Revisiting manufacturing policy
Industry and the government must implement a reform agenda together to revive the manufacturing sector
Manufacturing is in trouble in India. The sector’s share of gross domestic product (GDP) reached 16% in 2006-07, then stagnated and has declined since 2010-11, to little more than 15%, a sliver when compared with the shares in Thailand (36%), South Korea (31%), and China (30%). Employment in absolute terms has fallen in the formal manufacturing sector from 55 million in 2004-05 (12.2% of India’s overall workforce) to 50 million in 2010 (10.5%). The sector’s growth rate has been declining for four years, actually falling into negative territory in the first quarters of 2012 and 2013.