Chapter 8 – Industry's Next Leap | Economic Survey 2025-26

Chapter Overview

India is the world's 4th largest economy and aspires to become a USD 30 trillion economy by 2047 (Viksit Bharat). Manufacturing is central to this — contributing to employment, productivity, exports and strategic resilience. This chapter covers India's industrial performance, sector spotlights (steel, cement, electronics, auto, pharma, textiles), flagship policy initiatives (PLI, NMM), cross-cutting structural pillars (R&D, QCOs, logistics, MSMEs) and a roadmap for deeper GVC integration. The chapter signals a strategic shift: from import substitution to scale, competitiveness and innovation.

7.0%

Industry GVA Growth H1 FY26 (vs 5.9% FY25)

9.13%

Manufacturing GVA Growth Q2 FY26

46.3%

Medium & High-Tech Share of Manufacturing VA

37th

CIP (Competitive Industrial Performance) Rank 2023

₹18.70L cr

PLI Incremental Production/Sales (till Sep 2025)

12.60 L

Direct & Indirect Employment under PLI

38th

Global Innovation Index 2025 (from 66th in 2019)

7.97%

Logistics Costs as % of GDP (FY24) — down from 8.84%

🌐

Global Manufacturing Context & India's Positioning

UNIDO Data | Q3 2025

Global Manufacturing Q3 2025

World manufacturing output grew 0.7% QoQ in Q3 2025
Africa led growth, followed by Asia & Oceania
Latin America/Caribbean: decline; Europe: stagnation
Medium & high-tech: expanded 1.7% (Q2) and 1.4% (Q3) 2025

India's QoQ Manufacturing Growth — Q3 2025: 1.3%

India tied with China at 1.3% — among fastest growing globally. Strategic shift: future success depends on strategic indispensability, not cost arbitrage alone.

India's Domestic Industrial Performance

Industry GVA: 7.0% H1 FY26 (recovery from 5.9% FY25)
Manufacturing GVA: 7.72% Q1 FY26, 9.13% Q2 FY26
FY25 easing due to global demand cooling, not domestic weakness
Medium & high-tech: 46.3% of total manufacturing VA
CIP ranking: 37th (2023) from 40th (2022)

Business Sentiment Indicators

Manufacturing PMI: above 50 (expansion zone) since March 2023; mid-to-high 50s
RBI Business Expectations Index: consistently above neutral 100 through FY25–Q2FY26

5 Structural Pillars of Competitiveness (Para 8.12)

1. EoDB 2. Innovation & R&D 3. Skill Gaps 4. Infrastructure & Logistics 5. MSME Scaling

Industrial Credit Diversification

Bank Credit to Industry

FY24: 9.39% YoY
FY25: 8.24% YoY
Moderation is structural, not distress

Non-Bank Financial Flows

CAGR 17.32% (FY20–FY25)
Corporate bonds, commercial paper rising
Large corps shifting to market instruments

Total Domestic Resources

CAGR 28.6% since FY20
All Engineering credit: +21.98% FY25
Wood products: +16.73%; Petroleum: +16.49%

🏭

Core Input Industries: Cement, Steel, Coal, Chemicals

Backbone of Industrialisation

🧱 Cement

India: 2nd largest producer globally (after China)
Installed capacity: 690 MT
Production FY25: 453 MT
Per capita: 290 kg vs global 540 kg
160 integrated plants, 130 grinding units, 62 mini plants
Top states: Rajasthan, AP, Telangana, Karnataka, MP, Gujarat

⚙️ Steel

India: 2nd largest crude steel producer
Crude: 103.54 MT (FY21) → 152.18 MT (FY25), CAGR 10.1%
Finished: 96.20 → 146.69 MT, CAGR 11.1%
Consumption: 94.89 → 152.13 MT, CAGR 12.5%
FY26 (Apr-Oct): crude +11.7%, finished +10.8%, consumption +7.8%
PLI Specialty Steel outlay: ₹6,322 cr; investment: ₹23,022 cr
Mission Coking Coal: target 140 MT domestic coking coal by 2030
⚠️ Net importer FY26 (Apr-Oct) — low international prices

