Manufacturing Industry Contribution to GDP

At present, the manufacturing industry contributes 16 percent to India’s GDP. Anand Sharma, the Union Minister of Commerce and Industry, has stated that the Union Government will look to increase the manufacturing sector’s growth and create a policy that will assist the sector perform properly in India.

Manufacturing sector’s position in India GDP

The contribution made by the manufacturing sector in India’s real gross domestic product has increased over the years. However, the rate of growth has not been at par with expectations. In the planning process of India’s economic development a lot of emphasis was given on the heavy industries and this led to greater expectations from the manufacturing sector.

The East Asian countries like China have had similar levels of planning but have performed better in the global arena with their manufacturing sector. This has been discovered in a RBI Development Research Group study on productivity, competitiveness, and efficiency of India’s manufacturing sector.

In 2007, the manufacturing sector contributed 34 percent to China’s GDP while its Indian counterpart accounted for 16.1% in 2009-10 fiscal. In the last few years, India’s registered manufacturing sector has made better contributions than the unregistered sector.

The following table shows the estimated year on year increase in the contribution of various industries to India’s GDP in the upcoming fiscal year 2012:

The following table shows the growth rate of real GDPs of different sectors of Indian economy:

Manufacturing industry contribution to GDP – state wise contribution

The following table provides information on the contribution made by manufacturing industries across the states and union territories to India’s GDP. It also provides an indication of their GDP growth:

Top Players in India Manufacturing Sector

The leading names in India’s manufacturing sector may be mentioned as below:

• Larsen and Toubro
• Maruti Suzuki
• Ranbaxy Laboratories
• Mahindra and Mahindra
• Apollo Tyres
• Asian Paints
• Hindustan Lever Network
• Jindal Steel & Power
• Bombay Dyeing
• Videocon Industries

Manufacturing Industry Shares Performance

The following table reflects the performance of the stocks of leading manufacturing industry organizations of India for April 19th, 2012:

Future of manufacturing industry contribution to India’s GDP

The Union Government has consented to the National Manufacturing Policy (NMP) that is an ambitious and long awaited legislation. As per this policy, several mega industrial zones will be created and this will help in generating 100 million jobs by 2022. This will put India on an equal footing with countries like Japan and China that have strong manufacturing sectors.

Sharma has stated that the NMP will look to take the manufacturing sector’s share in GDP to 25% by 2022. The job growth will also happen as part of UPA’s inclusive growth plans.

The freshly approved policy does not include any subsidies for the units that will operate in these zones but the government will provide financial incentives as a form of encouragement. The small and medium enterprises will be the major beneficiaries of this fiscal benefit.

The Environment and the Labor ministries had earlier made certain objections to the NMP because some clauses related to their ministries had been waived. Manmohan Singh had asked a Group of Ministers (GoM) led by Sharad Pawar, the Union Agriculture Minister, to deal with the issue.

According to Sharma, NMP will make sure that environmental and labor laws are properly adhered to. It will also look to reduce the legal burden on the industry with rationalized and simpler procedures. He has said that the proposed interventions are sector, technology, and location neutral with the exception of efforts to provide incentives for green technology that will help in sustainable development.

The NMP will also look to optimize the private sector’s potential and improve the younger generation’s entrepreneurial capabilities. The policy will deal with important areas such as business environment improvement and development of industrial infrastructure. Technology development is also one of its major aims. Overall, it will look to help India grow in an environmentally sustainable manner.

The National Manufacturing Policy will also aim to create big and amalgamated industrial townships. The land used for these zones will be sterile land and these will be away from economically critical area and have good access to necessary facilities.

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