A rapid expansion of the manufacturing sector has been a key element of the growth experience of suc...........

Economic Affairs Others

A rapid expansion of the manufacturing sector has been a key element of the growth experience of successful developing countries, especially labour-abundant ones like India. Consider the following about the state of manufacturing in India.

Since last one decade, the contribution of manufacturing sector to GDP has remained stagnant at one-fourth of GDP.
Only a small share of employment in manufacturing is in organized manufacturing.
Employment is heavily concentrated in small firms.

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Explanation:

The Indian manufacturing sector exhibits many peculiarities that are quite puzzling:

It contributes around 17-18% of GDP, a small and stagnant share to GDP. It is envisaged that this share be increased to 25%.

Its composition is more skewed towards skill and capital intensive activities compared to countries at similar levels of development;

Only a small share of employment in manufacturing is in organized manufacturing. The unorganized manufacturing sector accounted for almost 70 per cent of total manufacturing employment in 2009—10.

Employment is heavily concentrated in small firms. The degree of concentration is much higher than in other Asian countries.