🪨 Coal

India: 5th largest reserves, 2nd largest consumer
Contributes 55% to energy mix; fuels 74% of power generation
Production FY25: 1,047.52 MT (highest ever) — ↑4.98% from FY24
Total supply FY25: 1,025.33 MT (+5.38%)
Imports FY25: 243.62 MT (↓7.9% from 264.53 MT FY24)

🧪 Chemicals & Petrochemicals

Contributes 8.1% to manufacturing GVA (FY24)
Production: 45,638 thousand MT (FY16) → 58,617 thousand MT (FY25)
CAGR FY16–FY25: 2.8%
Strong backward (petroleum) & forward linkages

🚀

High-Growth Sector Spotlights

Automobiles | Electronics | Pharmaceuticals | Textiles

🚗 Automobile Industry

World's largest market for 2-Wheelers & 3-Wheelers; 3rd largest for PVs & CVs
Employment: direct + indirect 30+ million; GST contribution: ~15% of national GST
Exports FY25: 5.3+ million vehicles (double-digit growth H1 FY26)
Production growth: 33% over last decade (FY15–FY25)
EV Registrations CAGR: 62.5% (FY20–FY25)

EV Policy Ecosystem (Box VIII.1)

PLI-Auto Scheme: ₹25,938 cr outlay; investment ₹35,657 cr (Sep 2025); 48,974 jobs

PLI-ACC Battery: ₹18,100 cr; 50 GWh capacity; 40 GWh awarded

PM E-DRIVE: ₹10,900 cr (Sep 2024); e-2W, e-3W, e-trucks, e-ambulances

PM e-Bus Sewa: ₹3,435.33 cr; 38,000+ electric buses

SMEC: min investment ₹4,150 cr (USD 500M); attract global EV manufacturers; reduced customs duty

📱 Electronics Sector — Flagship PLI Success Story

Export rank: 7th (FY22) → 3rd largest & fastest-growing (FY25); H1 FY26: USD 22.2B (on track for 2nd)
Production: ₹6.4L cr (FY22) → ₹11.3L cr (FY25); Exports: ₹1.2L → ₹3.3L cr
Mobile manufacturing: ₹18,000 cr (FY15) → ₹5.45 lakh crore (FY25) — ~30x growth
India: 2nd largest mobile phone manufacturer globally; 300+ units (from 2 in 2014)

Scheme	Key Achievement
PLI Large Scale Electronics	Production ₹9.34L cr; Exports ₹5.12L cr; Investment ₹13,759 cr
PLI 2.0 IT Hardware	Production ₹14,462.7 cr; Investment ₹892.47 cr
ECMS (Apr 2025)	Outlay ₹22,919 cr; integrates domestic electronics with GVCs
EMC & EMC 2.0	19+11 Greenfield clusters; 3+2 CFCs approved
SPECS	58 applications; proposed investment ₹22,081 cr; 25% capex incentive
India Semiconductor Mission (ISM)	₹76,000 cr programme; 10 projects; investment ₹1.60L cr in 6 states

💊 Pharmaceuticals & Medical Devices

India: 3rd largest by volume globally; 20% of global generics demand
Exports to 191 countries (FY25); 50%+ to US & Europe
Annual turnover FY25: ₹4.72 lakh crore
Export CAGR FY15–FY25: 7%
Global rank in pharma exports (value): 11th; share: 3%
Leader in DPT, BCG, measles vaccines globally

Medical devices exports: USD 2.5B (FY21) → USD 4.1B (FY25)
Exports to 187 countries; now makes MRI, CT scanners, linear accelerators
Shift: volume-driven → value-driven (complex generics, biosimilars)

Key Schemes:

Bulk Drugs PLI: investment ₹4,763 cr; 55,000 MT/year for 26 products
Bulk Drug Parks: ₹3,000 cr; Gujarat, HP, AP
Medical Devices PLI: actual investment ₹1,093.69 cr; 57 high-end devices
SMDI Scheme: ₹500 cr (Nov 2024)

