Manisha Kunwar

and Juanita Kasbe

SMBA 7

Manufacturing
Sector in India
 Contents
Introduction to Indian Manufacturing Sector
GDP
Components and Role of GDP
History of Manufacturing Sector
Types Of Manufacturing Sectors in India
Current Scenario of Indian Manufacturing Sector
Problems of Manufacturing Sectors In India
Solutions to the Problems
Conclusion
 Introduction

Manufacturing can be defined as physical or chemical transformation of

materials into products on large scale using machinery or capital equipments,
in contrast to production of handmade goods for personal use.
30% of the economy is of Manufacturing Sector.
Manufacturing sector contributes 15.24 per cent of the countrys GDP, and
provides employment to over 6 million persons.
Major Sectors includes textiles, capital goods, metals, chemicals, tyres, cement,
electronics, automotive, leather & footwear, machine tools, Food, Ceramics,
Textiles Machinery etc.
Deloitte's global index, 2013, for 38 nations, has ranked India the fourth most
competitive manufacturing nation, behind China, the US and Germany
 GDP Gross Domestic Product

The primaryindicatorsused to gauge the health of a

country'seconomy.
Thevalueof country'soveralloutputofgoods and services,
typically during onefiscal year atmarket prices,
excludingnet incomefromabroad.
GDPper capita is often considered an indicator of a
country'sstandard of living.
In the first quarter of 2013, Indias GDP is 4.8 %.
 Components of GDP
GDP= C+I+G+(X-M)
GDP =Private Consumption+Gross
Investment+Government Spending+ (Exports Imports)
I. Personal consumption
a) Durables: Durable goods, such as autos (3.6%) and furniture (3%)
is the smallest, at only 8% of GDP.
b) Nondurables : Non-durable goods are 20% of GDP. The three
largest components are food (10%), clothing (2.7%) and fuel (2.4%).
c) Services: More than 40% of GDP are services. The two largest
components are real estate (10%) and health care (12%).
 Continued..
II. Private Investment
a) Nonresidential
b) Structures
c) Producers' durables
d) Residential
III. Exports & Imports
a) Goods
b) Services
IV. Government expenditures
a) Federal i. Defense and ii. Nondefense
b) State and local
 Role of GDP
GDPis an important component of macroeconomics that measures the total
final goods and services produced in a country within a stated period,
usually quarterly.
An assessment of the GDP allows governments to gauge the states of their
nations' economies.
GDP figures are used by investors to assess the state of the economy in a
country before making any investment decisions.
When GDP rises sharply leading to a period of economic boom which lead to
inflation.
It is used to measure the productivity of a labor force, determine how the
federal government controls the flow of money and estimate or predict tax
revenues for national, state and local governments.
History of Manufacturing Sector In
India
 History of Manufacturing Sector
In India
Ancient Period
Evidences found from the remaining if Harappan Civilisation (4000
3000 BC).
Weights, Measures, Kilns and Casting and Metal Tools
Technologies for lifting loading and transportation of materials
Creation of Monumental Architectures and
Ports as Export sector for manufactured products from smelted
copper and bronze.
 Medieval Period History
Period Milestones
300 BC Porus presented Alexancer 30 LBS of Indian Iron. Kautilya writes about minerals,
including iron ores and the art of extracting the metals in Aarthashastra.

350 AD A 8-meter iron pillar erected near Delhi in memory of Chandragupta II.
Another 16- meter iron pillar erected in Dhar near Indore.

13th Century Massive Iron beams used in the construction of Sun temple.

16th Century Indian steel known as Wootz exported to middle east and Europe.

17th Century Manufacturing of cannons, firearms, swords and Agricultural implements.

Suspension bridge built over Beas at Saugor with iron from Tendulkhama, MP. Iron
smelter built at Porta Nova, Madras.
1870 Bengal Iron works established in Kulti.
 Post Independence
Based on Agriculture sector and less on Industrial sector, as a result of
showing poor economic condition.
Government started improving the social and material condition by introducing
the Five Year Plans.
Economy improved in the 2nd Five Year plan(1956-61) emphasizing on heavy
industry.
Major role of Public Sector in Industrialization by investing heavily.
Government intervention in Private Sector through Fiscal Policies and licensing
system.
Growth rate of MS increased from 4% to 6% between 1940- 1980.
LPG was introduces in 1991 aiming at removing Monopolies and Restrictive
Trade practices
Offering integration of Indian Economy with Foreign economy
 Highlights of the LPG Policy
Foreign Technology Agreements,
Foreign Investment,
MRTP Act, 1969 (Amended),
Industrial Licensing,
Deregulation,
Beginning of privatization,
Opportunities for overseas trade,
Steps to regulate inflation,
Tax reforms,
Abolition of License Raj or Permit Raj
 Five Year Plans

1951-56
2012-2017
 Types of Manufacturing Sector
In India
Capital Goods refer to products that are used in the
production of other products but are not incorporated into
the new product. This industry is the MOTHER of all
manufacturing industry and is of strategic importance to
the National security and economic independence.
Consumer Goods represent final value-added products
that are distributed for consumption in mass consumption
markets and which are purchased primarily for personal,
family and/or household purposes.
Types of Manufacturing Sector In
India
Capital Goods Consumers
Goods
 Growth of Indian Manufacturing
Sector
Contributes one-fourth of total GDP
Employs 30% of non-agricultural
workforce
Industrial output valued at US$ 65
billion
Rise in growth from 2.7% in 1998-
99 to 9.3% in 2010-11
Significant rise in index of growth
for the manufacturing sector from
6.3% in2009 to 8.2% in 2011.
 Current Scenario of Indian
Manufacturing Sector
Sharing 15% of GDP.
Having potential to share 25% of GDP.
At present sharing 9th largest manufacturing nation and
expected to be 5th in position.
Indian manufacturing and services sectors expanded more
than China in February 2013
The 2nd preferred global investment destination
India's currently exports manufactured products worth
about $50 billion.
 Challenges of Indian
Manufacturing Sector
Electricity, Land and Water
Unskilled labour and Obsolete Technology
Lagging in R&D
Easy Access to Finance
Complex Regulatory System
Inability to built talent internally
Corruption and Global Competition
 Must Focus
Improving the urban Infrastructure
Ensuring Fair Competition
Access to Global Market
Quality Improvement in vocational and higher
education
Increase Investments in R&D
Reduction of Import Duties
 Finally..

The share of manufacturing sector accounts for only

15% in our GDP which is very low compared to China,
Malaysia and Thailand where manufacturing
contributes to 1/3rd or more in their GDP.
Government is asking NRIs to Invest more in the
manufacturing sector to create more job
opportunities.
Thank You!