As India marks its 80th Independence Day, the country can legitimately take satisfaction in the transformation of parts of its manufacturing landscape. The most striking example is smartphones. From being overwhelmingly import-dependent a little over a decade ago, India has become the world’s second-largest mobile-phone manufacturer, with smartphones emerging as its top exported commodity in 2025. The production-linked incentive (PLI) programme deserves considerable credit for this turnaround. More broadly, the 14 PLI schemes had attracted investments of over Rs 2.16 lakh crore, generated production and sales exceeding Rs 20.4 lakh crore, and exports of over Rs 8.3 lakh crore by December 2025. Electronics has been the standout, but automobiles, pharmaceuticals, and other sectors have also benefitted. The lesson is important: carefully designed government support can help overcome initial disadvantages and create scale.
Yet Independence Day is also an appropriate occasion to ask what economic self-reliance should mean in its next phase. Attracting a semiconductor fab, battery gigafactory, electronics plant, or renewable-energy project is an achievement, but it is only the beginning of the manufacturing story. Every large factory needs an ecosystem around it — companies producing machinery, tooling, cables, gears, motors, cooling systems, precision components, sensors, and specialised materials. It is here that India still has a considerable distance to travel.
The micro, small, and medium enterprise (MSME) ministry’s dashboard illustrates the broader structural imbalance. Of nearly 89.5 million enterprises registered under Udyam and Udyam Assist at the end of July, 88.9 million were micro enterprises. There were only about 540,000 small enterprises and 41,641 medium ones. The figures cover services and trading as well as manufacturing, and therefore is not just a manufacturing census. But they capture the central problem: India has an enormous entrepreneurial base, yet too few businesses make the journey from micro to small, and from small to medium scale.
That matters because the depth of this industrial middle will determine how much value India captures from its manufacturing boom. MSMEs already account for 35.4% of manufacturing output and 48.58% of exports, according to the Economic Survey 2025-26. But the challenge is not simply to have more MSMEs; it is to enable more of them to acquire the technology, capital, skills, and quality standards necessary to become suppliers to increasingly sophisticated factories. The smartphone experience itself points to the unfinished task. Domestic value addition in electronics has risen substantially but is still estimated at just 18-20%.
The impediments are familiar but formidable. Smaller manufacturers struggle with the cost and availability of credit, technology acquisition, skilled manpower, certification, and access to large customers and global supply chains. Scale itself becomes a barrier: without orders they cannot justify investing in sophisticated machinery, but without that investment they cannot win large orders. Government initiatives on credit guarantees, technology centres, skilling, and cluster development help, as does the decision to raise the MSME classification thresholds so that companies can grow without prematurely losing benefits.
But policy must increasingly focus on helping firms graduate, rather than merely increasing the number qualifying as MSMEs. At 80, India has demonstrated that it can become a serious manufacturing location. The next milestone must be harder and more ambitious: turning factories into ecosystems and small suppliers into globally competitive manufacturers. Atmanirbharta should not mean producing everything at home. It should mean possessing enough technological and industrial depth to compete rather than depend. India has built some impressive manufacturing peaks. Its next task is to fill in the middle.