Trade Deficit Widening: Is 'Make in India' Falling Short on Its Promises?

India’s trade deficit for April 2025 stood at $26.42 billion, the highest since the November 2023 peak. Despite growing export numbers in certain sectors, the ballooning import bill continues to widen the deficit, raising serious questions about the long-term sustainability of the Make in India strategy.

Why India’s April 2025 Trade Deficit Matters?

April’s trade numbers are more than just a monthly report — they reflect structural weaknesses in India’s growth model. A rising deficit amidst strong export performance shows that India’s manufacturing sector is still not self-reliant enough. Understanding this shift is critical to shaping future industrial and trade policies.

Is the Make in India Program Underperforming?

This is a recurring concern. Launched with much fanfare, Make in India aimed to transform India into a global manufacturing hub - not only to promote exports but also to reduce import dependence. Yet, monthly trade deficit numbers averaging over $23 billion suggest otherwise.

The core issue? India is still heavily reliant on imported components to support its manufacturing operations, especially in electronics. The result: even as exports rise, imports rise faster, eroding any net gains from manufacturing-led exports.

The Apple Case: High Exports, Even Higher Imports

Apple's manufacturing shift to India is a success story on paper. In FY24, the company produced iPhones worth $22 billion from its Indian assembly units. But there's a catch.

• Domestic value addition remains low—just around 15–20%, though it has improved from 8% in 2020.

• That means 80–85% of the parts are still imported, primarily from China, Taiwan, South Korea, and Japan.

So, while India’s electronic goods exports jumped to $3.69 billion in April 2025 (from $2.65 billion in April 2024), the electronics imports surged even more sharply to $9.25 billion (from $7.05 billion a year ago).

This reveals a harsh truth: India is acting more as an assembler than a full-fledged manufacturer.

Why Imports Outpace Exports in Electronics

There’s a structural challenge. Unlike China and Taiwan, which have robust ecosystems for electronic components, India lacks a deep domestic supply chain for semiconductors, chipsets, sensors, and other critical parts.

• Imports are front-loaded in electronics manufacturing.

• As India scales up export volumes, the import bill rises in parallel, and often faster.

Unless domestic component manufacturing is ramped up, India’s role in the global value chain will remain limited to final-stage assembly—an unsustainable model in the long run.

What Can Be Done: Lessons from Auto Sector Success

The automobile industry offers a roadmap. India became a global auto export player by building a vibrant ancillary ecosystem—local vendors, part suppliers, R&D centers, and robust logistics.

A similar approach is now needed in electronics and precision manufacturing.

• Fast-track investment in domestic component production.

• Offer targeted PLI (Production-Linked Incentive) schemes for electronics, component makers, not just assemblers.

• Encourage public-private R&D hubs focused on semiconductor and hardware innovation.

Conclusion: The Trade Deficit is a Wake-Up Call

India’s Make in India push has delivered some milestones, especially in smartphone production. But the ballooning trade deficit in April 2025 is a warning sign.

The focus now needs to shift from assembling to deep manufacturing—creating an end-to-end value chain within the country. Only then can the export surge truly translate into a net economic advantage, and not just a trade illusion.