Mumbai: India’s manufacturing sector saw a notable increase in the total number of operational facilities in the organised sector, rising from 249,987 in FY22 to 253,334 by the end of the financial year 2022-2023. Despite this growth, challenges remain for the sector, especially in terms of employment generation and production stagnation.
Among the 29 major industrial groups surveyed in the Annual Survey of Industries (ASI), the food product group had the highest number of operational facilities. This group, which involves the preserving and processing of meat, fish, crustaceans, fruits, vegetables, and dairy products, recorded 40,508 operational facilities and employed about 2.1 million workers in FY23. The next largest group was the ‘other non-metallic mineral products’, which includes the manufacturing of glass and other similar materials, comprising 29,321 facilities and employing around 1.2 million Indian workers.
Employment Distribution in India
India’s agricultural sector continues to be the backbone of the country’s workforce, contributing to more than 50 per cent of total employment. This sector, which includes farming, mining, and fishing, plays a significant role in rural employment, even though its contribution to the GDP is much lower compared to other sectors.
In contrast, the secondary sector, which focuses on manufacturing and construction, accounts for 17.1 per cent of total employment, while the tertiary sector—covering services such as transportation, trade, and Global Capacity Centers (GCCs)—makes up 25.1 per cent of employment. The tertiary sector also contributes over 50 per cent of the country’s GDP, indicating a significant income disparity between sectors.
Manufacturing Challenges
India’s manufacturing sector has been facing difficulties over the past few years. Stagnation in production has led to reduced export levels, affecting profitability and limiting the sector’s ability to hire more workers. Initiatives like Production Linked Incentives (PLI) were introduced to stimulate growth and hiring, but the sector’s performance remains sluggish. Companies struggle to increase production, and without higher production levels, hiring more workers would lead to increased costs, further aggravating the situation.
The tertiary sector—particularly Global Capacity Centers (GCCs) established by multinational corporations—has emerged as a significant source of employment for skilled workers. India is currently home to over 1,000 GCCs, providing backend services such as HR management, business processes, and administrative support to international companies. These centres have created opportunities for millions of young professionals in India, contrasting with the stagnation seen in the manufacturing sector.
Agricultural Sector: Largest Employer, Smallest Contributor
Although agriculture remains the largest employer, it contributes only 18.4 per cent to the national GDP. Wages in the agricultural sector are generally lower than those in the secondary and tertiary sectors, leaving many workers in the low- to middle-income brackets. Meanwhile, workers in the tertiary sector, especially those in finance, earn substantially more, with the average wage in this sector being around Rs 500 per hour.
India’s economy is a tale of contrasts—while agriculture dominates employment, the tertiary sector leads in income generation. The manufacturing sector, despite a rise in operational facilities, remains plagued by stagnation and low hiring rates. For India’s economy to thrive, boosting production across all sectors is essential, along with strategic measures to balance the employment landscape.
India’s manufacturing sector saw a rise in operational facilities to 253,334 in FY22, led by food product industries. The sector faces challenges in growth and employment, with significant contributions from agriculture and services. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