🧵 Textiles & Apparel

Industry size: USD 179 billion; ~2% of GDP; 11% of manufacturing GVA
India: world's largest cotton cultivator; largest jute producer; 2nd largest silk/cotton producer
2nd largest producer of polyester & viscose; major MMF hub
Global rank: 6th largest exporter; ~4% share
Exports: USD 35.87B (FY24) → USD 37.75B (FY25); largest component: RMG 42.7%
Challenges: fragmentation, cotton-heavy (vs global MMF shift), limited FDI
PM-MITRA: Mega Integrated Textile Parks for scale economies
PLI for MMF: threshold ₹300 cr → ₹150 cr; incremental turnover 25% → 10%
NTTM: ₹1,480 cr outlay (2020–26); R&D, market development, skills
QCOs revoked: 14 on polyester/MMF value chain (Nov 2025) + viscose staple fibre

📋

PLI Schemes & National Manufacturing Mission (NMM)

Key Flagship Initiatives to Promote Manufacturing

Production Linked Incentive (PLI) Schemes — Cumulative Status (Sep 2025)

Sectors Covered

₹1.97L cr

Total Outlay

₹2.0L cr

Actual Investment Realised

₹18.70L cr

Incremental Production/Sales

₹8.20L cr

PLI Exports

12.60L

Jobs (Direct+Indirect)

₹23,946 cr

Incentives Disbursed (12 sectors)

806

Applications Approved (all 14)

National Manufacturing Mission (NMM) — Union Budget 2025-26

Targets by 2035:

Manufacturing: 12.9% → 25% of GDP
Jobs: 143 million
Merchandise exports: USD 1.2 trillion
Focus: 20–30 prioritised industrial clusters

Three Cluster Archetypes:

Scale: Automotive, Pharma — rapid expansion
Fix & Transform: Electronics, Capital Goods — structural reform
Seed: Semiconductors, EVs — innovation-led growth

Cross-cutting: EoDB, Plug & Play infrastructure, skilling, MSME empowerment, technology adoption

🔬

Innovation, R&D & India Semiconductor Mission

From Adopters to Innovators

3rd

Global rank in scientific publications (from 7th in 2010)

38th

Global Innovation Index 2025 (from 66th in 2019)

Indian universities in QS Rankings 2026 (from 11 in 2015)

0.64%

GERD as % of GDP (vs US 3.48%, China 2.43%, S.Korea 4.91%)

2 lakh

DPIIT-recognised startups (from ~500 in 2016)

45/64

Critical technologies in global top-5 (ASPI, vs 4 in 2003-07)

IP Rankings (2024) & R&D Activity

Trademarks: 4th globally
Patents: 6th globally
Industrial Designs: 7th globally
Patent applications: nearly doubled FY20–FY25
Trademark registrations: grew 1.5x
Designs: grew 2.5x
Bengaluru, Delhi, Mumbai: Top 50 innovation clusters globally

R&D Challenge: Low Business Sector Share

India GERD: 0.64% of GDP
Business sector R&D: only 41% of total
vs China (77%), US (75%), South Korea (79%)
India excels at TRL 1–3; struggles to reach TRL 7–9
Risk: remains a 'service provider', vulnerable to tech denial regimes

Key Institutional Initiatives for R&D

ANRF (Anusandhan National Research Foundation)
Under ANRF Act 2023; strategic direction, competitive funding, industry-academia-govt collaboration

RDI Fund
₹1 lakh crore over 6 years; ₹20,000 cr FY26; catalyse private R&D; Deep-Tech Fund of Funds; operationalised Nov 2025

National Missions
National Quantum Mission, NMICPS, IndiaAI Mission, India Semiconductor Mission, National Green Hydrogen Mission

⚡ India Semiconductor Mission (ISM) — Why It Matters (Box VIII.7)

