New Delhi, Nov 10 (IANS) An assessment of Narendra Modi’s 25 years in public office, published by The Economist in October, raised a familiar criticism. India has grown rapidly but has failed to achieve the structural transformation necessary to become a major manufacturing economy. The Economist’s comparison with China’s Fujian province, particularly the movement of workers out of agriculture, risks measuring India’s economic transformation too narrowly, overlooking changes in productive capabilities, infrastructure, technology and the country’s position in a fragmenting global economy.
Comparing India, a genuine democracy, to China’s authoritarianism and state-driven development is both misleading and disingenuous. Admittedly, India’s manufacturing share of GDP remains around 16 per cent, and the movement of labour out of agriculture has been slower than in some East Asian economies.
But the conclusion that industrial transformation has barely begun is difficult to reconcile with recent production data. The Annual Survey of Industries for 2024–25 recorded manufacturing gross value-added growth of 9.59 per cent, employment growth of 7.19 per cent and an increase of more than 14 lakh workers in manufacturing.
Employment in the sector reached approximately 2.10 crore. For all the talk about Gross Fixed Capital Formation (GFCF), India’s numbers compare favourably with South Korea, Japan, Vietnam and Germany. India’s 10-year GFCF averages about 29 per cent, while South Korea average about 31 per cent, Japan 25 per cent, and Vietnam about 28 per cent.
Electronics production increased from Rs 1.9 lakh crore in 2014–15 to Rs 11.3 lakh crore in 2024–25, while exports rose from Rs 38,000 crore to Rs 3.27 lakh crore. Mobile manufacturing has expanded considerably. The sector has created an estimated 25 lakh jobs over the decade. The challenge is now to deepen domestic component manufacturing, reduce import dependence and move towards higher-value activities rather than remain concentrated in assembly.
These figures do not establish that India has achieved labour-intensive industrialisation, but they indicate an expanding production base. Employment requires a differentiated assessment. The Periodic Labour Force Survey shows that the worker-population ratio for those aged 15 and above increased from 46.8 per cent in 2017–18 to 58.2 per cent in 2023–24, while the unemployment rate declined from 6 per cent to 3.2 per cent.
Female workforce participation has also increased. These indicators do not obscure the problem of youth unemployment, underemployment or the prevalence of informal and low-productivity work. But they complicate any assessment of India’s growth as simply jobless.
Infrastructure is another important aspect of the transformation. The expansion of national highways, airports, railway connectivity and digital payment systems has changed the economic geography of the country. UPI is a substantial part of India’s digital public infrastructure, reducing transaction costs and widening access to formal financial services.
These investments create the foundations for industrial productivity, market integration and private investment. Their economic returns extend beyond the immediate expenditure on construction. Foreign investment must be assessed against global conditions.
UNCTAD’s World Investment Report 2026 recorded a 6 per cent increase in global FDI to $1.6 trillion in 2025, but the recovery was uneven. Investment into developed economies increased by 11 per cent, compared with just 2 per cent for developing economies. Against this background, India’s inflows rose 44 per cent to approximately $39 billion. This is meaningful growth, although India’s share of global investment must grow substantially to boost manufacturing.
Defence manufacturing adds another dimension. India’s defence production reached a record Rs 1.78 lakh crore in FY2025–26, almost four times its 2013–14 level. Defence exports rose to Rs 38,424 crore, an increase of 62.66 per cent over the previous year.
The private sector accounted for approximately 45 per cent of exports. Missiles, naval systems, ammunition, radar, electronics and aerospace production are contributing to a wider industrial ecosystem. The expansion of domestic production is developing capabilities in precision engineering, materials, electronics and software with applications beyond defence.
The growing relationship with Japan is important in this context, moving beyond infrastructure financing and conventional financial investment towards defence technology, economic security and industrial cooperation. Cooperation in semiconductors, rare-earth processing, telecommunications and naval engineering illustrates how economic partnerships are increasingly intertwined with security considerations.
This is relevant as both countries seek more resilient supply chains amidst intensifying US–China rivalry. The comparison between Gujarat and Fujian is also misleading. It places an Indian state operating within a federal, democratic economy alongside a Chinese province that benefited from China’s authoritarian, state-directed export-industrialisation model.
More importantly, comparing per capita incomes expressed in US dollars without establishing a common basis of measurement, purchasingpower adjustments and comparable real growth rates tells us little about the respective development trajectories. RBI data show that Gujarat’s real per capita income increased fourfold between 2003–04 and 2024–25, at constant prices.
The appropriate question is not why Gujarat failed to become Fujian, but what structural constraints distinguish India’s development model from China’s. None of this means India has comprehensively resolved its structural weaknesses. But India’s economic transformation cannot be judged exclusively by whether it has replicated China’s manufacturing-led development model.
Geopolitical competition, trade weaponisation and supply-chain vulnerabilities are influencing corporate investment decisions globally. India’s opportunity lies in becoming vital production and technology partner as companies diversify their manufacturing networks. Its large domestic market, improving infrastructure and expanding trade relationships provide advantages, but regulatory predictability, and supplier ecosystem depth remain essential.
The important question is whether India is building the productive, technological and institutional capabilities required to occupy a larger position in the global economy. Its progress in electronics, infrastructure, digital systems, defence manufacturing and strategic industrial partnerships suggests that this transformation is under way.
Data suggest a democracy undergoing a more complex transformation than The Economist’s assessments indicate. India might not have achieved all the industrial depth required of a major manufacturing power, but neither is its economic structure standing still.
–IANS
