India’s manufacturing sector has been coming off its high growth path since the first quarter of 2007. Large parts of India remain outside the impact of this downturn, as their economies are largely related to agricultural or tertiary sectors. In fact, 10 states with the highest manufacturing sector GDP account for 70% of the manufacturing output in the country.
Maharashtra, Gujarat and Tamil Nadu are India’s top three industrialised states, and while the top eight positions have remained static since 2001, two new states, Jharkhand and Chhattisgarh have moved up into the top 10, displacing Rajasthan and Punjab, respectively.
The phenomenal growth in these two states, since their inception, has seen the share of manufacturing in their GDP rise dramatically as they have attracted industrial projects. Looking at the share of income that originates in the manufacturing sector, these two states have shown higher levels than Maharashtra, Haryana and Tamil Nadu.
This graph shows the share of various states in India’s manufacturing output and their income from the manufacturing activity in 2007-08. Ahmed Raza Khan / Mint
It is no accident that Chhattisgarh and Jharkhand have had high manufacturing growth. Being newer and smaller states, they responded more rapidly than their larger—and in some cases better endowed—neighbours. The result is for all to see. As Orissa, eastern Madhya Pradesh, Bihar and West Bengal get their act together, large-scale manufacturing based on primary inputs will rapidly enhance incomes and lifestyles in eastern India.
Currently, there are few large urban markets in eastern India. After Kolkata, there is Patna, a distant second, and then, Bhubaneswar, an even more distant third. Asansol, Dhanbad, Ranchi and Raipur continue to be small markets.
But this is changing. The emerging trends can already be seen. For instance, many of the cities in eastern India have not gone through the realty downturn that has characterized much of urban India.
With the slowdown, which districts would be affected the most? Some are the standard manufacturing heavyweights in the country—Surat, Bangalore, Pune, Ahmedabad, Mumbai, Chennai, Coimbatore, etc. The manufacturing growth centres of the 1990s and 2000s were predominantly in the west and south and had an international focus.
But the new growth centres are different. Two districts, that have become part of the top 10 manufacturing districts in recent years are Gurgaon, which has attracted large investments in auto manufacturing, and Raipur in Chhattisgarh, which has two industrial growth centres at Urla and Siltara.
Demand Curve is a weekly column by research firm Indicus Analytics Pvt. Ltd on consumer trends and markets. Your comments are welcome at firstname.lastname@example.org