Context: Semiconductors = heart of energy, financial markets, telecom, hospitals, satellites. COVID exposed vulnerabilities — shortages impacted 169+ industries globally
Global concentration: US, South Korea, Taiwan, Japan = 79.4% of global IC design revenue; 5 companies in 4 countries supply critical lithography equipment
Programme: ₹76,000 crore incentive framework; 50% fiscal support on project cost; 4 schemes (fab, compound semi, ATMP, DLI)
Approved (Aug 2025): 10 projects; cumulative investment ₹1.60 lakh crore in 6 states
Key projects: Micron ATMP, Tata Electronics Semiconductor Fab, compound semiconductor fab
R&D intensity (2024): US 17.7%, South Korea 11.8%, Taiwan 11.5%, EU 10.8%, China 9.2%

ASPI Critical Technology Rankings (India among top 5 in 45/64 technologies)

3rd in Advanced Aircraft Engines; 3rd in Autonomous Underwater Vehicles
2nd in Biological Manufacturing; 3rd in Novel Antibiotics & Antivirals
3rd in AI Algorithms, ML, NLP
3rd in Post-Quantum Cryptography; 4th in Quantum Sensors

2nd in Advanced Composite Materials, Smart Materials
2nd in Biofuels; 3rd in Supercapacitors
2nd in Mesh & Infrastructure Independent Networks
4th in Drones, Swarming & Collaborative Robots

Note: Rankings based on research output only — do not capture industrial maturity or commercial deployment

✅

Quality Control Orders (QCOs) — Towards Pragmatism

Enhancing Global Competitiveness | Box VIII.8

QCO Coverage

Total QCOs: 143 covering 723 products (as of 31 Dec 2025)
In 2019: only 214 products — more than tripled
Purpose: quality standards, curb substandard imports, consumer/worker safety
QCOs revoked in 2025-26: 46 QCOs covering 51 products
Deferred/suspended: 3 QCOs covering 63 products + 20 categories (OTR)

Toys Sector — Success Story

QCO issued 2020 (effective 01.01.2021); Customs Duty: 20% → 70%
Imports declined 52% between FY15–FY23
Exports soared 239%
Net exporter since FY21 (was net importer in FY15)

Pragmatic QCO Framework (Box VIII.8)

QCOs on finished goods: beneficial — toys, transformers, footwear, cement
QCOs on raw materials/intermediates: caution needed — can disrupt downstream (auto, power, electronics)
MSMEs lack capital for in-house testing; need adequate transition periods
Framework should include: rigorous pre-notification, calibrated transition, national testing capacity, exemptions for inputs without domestic alternatives
Milton Friedman 'Pencil Lesson': modern manufacturing has complex interdependencies

🛣️

Infrastructure & Logistics: Improving Competitiveness

PM GatiShakti | ULIP | Industrial Corridors

Logistics Cost Reduction

FY22: 8.84% of GDP → FY23: 8.79% → FY24: 7.97%
Driven by PM GatiShakti, DFCs, Bharatmala, Sagarmala
27 States: notified State Logistics Policies
28 Aspirational Districts using GatiShakti District Master Plan Module

PM GatiShakti National Master Plan

57 Ministries onboarded (Nov 2025)
1,700+ data layers integrated
Public access: 230 curated datasets for private investment planning
Unified Geospatial Interface now open to private users

ULIP — Unified Logistics Interface Platform

Connects 44 systems across 11 ministries
2,000+ data fields; 1,700+ companies registered
200 crore API transactions executed

National Industrial Corridor Development Programme

Phase-I cities: Dholera, Shendra-Bidkin, Greater Noida, Vikram Udyogpuri
350 industrial plots allotted
Investment: ₹2.02 lakh crore (electronics, renewables, pharma, EVs)

🏗️ Industrial Cluster Strategy — Why It Matters (Box VIII.9)

China's Greater Bay Area: 35% of national exports, 11% of GDP from <1% of land
Vietnam's 2 key economic regions: ~2/3 of GDP & trade in 11% of land
Nashik luggage cluster: Samsonite = world's largest factory by volume (surpassed European hubs)
India's Gap: clusters exist but lack scale, multimodal connectivity, regulatory flexibility
3 Pillars Forward: (1) Scale & Location — large brownfield areas, land pooling; (2) Empowered Institution (like IFSCA at GIFT City); (3) Private Execution by developers
Tier-2/3 cities: Belagavi (aerospace castings), Hubballi-Dharwad (steel, consumer durables) — India's industrial future

