India’s Industrial Sector Booms as Manufacturing Drives Economic Growth

India’s industrial sector is expanding rapidly, paving the way for the country to target economic growth exceeding 9%, according to NITI Aayog CEO B V R Subrahmanyam. Speaking at a press conference following the release of the Annual Survey of Industries (ASI) by the Ministry of Statistics and Programme Implementation (MoSPI), Subrahmanyam highlighted the strong performance of India’s manufacturing sector, which he noted has been generating a significant number of jobs.

Data from the ASI showed that employment in the manufacturing sector increased by 7.5% during the 2022-23 fiscal year. The number of people working in this sector exceeded pre-pandemic levels by more than 2.2 million, according to the MoSPI statement, which also pointed out that average salaries rose over the previous year.

Subrahmanyam remarked that the industrial sector’s growth in India had been the subject of undue criticism, despite its robust performance. He emphasized that manufacturing growth is widespread across various industries and asserted that India can now aim for over 9% economic growth.

The Reserve Bank of India has already revised its GDP growth forecast for the current fiscal year, raising it to 7.2% from 7% due to increased private consumption and revived rural demand. Subrahmanyam also noted that numerous rating and multilateral agencies are likely to revise India’s growth projections upwards as the country recovers from the impacts of COVID-19.

The ASI data further revealed that average wages in the manufacturing sector increased by 6.3% in 2022-23 compared to the previous year. The total number of people employed in manufacturing rose to 18.49 million in 2022-23, up from 17.21 million in 2021-22. Employment levels had previously stood at 16.09 million in 2020-21, 16.62 million in 2019-20, and 16.28 million in 2018-19.

In terms of economic performance, the Gross Value Added (GVA) in the manufacturing sector grew by 7.3% at current prices in 2022-23 compared to 2021-22. Input costs rose by 24.4%, while output saw a 21.5% increase over the same period. Growth was recorded across most key economic indicators, including invested capital, input, output, GVA, employment, and wages, with the sector surpassing pre-pandemic levels in absolute value terms.

Industries such as basic metals, coke and refined petroleum products, food products, chemicals and chemical products, and motor vehicles were key drivers of this growth in 2022-23. Together, these industries accounted for around 58% of the sector’s total output, showing a 24.5% rise in output and 2.6% GVA growth compared to the previous year.

Among states, Maharashtra led the nation in terms of GVA in 2022-23, followed by Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh. These five states contributed more than 54% of India’s total manufacturing GVA. In terms of employment, Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh, and Karnataka topped the list, collectively accounting for 55% of the total manufacturing workforce in 2022-23.

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