Infrastructure and Manufacturing - Newspaper Summary

 The sources illustrate that India's Infrastructure and Manufacturing sectors, as of October 2025, are characterized by ambitious government policy pushes, heavy corporate capital expenditure, structural challenges in key industries like metals, and significant foreign investment interest, all within an evolving global trade and geopolitical context.

Here is a comprehensive discussion of what the sources say regarding Infrastructure and Manufacturing:

I. Manufacturing Sector Rejuvenation and Policy Push

The Government of India is embarking on a significant mission to boost the manufacturing sector's share in the GDP and enhance global competitiveness.

National Manufacturing Mission (NMM)

• Ambitious Targets: India plans to reboot its long-held ambition of raising manufacturing's share of Gross Domestic Product (GDP) to 25% by 2035, up from around 13% currently.
• Financial Outlay: The government plans a ₹10,000 crore outlay for the National Manufacturing Mission (NMM). This fund, which started with a modest ₹100 crore allocation in the FY26 Union Budget, will be channeled through viability gap funding (VGF)—a government grant to bridge the shortfall between a project's cost and private financing.
• Scope and Coordination: The NMM aims to support greenfield projects and scale up high-value sectors across seven regional clusters. The mission will not alter the mandates of existing departments but will act as a coordinating body among various ministries (electronics, steel, heavy industries, renewable energy, Niti Aayog, and DPIIT).
• Targeted Sectors: The NMM will specifically support 15 key sectors, including:
  • Clean Energy/High-Tech: Solar photovoltaic (PV) cells, electric vehicle (EV) batteries, motors and controllers, electrolyzers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.
  • Core Industries: Capital goods, basic metals (iron, steel, aluminum, non-ferrous metals), pharmaceuticals, automotive and components, electronics, and transport equipment (aerospace, shipbuilding, modern trains).
• Structural Context: India's share in global manufacturing output is currently 2.9%, significantly lower than China’s 31.6%. The NMM aims to close this gap, enhance domestic value addition, and deepen India's integration into global value chains. Experts warn that the proposed ₹10,000 crore may not be adequate, and land reforms will be key to the mission's success.
• Regional Strategy: The NMM proposes seven regional clusters for industrial expansion, focusing on specialized high-tech sectors like semiconductors and aerospace in the South-West (Bengaluru/Chennai), food/consumer durables/EVs in the North-West (Delhi-NCR), and basic metals in the East (West Bengal).

Defense Manufacturing and MSME Inclusion

The Ministry of Defence released the Defence Procurement Manual (DPM) 2025 to spur innovation and strengthen the domestic defence manufacturing ecosystem.

• Reservation for MSMEs: The DPM 2025 introduces a 25 per cent product reservation for Micro and Small Enterprises (MSMEs) in revenue procurements, which are valued at approximately ₹1 lakh crore for FY26.
• Start-up Support: The manual relaxes eligibility criteria ("prior turnover" and "prior experience") for DPIIT-recognized start-ups, provided they meet technical specifications.
• Innovation Focus: New chapters were added to the DPM 2025 focused on "Promoting Self-Reliance through Innovation and Indigenisation". These reforms are expected to enhance business visibility for approximately 14,000 MSMEs and over 350 defense start-ups.

II. Infrastructure Development and Investment

Infrastructure sectors, especially transportation and housing, are seeing concentrated investment and regulatory support.

Shipping and Shipbuilding Push

The Centre has launched a substantial shipbuilding package, totaling nearly ₹70,000 crore, building on the FY26 Budget proposals, highlighting shipbuilding as a strategic economic investment.

• Strategic Rationale: This push is considered timely given volatile global shipping costs and geopolitical disruptions, such as punitive port fees between the US and China, which hurt third countries. India currently relies on foreign-owned vessels for 95% of its goods transport and pays $75 billion annually for hiring them.
• Dual Focus: Reforms aim at two levels: (1) Port modernization through the existing Sagarmala scheme (₹5.8 lakh crore outlay over two decades), to accommodate larger ships and reduce turnaround times; and (2) Creating critical shipping capacity through the new shipbuilding package, insulating exports and imports from disruption.
• New Greenfield Projects: Two public sector companies, Mazagon Dock Shipbuilders Ltd (MDL) and Cochin Shipyard Ltd (CSL), selected Thoothukudi in Tamil Nadu for new greenfield shipbuilding units, committing a combined investment of ₹30,000 crore and expected to generate 55,000 jobs. Thoothukudi was selected due to its rocky seabed (reducing maintenance dredging), favorable siltation pattern, good connectivity, proximity to the port, and availability of labor.
• Incentives: The FY26 Budget granted infrastructure status for large vessels and waived customs duty on shipbuilding spares and equipment for 10 years. Dedicated funds like the Maritime Development Fund (₹25,000 crore corpus) and the Shipbuilding Development Scheme (₹20,000 crore allocation) are intended to build critical capacity.

Railways Capital Expenditure

Indian Railways is undergoing a major spending spree, having exhausted ₹1.6 trillion (over 65%) of its record ₹2.52 trillion budgetary allocation in the first seven months of FY26.

• Need for Additional Funds: This marks the first instance in years where the Railways may need to seek additional funds from the Centre to complete capital projects before the fiscal year ends.
• Key Drivers: The spending spike is attributed to capital-intensive programs reaching the execution stage, such as increasing the production of Vande Bharat trains, accelerating work on high-speed railways, and the installation of the indigenously developed automatic train protection system, Kavach.