🏪

Scaling Up MSMEs: Credit, Markets & Competitiveness

2nd Largest Employer after Agriculture

7.47 cr

MSME Enterprises (Udyam Portal)

32.82 cr

Persons Employed by MSMEs

35.4%

Share of Manufacturing

48.58%

Share of India's Exports

31.1%

Share of GDP

₹8.1L cr

Estimated Locked in Delayed Payments

MSME Credit Trends (Aug 2025)

Segment	Aug 2025 (YoY%)
Micro & Small	20.9%
Medium Enterprises	13.1%
Total MSME Credit	18.5%
Large Industry	1.8%

MSME classification revised April 2025 — expanded PSL eligibility. Non-bank (NBFCs): strong double-digit lending growth.

SME IPOs Boom

Listings: +87.2% between FY23–FY25
Issue amount: +52.7% over previous year
Facilitated by UPI-based ASBA system

Key MSME Schemes

CGTMSE revamp (Apr 2023): corpus ₹9,000 cr; ceiling ₹2 cr → ₹5 cr; fee 0.37%; women MSEs 85% → 90% coverage
CGTMSE further (Apr 2025): ceiling doubled to ₹10 crore
SRI Fund: ₹50,000 cr equity infusion target; invested ₹15,442 cr in 682 MSMEs (Nov 2025)
TReDS: threshold reduced ₹500 cr → ₹250 cr for onboarding
TEAM Initiative: 5 lakh MSMEs on ONDC
MSME ODR Portal: online dispute resolution for delayed payments

Unincorporated Sector Credit (ASUSE)

Avg outstanding loan: ₹50,138 (FY23) → ₹53,710 (FY24) — +7.12%
Formal credit access: 48% (FY22) → 51% (FY24)
Commercial bank share: +6 pp; moneylenders: −3 pp
PSL sub-target: 7.5% of ANBC for micro enterprises

🌏

Integrating with Global Value Chains (GVCs)

BVAX | Backward Linkages | Tariff Rationalisation

India's GVC Position

India's manufacturing GVA: 2.9% of global manufacturing GVA (2024)
Merchandise exports: 1.8% of global (2024)
Limited backward GVC participation (importing intermediates for export assembly)
Inverted duty structures raise input costs and discourage assembly

Backward GVC Participation — BVAX Ratio (Box VIII.13)

India BVAX: 10.7% (1995) → 25.5% (2012) → 17.2% (2020)
Vietnam BVAX: ~48% (2020); Electronics: 49.8% vs India 25.4%
Higher backward participation (even with high FVA) → greater absolute DVA & employment due to scale
Grossman & Rossi-Hansberg (2008): GVC integration generates higher absolute DVA in medium term

🔑 GVC Strategy: Key Insights

Import substitution → competitiveness model: India needs to shift from "make everything at home" to "build strategic depth in key segments"
Tariff rationalisation: High tariffs on intermediates/capital goods = inverted duty = hurts assembly. Recent budgets have started correcting this
Geopolitical opportunity: Supply chain realignments (near-shoring, friend-shoring) create openings for labour-abundant India
Advanced manufacturing matters: Forces discipline, quality, productivity — unlike infrastructure or services alone
TRC (Translational Research Centres): Proposed as national infrastructure to bridge TRL 1-3 to TRL 7-9 gap; managed under ANRF architecture

💡

Concept Explainers for UPSC

Key Terms from Chapter 8

📊 GVA vs GDP in Manufacturing

Gross Value Added (GVA) measures the contribution of each sector by deducting intermediate consumption from output. GDP = GVA + Taxes on products − Subsidies. Medium & high-tech GVA share of 46.3% in India's manufacturing shows structural upgrading. Competitive Industrial Performance (CIP) index by UNIDO measures a country's manufacturing capability and exports.

