India’s manufacturing success depends on making its firms bigger

The manufacturing sector’s contribution to India’s GDP has been stagnant at 15-18% for the past two decades. Not only has the sector’s contribution to GDP stagnated, so has the employment share of manufacturing. The unemployment problem in the country cannot be dealt with in a meaningful manner without growth in the manufacturing sector. There is a preponderance of extraordinarily small-scale establishments in the sector, which are underproductive and not competitive, caused largely by restrictive and business-unfriendly labour laws. Sridhar Krishna and Minu Chawla discuss this and how recent labour reforms and other efforts could help alleviate some of India’s labour manufacturing woes.

Suggested Readings:

  1. Where will jobs in manufacturing come from?
  2. Understanding the Performance of India’s Manufacturing Sector: Evidence from Firm Level Data
  3. What is Holding Back Productivity Growth in India? Recent Microevidence
  4. Has India De-industrialised, Prematurely?

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Pragati Staff

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