Regulatory Support for Infrastructure Finance

The Reserve Bank of India (RBI) is creating incentives for Non-Banking Financial Companies (NBFCs) to finance infrastructure projects:

• Lower Risk Weight: The RBI proposed lowering the risk weight on NBFCs’ financing of "high-quality infrastructure projects". For projects with satisfactory operations for at least one year and where the borrower has repaid 10% or more of the sanctioned amount, the risk weight will be reduced to 50% (from 100%). If repayment is between 5% and 10%, the risk weight drops to 75%.
• Housing Finance: The RBI approved extending a specified exemption for the SWAMIH Investment Fund-I (Special Window for Affordable and Mid-Income Housing), encouraging greater inflows into the fund from regulated entities like banks.

Digital Infrastructure Investment

The GX Group, a broadband and connectivity gear maker, announced plans to invest around ₹1,500 crore over the next four years in a new venture, GX Quantum Photonics, focused on developing advanced photonics modules and chip systems.

• Technology Focus: The investment will target next-generation broadband, 5G/6G, and quantum communication technologies, primarily serving data centers and telecom operators.
• Phased Investment: Phase I involves ₹500 crore, supported by Invest International (Netherlands) and collaboration with Smart Photonics BV, with the subsequent ₹1,000 crore investment planned for Phase II technology transfer and setting up local facilities.

III. Challenges and Market Dynamics in Manufacturing

Despite government pushes, key manufacturing segments face structural vulnerabilities and macroeconomic hurdles.

Metals and Metallurgy Sector (MMI) Vulnerabilities

India’s metals trade pattern exhibits a structural asymmetry, exporting low-value bulk materials while importing high-value niche inputs, compromising industrial resilience.

• Trade Deficit: The MMI trade deficit reached $14.15 billion in 2024, constituting 5.4% of the overall trade deficit. India has been a net importer since 2004, reversing a previous surplus trend.
• Product-Level Declines: Copper, in particular, dramatically shifted from a surplus to a deep deficit of $8.36 billion in 2024. Iron and steel also collapsed into a $(-)7.33 billion deficit by 2024.
• Structural Weaknesses: These deficits stem from persistent vulnerabilities including fragmented markets, shallow value-addition (exporting raw ore/bauxite while importing higher-value alloys), outdated technology, high energy costs, policy volatility, and infrastructure bottlenecks.
• Recycling Deficiencies: Recycling systems remain "embryonic," dominated by informal operators lacking scale and technology, resulting in missed opportunities for a reliable secondary supply base.
• The Way Forward: Recommended strategies include expanding domestic smelting and refining capacity, offering PLI-style incentives for specialty steels, building integrated industrial clusters in port-based corridors, and focusing on green metallurgy (hydrogen-based steelmaking) to access ESG-sensitive markets. Strategic seabed exploration (e.g., Carlsberg Ridge acquisition) is highlighted as crucial for securing critical minerals like copper, nickel, and cobalt.

Global Trade and Geopolitical Headwinds

Global uncertainty, particularly trade policy, directly impacts Indian manufacturing and corporate investment decisions.

• US Tariffs and Trade Deals: Commerce Minister Piyush Goyal stated India will not rush into trade agreements under restrictive conditions, despite being "very close" to a deal with the US. High US tariffs imposed on Indian goods are expected to be offset by the benefits of Goods and Services Tax (GST) reforms, keeping India's FY26 growth resilient (projected at 6.6%). However, trade policy uncertainty contributes to caution.
• Overseas Investment Dip: Overseas Direct Investment (ODI) by India Inc dipped sharply by 13% year-on-year in Q3 2025 to $10.03 billion. Experts suggest companies are postponing fresh global investments due to higher global uncertainty and tariff tensions, expecting the trend to continue until geopolitical and trade war clarity emerges.
• Sanctions Impact on Oil Refining: US sanctions on two major Russian oil giants, Rosneft and Lukoil, are expected to create an economic trade-off for Indian refiners, who may lose discounts on crude purchases. While India's refining system is flexible enough to switch to alternative crudes (Middle East, Africa, Latin America), diversification is generally "not cost-neutral". Reliance Industries (RIL) is monitoring the situation and stated it would comply with guidance from the Indian government and the EU.

Specific Manufacturing Sector Activity

• Cement: Dalmia Bharat is pursuing the acquisition of Jaiprakash Associates’ cement assets in North and Central India while simultaneously developing a large greenfield plant in Jaisalmer, Rajasthan, as a Plan B in case the complex acquisition fails.
• Consumer Electronics: Japanese electronics brands (Akai, JVC, OM System, Sony, Panasonic, Hitachi) are returning or resetting their strategies in India's fast-growing $75 billion market, focusing on premium value, reliability, and niche segments rather than engaging in price wars dominated by Chinese brands.
• Automotive: TVS Motor Co. plans to invest over ₹1,000 crore in its British marquee brand, Norton Motorcycles, aiming to launch six new models by the end of 2026 and eventually scale annual sales to 20,000 units globally, positioning Norton as key to its premium and international strategy.
• Regional Investment Clearance: The state of Karnataka approved 13 investment projects totaling ₹27,607.26 crore, expected to create 8,704 jobs, including significant manufacturing investments from SFX India Mfg Pvt Ltd (₹9,298 crore) and JSW JFE Electrical Steel Pvt Ltd (₹7,102 crore).
• Manufacturing Sentiment: Growth in India’s private sector eased slightly to a five-month low in October, tempered by a slowdown in services and weaker new orders. However, the flash manufacturing Purchasing Managers’ Index (PMI) rose to 58.4 (from 57.7 in September), indicating robust expansion in the sector.