Sector in India
and Juanita Kasbe
• Introduction to Indian Manufacturing Sector
• Components and Role of GDP
• History of Manufacturing Sector
• Types Of Manufacturing Sectors in India
• Current Scenario of Indian Manufacturing Sector
• Problems of Manufacturing Sector’s In India
• Solutions to the Problems
• Manufacturing can be defined as physical or chemical transformation of
materials into products on large scale using machinery or capital equipments,
in contrast to production of handmade goods for personal use.
• 30% of the economy is of Manufacturing Sector.
• Manufacturing sector contributes 15.24 per cent of the country’s GDP, and
provides employment to over 6 million persons.
• Major Sectors includes textiles, capital goods, metals, chemicals, tyres, cement,
electronics, automotive, leather & footwear, machine tools, Food, Ceramics,
Textiles Machinery etc.
• Deloitte's global index, 2013, for 38 nations, has ranked India the fourth most
competitive manufacturing nation, behind China, the US and Germany
GDP – Gross Domestic Product
• The primary indicators used to gauge the health of a
• The value of country's overall output of goods and services,
typically during one fiscal year at market prices,
excluding net income from abroad.
• GDP per capita is often considered an indicator of a
country's standard of living.
• In the first quarter of 2013, India’s GDP is 4.8 %.
Components of GDP
GDP = Private Consumption + Gross
Investment + Government Spending + (Exports − Imports)
I. Personal consumption
a) Durables: Durable goods, such as autos (3.6%) and furniture (3%)
is the smallest, at only 8% of GDP.
b) Nondurables : Non-durable goods are 20% of GDP. The three
largest components are food (10%), clothing (2.7%) and fuel (2.4%).
c) Services: More than 40% of GDP are services. The two largest
components are real estate (10%) and health care (12%).
II. Private Investment
• a) Nonresidential
• b) Structures
• c) Producers' durables
• d) Residential
III. Exports & Imports
• a) Goods
• b) Services
IV. Government expenditures
• a) Federal – i. Defense and ii. Nondefense
• b) State and local
Role of GDP
• GDP is an important component of macroeconomics that measures the total
final goods and services produced in a country within a stated period,
• An assessment of the GDP allows governments to gauge the states of their
• GDP figures are used by investors to assess the state of the economy in a
country before making any investment decisions.
• When GDP rises sharply leading to a period of economic boom which lead to
• It is used to measure the productivity of a labor force, determine how the
federal government controls the flow of money and estimate or predict tax
revenues for national, state and local governments.
History of Manufacturing Sector
• Evidences found from the remaining if Harappan Civilisation (4000 –
• Weights, Measures, Kilns and Casting and Metal Tools
• Technologies for lifting loading and transportation of materials
• Creation of Monumental Architectures and
• Ports as Export sector for manufactured products from smelted
copper and bronze.
300 BC Porus presented Alexancer 30 LBS of Indian Iron. Kautilya writes about minerals,
including iron ores and the art of extracting the metals in Aarthashastra.
350 AD A 8-meter iron pillar erected near Delhi in memory of Chandragupta II.
Another 16- meter iron pillar erected in Dhar near Indore.
Century Massive Iron beams used in the construction of Sun temple.
Century Indian steel known as “Wootz” exported to middle east and Europe.
Century Manufacturing of cannons, firearms, swords and Agricultural implements.
Suspension bridge built over Beas at Saugor with iron from Tendulkhama, MP. Iron
smelter built at Porta Nova, Madras.
1870 Bengal Iron works established in Kulti.
Medieval Period History
• Based on Agriculture sector and less on Industrial sector, as a result of
showing poor economic condition.
• Government started improving the social and material condition by introducing
the “ Five Year Plan’s”.
• Economy improved in the 2nd Five Year plan(1956-61) emphasizing on heavy
• Major role of Public Sector in Industrialization by investing heavily.
• Government intervention in Private Sector through Fiscal Policies and licensing
• Growth rate of MS increased from 4% to 6% between 1940- 1980.
• LPG was introduces in 1991 aiming at removing Monopolies and Restrictive
• Offering integration of Indian Economy with Foreign economy
Highlights of the LPG Policy
• Foreign Technology Agreements,
• Foreign Investment,
• MRTP Act, 1969 (Amended),
• Industrial Licensing,
• Beginning of privatization,
• Opportunities for overseas trade,
• Steps to regulate inflation,
• Tax reforms,
• Abolition of License Raj or Permit Raj
Types of Manufacturing Sector
• Capital Goods refer to products that are used in the
production of other products but are not incorporated into
the new product. This industry is the “MOTHER” of all
manufacturing industry and is of strategic importance to
the National security and economic independence.
• Consumer Goods represent final value-added products
that are distributed for consumption in mass consumption
markets and which are purchased primarily for personal,
family and/or household purposes.
Types of Manufacturing Sector In
Capital Goods Consumers
Growth of Indian Manufacturing
• Contributes one-fourth of total GDP
• Employs 30% of non-agricultural
• Industrial output valued at US$ 65
• Rise in growth from 2.7% in 1998-
99 to 9.3% in 2010-11
• Significant rise in index of growth
for the manufacturing sector from
6.3% in2009 to 8.2% in 2011.
Current Scenario of Indian
• Sharing 15% of GDP.
• Having potential to share 25% of GDP.
• At present sharing 9th
largest manufacturing nation and
expected to be – 5th
• Indian manufacturing and services sectors expanded more
than China in February 2013
• The 2nd preferred global investment destination
• India's currently exports manufactured products worth
about $50 billion.
Challenges of Indian
• Electricity, Land and Water
• Unskilled labour and Obsolete Technology
• Lagging in R&D
• Easy Access to Finance
• Complex Regulatory System
• Inability to built talent internally
• Corruption and Global Competition
• Improving the urban Infrastructure
• Ensuring Fair Competition
• Access to Global Market
• Quality Improvement in vocational and higher
• Increase Investments in R&D
• Reduction of Import Duties
• The share of manufacturing sector accounts for only
15% in our GDP which is very low compared to China,
Malaysia and Thailand where manufacturing
contributes to 1/3rd or more in their GDP.
• Government is asking NRIs to Invest more in the
manufacturing sector to create more job