INDIA’S MANUFACTURING AT A CROSSROADS

INDIA'S manufacturing is growing on two fronts, strong gains in capital-intensive sectors and vast untapped potential in labour-intensive industries, offering a unique opportunity to shape inclusive, job-rich growth.

- RIYA JINDAL & SALOME SARA PHILIPS

Economic history is clear —countries that achieved rapid economic growth, from East Asia to Western Europe, did so by reallocating labour from low-productivity sectors to high-productivity ones. Manufacturing, especially labour-intensive manufacturing, has been central to this transformation. As India pursues its Viksit Bharat 2047 vision and moves toward middle-income status, the same structural shift becomes essential. Ultimately, India’s long-term trajectory hinges on one crucial question —can manufacturing generate broad-based, job-rich growth?

Nearly 45% of India’s workforce, or over 220 million people, remains engaged in agriculture, asector that contributes barely 15% to GDP. To meet its development aspirations, India must facilitate large-scale movement of workers into more productive non-farm sectors, particularly manufacturing. This is not just desirable; it is foundational for achieving higher per capita income and avoiding the middle-income trap that stalled many Latin American economies.

This challenge is more urgent now because India’s demographic dividend will peak in the next decade, and global supply chains are being reshaped by geopolitical tensions, China+1 strategies, and rising labour costs in East Asia.

Uncomfortable truth