India’s manufacturing growth can falter if remedial measures are not taken: Ajay S. Shriram

THE MANUFACTURING SECTOR has long been a cornerstone of India’s growth ambitions, providing livelihoods, strengthening exports, and fuelling innovation. Yet, in recent years, its share in GDP has moderated — from 17% in 2010 to about 13% in 2024. While this signals the need for immediate attention, it also underscores the vast untapped opportunity ahead. A tale of contrasts A look at our global peers shows how manufacturing can drive sustained growth. Vietnam, for instance, demonstrates what coordinated policies, agile execution, and strong infrastructure can deliver. It began its journey on a par with India in 2010, but has since increased its manufacturing share to 24% of GDP by 2024. Within India, too, the picture is uneven. States like Gujarat, Tamil Nadu, and Maharashtra account for nearly a third of the country’s manufacturing output. Gujarat’s success stems from a stable, investor-friendly environment, robust infrastructure, MSME-focussed clusters, and scale-oriented policies. This model offers lessons for other states where industrial potential remains underutilised. Sectoral realities Some industries, such as petrochemicals, bulk chemicals, automobiles, metals, food processing, and consumer goods, continue to anchor India’s manufacturing output strongly, contributing significantly to manufacturing GVA over the last decade. However, emerging sectors, particularly electronics, computers, precision machinery, and capital goods, must be scaled up, especially as the world embraces digital and advanced technologies. In addition, sectors such as apparel, leather, and MSME require special attention for their job-creation potential. Addressing bottlenecks To unlock the next wave of growth, we must address long-standing cost and ease-of-doing-business hurdles. Infrastructure is key — India’s logistics cost is around 14% of GDP, compared to 9% in more competitive economies. Encouragingly, the government is investing heavily in roads, railways, and ports, and the benefits are already visible. But other costs remain high. Power, land, and financing need to become globally competitive. Regional cost differences are striking. For instance, industrial land in Gujarat starts at ₹4.5 lakh per acre, but is six times costlier in states such as Jharkhand and West Bengal. Similarly, industrial power tariffs vary widely. Streamlining these costs and ensuring affordable, reliable energy will be critical to broad-based growth. Enhancing policy ecosystem Landmark initiatives such as Make in India and the Production Linked Incentive (PLI) schemes reflect strong policy intent. What is needed now is sharper execution — simplifying approvals, modernising regulations, rationalising compliance, and promoting single-window clearances across states. Equally important is continued investment in industrial corridors, multimodal logistics parks, and Special Economic Zones that can reduce friction across the supply chain and bring India’s cost competitiveness closer to global benchmarks. From the policy point of view, two suggestions stand out. First, adopting each state’s best practices nationwide could significantly improve the ease of doing business. Forward-looking policies already exist — they just need replication and rollout. Second, inter-ministerial coordination must be strengthened. The National Single Window System is a step forward, but it needs statutory backing to ensure consistent compliance. If it can be done for GST and income tax, there’s no reason it can’t be done in manufacturing, with India’s strong tech capabilities. Charting the road ahead Despite current headwinds, India’s manufacturing story has a positive future, waiting to be tapped. The next decade can, and must, belong to Indian manufacturing, provided we learn from best practices at home and abroad, double down on infrastructure and skills, and create an environment where industries, big and small, can thrive with confidence. India has the talent, the entrepreneurial drive, and the market scale to be a global manufacturing powerhouse. With focussed reforms and collaborative action across governments and industries, we can not only reverse the recent slide but also build a resilient, diversified, and globally competitive manufacturing sector that generates jobs, fosters innovation, and powers India’s growth ambitions for decades to come. (Views are personal. The author is Chairman and Senior Managing Director, DCM Shriram Ltd.)

India’s manufacturing growth can falter if remedial measures are not taken: Ajay S. Shriram

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