Change in mindset essential to make India a global manufacturing leader: Raamdeo Agrawal

The government has taken major initiatives over the last two years to reduce imports dependency and make India a global manufacturing hub.

While the initiatives are steps in the right direction, a change in the mindset is essential to achieve this target, according to market veteran Raamdeo Agrawal.

“It’s a mindset issue,” Agrawal, the chairman of Motilal Oswal Financial Services, said while speaking at the AIF and PMS Conclave 1.0 Summit.

“The biggest manufacturing exports started happening in Japan and Korea as their domestic market was very small. So, they set up capacities and businesses only for exports. Even the government (policies) were aligned to make it supportive of exports,” Agrawal said.

In India, historically, most manufacturers and entrepreneurs had a huge domestic market to cater to. Therefore, they never set up dedicated export units.


About 80-90% of the production was sold in the domesticmarket and only the surplus was sold in international markets.

Illustrating it further, Agrawal gave the example of the steel industry and the export potential for the sector.

“Everybody (steelmakers) does at the margin exports to the world. Otherwise, nobody can match India in steel competitiveness. We have iron ore, coal, low-cost labour, technology etc..,” he said.

Being the world’s second-largest producer of crude steel, India’s exports slumped to a 5-year low in FY23, largely due to the imposition of export tax by the government. Meanwhile, crude steel production hit a record high of 125.32 million tonnes, with consumption at 119.17 million tonnes.

However, Agrawal is hopeful of the manufacturing theme playing in a big way in the country as the atmosphere is conducive, and India has a huge capability to make it happen.

To make India the global manufacturing hub, the government, in 2020, introduced a production linked incentive (PLI) scheme for 14 sectors, with a total outlay of Rs 1.97 lakh crore.

These include mobile manufacturing, electronic components, speciality steel, medical devices, automobiles and auto components, and telecom and networking products.

“It shows the government’s commitment and mindset towards exports in the manufacturing sector. Let’s see if the global capacities come up…” Agrawal said.

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