India’s manufacturing push is entering a new phase as the focus shifts from assembly-led growth to building deeper industrial ecosystems across high-value sectors such as aerospace, semiconductors, electric mobility, and clean technology. Ajay Sethi, Managing Partner, Baker Tilly ASA India, in an exclusive interview by Bhaswati Guha Majumder, Associate Editor at CXO Media and APAC Media, explains how evolving investor expectations, global supply chain diversification, and policy initiatives like the Production Linked Incentive (PLI) schemes are accelerating ecosystem development. He also outlines the opportunities emerging in high-value aerospace exports, semiconductor supply chains, battery manufacturing, and clean-tech industries as India positions itself as a strategic global manufacturing hub.
Make in India has entered a new phase focused on building ecosystems rather than assembly lines. What structural shifts are you seeing in capital flows and investor expectations that support this transition?
India’s manufacturing story is entering a more mature phase. We are currently seeing three structural shifts in capital flows and investor expectations that signal Make in India’s move from assembly to ecosystems.
First, capital is moving deeper into supply chains, not simply final assembly. India approved 22 electronics-component projects in early 2026 with Rs 41,863 crore (US$5bn) in investment, targeting domestic manufacturing of PCBs, camera modules and battery components.
Second, FDI momentum is strengthening. Last year, inflows showed a rising trend of moving into technology-driven manufacturing such as EVs, electronics and semiconductors.
Third, global firms are positioning India as a strategic manufacturing hub – for example, automotive manufacturers and industrial suppliers are expanding local production and export capacity to diversify supply chains.
Global investors are now prioritising ecosystem depth, reliable infrastructure, policy continuity, and integrated supply chains, which is helping India move from assembly-led growth toward a more comprehensive and resilient manufacturing ecosystem.
In aerospace and defence, India is integrating more deeply into global OEM supply chains. Where do you see the biggest opportunity – indigenous manufacturing, MRO expansion, or high-value component exports?
The biggest opportunity lies in high-value component exports as India integrates more deeply into global OEM supply chains. Global OEMs already source over US$2bn annually in aerospace components and services from India, with Indian manufacturers increasingly contributing to areas such as aerostructures, avionics, composites, and precision-engineered components, supported by partnerships like the Airbus–Tata C295 programme, the Bharat Forge – Liebherr Facility for landing gear and the expanding supplier ecosystems of global majors such as Airbus and Boeing. These collaborations are helping India move up the value chain from basic manufacturing to specialized aerospace production.
At the same time, Maintenance, Repair and Overhaul (MRO) presents one of the fastest-growing commercial opportunities. With India’s rapidly expanding aviation fleet and policy reforms such as 100% FDI allowance and a streamlined 5% IGST regime, the domestic MRO market is projected to reach around USD 4.1 billion by 2031.
Indigenous manufacturing remains strategically important, particularly for defence self-reliance, but its scale-up will likely be gradual as technology capabilities and supply chains continue to develop.
India’s semiconductor push now spans design, ATMP, and component ecosystems. From a strategic advisory standpoint, what gaps still need to be addressed to make the semiconductor ecosystem globally competitive and financially sustainable?
India has made meaningful progress across design, ATMP, and emerging semiconductor manufacturing, but several structural gaps remain. Upstream supply chains are still shallow, with key inputs such as semiconductor chemicals, speciality gases, wafers, and fabrication equipment largely imported. Cluster-ready infrastructure, specialised talent in fab operations and advanced packaging, and reliable power and ultrapure water systems also require further scaling. In addition, anchor demand and sustained global technology partnerships will be critical given the sector’s capital intensity. Ultimately, India’s competitiveness will depend less on individual fab announcements and more on building a fully integrated semiconductor ecosystem spanning materials, infrastructure, talent, and long-term demand.
The EV story is expanding beyond vehicles into battery cells, materials, and energy storage. How viable is India’s ambition to localise the battery value chain, especially in the context of global supply chain dependencies?
India’s ambition to localise the battery value chain is strategically viable, but it will likely evolve through selective localisation rather than full upstream self-sufficiency. While India is beginning to scale cell manufacturing and battery assembly under initiatives such as the Advanced Chemistry Cell (ACC) PLI scheme, critical minerals such as lithium, cobalt, and nickel will continue to be sourced globally, as reserves are concentrated in regions like Latin America, Africa, and Australia.
India’s strongest opportunity lies in the midstream and downstream segments, including cell manufacturing, battery pack assembly, battery management systems, and energy storage integration. Battery recycling could also emerge as a strategic advantage by enabling urban mining and reducing long-term dependence on imported minerals.
With rising demand from electric mobility, renewable energy integration, and grid-scale storage, along with strategic mineral partnerships and policy support, India has the potential to build a competitive and resilient domestic battery ecosystem.
Government initiatives such as PLI schemes and industry partnerships have been central to this manufacturing push. In your assessment, how effective have these policies been in crowding in private capital, and what refinements are required to ensure long-term competitiveness?
Government initiatives such as the Production Linked Incentive (PLI) schemes, along with targeted programs like Semicon India and the Design Linked Incentive (DLI), have played a significant role in crowding in private capital and accelerating India’s manufacturing push. Under the semiconductor mission alone, multiple fabrication, ATMP, and packaging projects have been approved across several states, representing over USD 15-20 billion in announced investments, supported by a USD 10 billion incentive framework. These programs have helped de-risk early investments and signal long-term policy commitment to global investors.
Going forward, the policy focus will need to evolve from project attraction to ecosystem competitiveness. This means strengthening materials and equipment supply chains, cluster-ready infrastructure, specialised semiconductor talent, and domestic R&D capability. Initiatives such as the India Semiconductor Mission 2.0 and the National Critical Mineral Mission, combined with rising demand from electronics, EVs, telecom, and defence sectors, will be critical to sustaining investment momentum and ensuring long-term global competitiveness.
With renewable energy and green hydrogen emerging as strategic priorities, can India realistically position itself as a clean-tech manufacturing export hub and what role will global partnerships and financial structuring play in achieving this?
India can realistically position itself as a clean-tech manufacturing and export hub, although full self-sufficiency across every segment of the value chain may not be feasible in the near term. The country has already built strong momentum in renewable energy, with non-fossil sources now accounting for over half of India’s installed power capacity and close to 30 GW of renewable capacity added in FY2024–25. Manufacturing capacity is also expanding, supported by the Rs 19,500 crore PLI scheme for high-efficiency solar modules.
In parallel, the National Green Hydrogen Mission, with an outlay of roughly $2.3 billion, targets 5 million tonnes of annual green hydrogen production by 2030 and is catalysing investments in electrolysers, hydrogen hubs, and industrial pilot projects.
Going forward, global technology partnerships, stable policy frameworks, and innovative financing mechanisms-including green bonds, blended finance, concessional capital, and export credit—will be critical to scaling manufacturing and enabling India to compete in global clean-tech supply chains.