🌐 Backward vs Forward GVC Participation

Backward GVC: Import intermediates → process → export finished goods. Measured by BVAX (foreign value added as % of gross exports). Higher BVAX means more integrated. Forward GVC: Export raw materials/intermediates for others to process. For labour-rich economies, backward participation generates more employment via scale effects. India's BVAX (17.2%) far below Vietnam (48%).

⚙️ PLI Scheme — How It Works

PLI = Production Linked Incentive — provides a % of incremental sales/turnover as incentive to manufacturers in target sectors. Unlike capex subsidies, PLI rewards actual production and sales growth, aligning incentives with competitiveness. Covers 14 sectors; ₹1.97L cr outlay. Key insight: electronics PLI drove India's mobile phone manufacturing from 2 units (2014) to 300+ units with USD 22.2B exports in H1 FY26.

🔧 MSME Classification (Revised Apr 2025)

Under MSMED Act 2006, revised thresholds expand formal credit access. Micro: Investment ≤₹1 cr, turnover ≤₹5 cr. Small: Investment ≤₹10 cr, turnover ≤₹50 cr. Medium: Investment ≤₹50 cr, turnover ≤₹250 cr. The April 2025 revision raised these thresholds, expanding PSL eligibility — more MSMEs now qualify for priority sector lending. MSMEs = 2nd largest employer after agriculture (32.82 cr persons).

📈 GERD — Gross Expenditure on R&D

GERD as % of GDP is the standard measure of R&D investment intensity. India: 0.64% — well below world average. US: 3.48%; South Korea: 4.91%; China: 2.43%. Low GERD is partly because India's private sector only funds 41% (vs 75–79% in developed economies). The ₹1 lakh crore RDI Fund aims to incentivise private R&D. NMM targets bridging the TRL gap: India strong in basic research (TRL 1-3) but weak in translation to deployable tech (TRL 7-9).

🏭 Technology Readiness Level (TRL)

TRL 1-3: Basic research, concept formulation — India relatively strong here. TRL 4-6: Laboratory validation, technology demonstration — weak transition zone in India. TRL 7-9: System prototype, actual system proven in operational environment, commercial deployment — the gap India must bridge. Translational Research Centres (TRCs) are proposed as shared national assets for prototyping/piloting to help startups & MSMEs cross this gap.

UPSC Prelims Practice MCQs — Chapter 8

Q1. With reference to India's industrial performance in H1 FY2025-26, which of the following statements is correct?

(a) Industry GVA grew by 5.9% — same as FY25

(b) Industry GVA grew by 7.0%, recovering from 5.9% in FY25

(d) Manufacturing PMI fell below 50 indicating contraction

Answer: (b)

Industry GVA grew 7.0% in H1 FY26 (recovery from 5.9% in FY25). Manufacturing GVA: 7.72% Q1, 9.13% Q2 FY26. PMI stayed well above 50 (expansion) since March 2023.

Q2. Consider the following statements about PLI Schemes (as of September 2025):
1. PLI Schemes cover 14 sectors with an outlay of ₹1.97 lakh crore
2. Total incremental production/sales under PLI crossed ₹18.70 lakh crore
3. Employment generated was 12.60 lakh (direct + indirect)
Which of the above is/are correct?

(a) 1 and 2 only

(b) 1, 2 and 3

(d) 1 and 3 only

Answer: (b)

All three are correct as per Economic Survey 2025-26. PLI exports also crossed ₹8.20 lakh crore. 806 applications approved; ₹23,946 crore incentives disbursed.

Q3. Which of the following is NOT a correct fact about India's coal sector as per Economic Survey 2025-26?

(a) India is the 5th largest coal reserve holder globally

(b) Coal production in FY25 was 1,047.52 MT — highest ever

(d) Coal contributes 74% to the national energy mix

Answer: (d)

Coal contributes 55% to the energy mix (not 74%). It fuels over 74% of total power generation — which is the distinction. All other statements (a), (b), (c) are correct.

Q4. The National Manufacturing Mission (NMM), announced in Union Budget 2025-26, aims to increase manufacturing's share of GDP to which target by 2035?

