Abstract
The manufacturing sector in India contributes around 15% of its GDP, a share which is significantly lower than the newly industrialised countries of Asia and those of many industrialised nations (who have a lower share now compared to the earlier industrialisation phase). Apprehensions run high that without steady expansion of the manufacturing sector, India is set to lose out on its demographic dividend where a large fraction of the workforce would be languishing in less productive farm and non-farm activities. The share of manufacturing in total employment increased to 12.2% in the first-half of the last decade and declined to 11% in the second-half of the decade indicating higher capital intensity.
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Notes
- 1.
Twelfth Five-Year Plan (2012–17) Document.
- 2.
Ministry of Commerce and Industries, October, 2018, http://commerce-app.gov.in/meidb/comq.asp?ie=i.
- 3.
Kumar (2017) explained that the share of manufacturing began to decline after a certain level of per capita income was reached as services began to attain a greater prominence, as happened in most of the industrialised countries. However, de-industrialisation happening in developing countries is an issue that warrants attention. Agarwal (2015) summarised that the share in the middle-income countries had increased before 1990s but has tended to decline since then. The exact timing of the reversal from an increasing share of manufacturing in GDP to a decreasing share varied between the regions. In East Asia Pacific (EAP) and Sub-Saharan Africa (SSA), it started decreasing after the period 1974–82, whereas in the Latin America and Caribbean (LAC), the decline has been particularly sharp since the 1983–90 period. There is a further difference in the performance of the sector in more recent years. Its share has declined continuously in LAC and Sub-Saharan Africa (SSA), whereas in East Asia and Pacific (EAP) it has been almost constant and in South Asia (SA), there has been an overall increase though with fluctuations.
- 4.
The recent World Bank study on South Asia and Manufacturing arrives at similar conclusions.
- 5.
- 6.
Research on opportunities of market access, value addition, competitiveness, agglomeration, innovation, integration and challenges of market competition, industrial structure, capacity gaps, etc. has been less frequent and prominent. These factors along with others highlighted above affect performance of the manufacturing at the sectoral level. These also define the scope of firm level analysis for policy design, regulation and organisational innovations.
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Mohanty, S.K., Saha, S. (2019). Manufacturing Trade and Employment Linkages in India. In: Chaturvedi, S., Saha, S. (eds) Manufacturing and Jobs in South Asia. South Asia Economic and Policy Studies. Springer, Singapore. https://doi.org/10.1007/978-981-10-8381-5_4
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