informal segment made up of petty trade and domestic work.
• Informality: About 72.6% of unincorporated enterprises are in services, which means they operate outside formal structures and without social security cover.
• The policy fix: The answer is to skill workers for labour-intensive but tradeable services, such as tourism, healthcare support, logistics and retail, rather than only expanding IT and finance, which employ relatively few people.

• The key role: India's merchandise trade deficit was $333 billion in FY26, but the services surplus of about $214 billion offset nearly two-thirds of it. This is what keeps the current account deficit at a manageable level.
• Composition: Software and IT dominate services exports, followed by business services, travel and finance. The United States takes about half of India's software exports. India ranks eighth in the world in services trade, with a 4.3% share.
• Global Capability Centres (GCCs): There are now more than 1,750 Global Capability Centres, which are captive units of multinational companies. They are gradually shifting India's exports toward engineering research and development and digital engineering.

• IT-BPM: This is the largest and most export-oriented services sub-sector, contributing about 7.3% of GDP, generating 43% to 45% of services exports, and employing roughly 5.8 to 6 million people. Domestic demand is now growing faster than exports, and hiring is rising in non-metro cities.
• E-commerce: India is the world's second-largest e-retail market measured by number of shoppers. Quick commerce is the fastest-growing segment, though its profitability remains a concern, and the GeM portal channels public procurement.
• Tourism: Tourism contributes about 5% of GDP and supports roughly 7.6 crore jobs, making it highly labour-intensive. Foreign tourist arrivals rose from 6.44 million in 2022 to 9.95 million in 2024, yet India still accounts for only about 1.4% to 1.5% of world arrivals despite having 44 UNESCO sites. Key schemes include Swadesh Darshan 2.0, PRASHAD and SASCI.
• Real estate: Real estate is the second-largest generator of employment after agriculture, supporting about 5.5 crore jobs. The RERA law together with REITs has improved transparency in the sector.
• Healthcare: The Ayushman Bharat scheme is scaling up access to healthcare, but public health spending remains below the 2.5% of GDP target set in the National Health Policy of 2017. Medical tourism draws patients from South Asia, Africa and the Gulf.
• Space: The space sector is shifting from being ISRO-led toward greater commercial participation, guided by the Indian Space Policy 2023, the IN-SPACe regulator and the commercial arm NSIL. There are now about 300 start-ups and a ₹1,000 crore venture fund. India's cost-effective missions, such as Mangalyaan and Chandrayaan-3, are a clear comparative advantage.