(a) 20%

(b) 25%

(d) 18%

Answer: (b)

NMM targets doubling manufacturing from 12.9% (2023) to 25% of GDP by 2035, generating 143 million jobs and merchandise exports of USD 1.2 trillion.

Q5. With reference to the BVAX ratio, which of the following statements is correct?

(a) BVAX measures foreign value added as a share of gross exports

(b) A higher BVAX means lower integration into GVCs

(d) Vietnam's BVAX is lower than India's in electronics

Answer: (a)

BVAX = Backward participation ratio = foreign value added as % of gross exports. Higher BVAX = MORE backward GVC integration. India BVAX: 25.5% (2012) → 17.2% (2020). Vietnam: ~48%. In electronics, Vietnam BVAX = 49.8% vs India 25.4%.

Q6. Which of the following is/are correctly matched regarding India Semiconductor Mission (ISM)?
1. Total programme outlay: ₹76,000 crore
2. Fiscal support per project: 50% of project cost
3. Projects approved (Aug 2025): 10 projects; investment ₹1.60 lakh crore in 6 states
Select the correct answer:

(a) 1 and 2 only

(b) 1, 2 and 3

(d) 1 only

Answer: (b)

All three are correct. ISM: ₹76,000 cr framework, 50% fiscal support on project cost/capex, 10 projects approved (Aug 2025) with ₹1.60 lakh crore investment in 6 states. Key approved projects: Micron ATMP, Tata Electronics Fab.

Q7. Which of the following is NOT among the 5 structural pillars of competitiveness identified in Chapter 8 of Economic Survey 2025-26?

(a) Strengthening regulatory environment for ease of doing business

(b) Boosting innovation and R&D

(d) Enhancing infrastructure and logistics to lower costs

Answer: (c)

The 5 pillars (Para 8.12) are: (1) EoDB/regulatory reforms, (2) Innovation & R&D, (3) Skill gaps for future workforce, (4) Infrastructure & logistics, (5) Scaling up MSMEs for global competition. FDI expansion is not listed as a separate structural pillar.

Q8. India's per capita cement consumption compared to global average is approximately:

(a) 190 kg vs 350 kg global average

(b) 350 kg vs 450 kg global average

(d) 410 kg vs 480 kg global average

Answer: (c)

India's domestic cement consumption is approximately 290 kg per capita, compared to a global average of 540 kg per capita — indicating significant scope for demand growth. India is the 2nd largest cement producer globally with 690 MT installed capacity.

Q9. Consider these statements about India's MSME sector:
1. MSMEs are the largest employer in India
2. MSMEs account for 48.58% of India's exports
3. CGTMSE ceiling was doubled from ₹5 crore to ₹10 crore from April 2025
Which is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(d) 3 only

Answer: (b)

Statement 1 is INCORRECT — MSMEs are the 2nd largest employer after agriculture. Statements 2 and 3 are correct: MSMEs = 48.58% of exports; CGTMSE ceiling doubled to ₹10 crore from April 2025 (from ₹5 crore since April 2023 revamp).

Q10. India's Global Innovation Index (GII) rank in 2025 and its position relative to income groups is:

(a) 40th; top in upper-middle income group

(b) 38th; 1st in lower-middle income group and 1st in Central & Southern Asia

(d) 42nd; 1st in South Asia only

Answer: (b)

India's GII rank improved to 38th in 2025 (from 66th in 2019, improving through 48, 46, 40, 40, 39, 38). India is 1st in lower-middle income group and 1st in Central and Southern Asia region — published by WIPO.

📝

Quick Reference: Key Numbers for UPSC

Chapter 8 — Must-Know Data Points

Topic	Key Data Point	Context
Manufacturing GVA	7.72% Q1, 9.13% Q2 FY26	Recovery after 5.9% FY25
Medium/High-Tech Share	46.3% of manufacturing VA	UNIDO, India's structural upgrade
CIP Rank	37th (2023)	Up from 40th in 2022
Steel Production FY25	152.18 MT crude; 146.69 MT finished	CAGR 10.1% since FY21; 2nd globally
Coal Production FY25	1,047.52 MT (highest ever)	55% of energy mix; 74% of power gen
Mobile Manufacturing	₹5.45 lakh crore (FY25)	From ₹18,000 cr (FY15); 30x growth; 2nd globally
Pharma Turnover FY25	₹4.72 lakh crore	3rd largest by volume; 20% global generics
Textiles Exports FY25	USD 37.75 billion	6th largest global exporter; 4% share
PLI Total Outlay	₹1.97 lakh crore (14 sectors)	Investment: ₹2.0L cr; Production: ₹18.70L cr
ISM Projects (Aug 2025)	10 projects; ₹1.60L crore; 6 states	₹76,000 cr programme; 50% fiscal support
GII Rank 2025	38th (from 66th in 2019)	#1 lower-middle income; #1 Central & S. Asia
GERD % GDP	0.64%	vs US 3.48%, S.Korea 4.91%, China 2.43%
ASPI Critical Tech	Top-5 in 45 out of 64 technologies	vs 4 technologies in 2003-07
QCOs Coverage	143 QCOs; 723 products (Dec 2025)	vs 214 products in 2019; tripled
Logistics Cost % GDP	7.97% (FY24)	Down from 8.84% (FY22)
MSMEs Persons Employed	32.82 crore	2nd largest employer; 7.47 cr enterprises
MSME Credit Growth Aug 2025	18.5% YoY	vs large industry 1.8% — MSME credit driving growth
BVAX India 2020	17.2%	Vietnam 48%; India electronics 25.4% vs Vietnam 49.8%
India Manufacturing GVA (global)	2.9%	Merchandise exports: 1.8% of global
NMM Manufacturing Target	25% of GDP by 2035	From 12.9% in 2023; 143M jobs; USD 1.2T exports

Chapter 8: Industry's Next Leap

Chapter Overview

Global Manufacturing Q3 2025

India's QoQ Manufacturing Growth — Q3 2025: 1.3%

India's Domestic Industrial Performance

Business Sentiment Indicators

5 Structural Pillars of Competitiveness (Para 8.12)

Industrial Credit Diversification

Bank Credit to Industry

Non-Bank Financial Flows

Total Domestic Resources

🧱 Cement

⚙️ Steel

🪨 Coal

🧪 Chemicals & Petrochemicals

🚗 Automobile Industry

EV Policy Ecosystem (Box VIII.1)

📱 Electronics Sector — Flagship PLI Success Story

💊 Pharmaceuticals & Medical Devices

🧵 Textiles & Apparel

Production Linked Incentive (PLI) Schemes — Cumulative Status (Sep 2025)

National Manufacturing Mission (NMM) — Union Budget 2025-26

IP Rankings (2024) & R&D Activity

R&D Challenge: Low Business Sector Share

Key Institutional Initiatives for R&D

⚡ India Semiconductor Mission (ISM) — Why It Matters (Box VIII.7)

ASPI Critical Technology Rankings (India among top 5 in 45/64 technologies)

QCO Coverage

Toys Sector — Success Story

Pragmatic QCO Framework (Box VIII.8)

Logistics Cost Reduction

PM GatiShakti National Master Plan

ULIP — Unified Logistics Interface Platform

National Industrial Corridor Development Programme

🏗️ Industrial Cluster Strategy — Why It Matters (Box VIII.9)

MSME Credit Trends (Aug 2025)

SME IPOs Boom

Key MSME Schemes

Unincorporated Sector Credit (ASUSE)

India's GVC Position

Backward GVC Participation — BVAX Ratio (Box VIII.13)

🔑 GVC Strategy: Key Insights

📊 GVA vs GDP in Manufacturing

🌐 Backward vs Forward GVC Participation

⚙️ PLI Scheme — How It Works

🔧 MSME Classification (Revised Apr 2025)

📈 GERD — Gross Expenditure on R&D

🏭 Technology Readiness Level (TRL)

UPSC Prelims Practice MCQs — Chapter 8