Industry: Small and Medium Matters | Indian Economy for UPSC CSE PDF Download

 Page 1


CHAPTER
10
INDUSTRY: SMALL AND 
MEDIUM MATTERS
Industrial growth accelerated in FY24, with manufacturing and construction leading 
the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the 
pre-Covid FY20 levels, affirming broad-based recovery and consolidation. This 
was supported by greater credit offtake, a thrust on capital formation to shore up 
infrastructure-oriented sectors, and a supportive policy framework. 
In the last decade, there were considerable changes in the sectoral composition of India’s 
manufacturing landscape. Some consumer-oriented industries like automobiles, wood 
products, furniture and pharmaceuticals have made large gains in output share and 
production-oriented sectors like machinery, chemicals, non-metallic minerals, and 
rubber and plastic products have also had share gains, balancing the growth dynamics. 
At a same time, sectors like petroleum products, textiles, beverage and tobacco have 
witnessed gradual decline in their output share.
Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and 
dynamics to labour-intensive segments like textiles, food processing, and MSMEs 
would lend greater balance to industrial expansion. Incentivising R&D investment, 
greater formalisation of smaller manufacturers, alleviating their supply chain 
bottlenecks, facilitating market access and improving access to finance will also 
foster industrialisation. Further reduction in the compliance burden for MSMEs will 
considerably improve their growth prospects.
Domestic demand conditions on account of consumption and investment are strong 
and conducive to smooth industrial output expansion in the near term. A forward-
looking survey of the Reserve Bank of India on business expectations and industrial 
outlook presents a positive outlook. However, headwinds persist in terms of uncertain 
global demand conditions and prices of key inputs for which India is import-dependent. 
INTRODUCTION
10.1 Economic growth of 8.2 per cent in FY24 was supported by an industrial growth of 
9.5 per cent.
1
 Among the four sub-sectors of industry, manufacturing and construction 
achieved close to double-digit growth, while mining & quarrying and electricity & water supply 
also recorded strong positive growth in FY24. This reflects the broad-based acceleration of 
1     As per the provisional estimates of GDP released by the Central Statistics Office on 30 May 2024. This is greater 
than the 9 per cent industrial growth estimated in the second advance estimates of GDP released in February 
2024, indicating faster than anticipated expansion of industrial output during the latter part of FY24.
Page 2


CHAPTER
10
INDUSTRY: SMALL AND 
MEDIUM MATTERS
Industrial growth accelerated in FY24, with manufacturing and construction leading 
the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the 
pre-Covid FY20 levels, affirming broad-based recovery and consolidation. This 
was supported by greater credit offtake, a thrust on capital formation to shore up 
infrastructure-oriented sectors, and a supportive policy framework. 
In the last decade, there were considerable changes in the sectoral composition of India’s 
manufacturing landscape. Some consumer-oriented industries like automobiles, wood 
products, furniture and pharmaceuticals have made large gains in output share and 
production-oriented sectors like machinery, chemicals, non-metallic minerals, and 
rubber and plastic products have also had share gains, balancing the growth dynamics. 
At a same time, sectors like petroleum products, textiles, beverage and tobacco have 
witnessed gradual decline in their output share.
Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and 
dynamics to labour-intensive segments like textiles, food processing, and MSMEs 
would lend greater balance to industrial expansion. Incentivising R&D investment, 
greater formalisation of smaller manufacturers, alleviating their supply chain 
bottlenecks, facilitating market access and improving access to finance will also 
foster industrialisation. Further reduction in the compliance burden for MSMEs will 
considerably improve their growth prospects.
Domestic demand conditions on account of consumption and investment are strong 
and conducive to smooth industrial output expansion in the near term. A forward-
looking survey of the Reserve Bank of India on business expectations and industrial 
outlook presents a positive outlook. However, headwinds persist in terms of uncertain 
global demand conditions and prices of key inputs for which India is import-dependent. 
INTRODUCTION
10.1 Economic growth of 8.2 per cent in FY24 was supported by an industrial growth of 
9.5 per cent.
1
 Among the four sub-sectors of industry, manufacturing and construction 
achieved close to double-digit growth, while mining & quarrying and electricity & water supply 
also recorded strong positive growth in FY24. This reflects the broad-based acceleration of 
1     As per the provisional estimates of GDP released by the Central Statistics Office on 30 May 2024. This is greater 
than the 9 per cent industrial growth estimated in the second advance estimates of GDP released in February 
2024, indicating faster than anticipated expansion of industrial output during the latter part of FY24.
Economic Survey 2023-24
348
industrial output. The HSBC India Purchasing Managers' Index (PMI) for manufacturing also 
consistently remained well above the threshold value of 50 in all months of FY24, indicating 
sustained expansion and stability in India's manufacturing sector. 
10.2 The share of manufacturing in total gross value added at current prices was 14.3 per 
cent in FY23.  However, the output share is 35.2 per cent during the same period, indicating 
that the sector has significant backward and forward linkages that are not fully captured within 
its value-added share. About 47.5 per cent of the total value of output in the country is used as 
inputs in productive activities (inter-industry consumption)
2
. Manufacturing activities account 
for about 50 per cent of the inter-industry consumption and, at the same time, supply almost 
50 per cent of inputs used in all productive activities (agriculture, industry and services). 
Chart X.1: Share of industry and its 
Components in total GVA 
(in constant prices)
Chart X.2: Annual growth of 
industry and its components 
(in constant prices)
 
2.4 2.3 2.2 2.1 2.1
17.1
18.4 18.5
16.9 17.3
2.3
2.3 2.3
2.4
2.4
7.9
7.8
8.6
8.8
9.0
2 9.6
3 0.8
3 1.6
3 0.2
3 0.9
FY20 FY21 FY22 FY23 FY24
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
 
- 1 .4
- 0 .4
12 .2
2.1
9.5
-10
-5
0
5
10
15
20
25
FY 20 FY 2 1 FY 22 FY 2 3 FY 2 4
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Chart X.3: India Manufacturing 
Purchasing Managers' Index
Chart X.4: Average annual growth in 
components of manufacturing GVA in 
constant prices (FY14 to FY23) in per cent
 
57.2
58.7 58.6
54.9
59.1
57.5
40
42
44
46
48
50
52
54
56
58
60
I nd e x
 
5.3
9.6
9.2
6.0
6.7
8.3
6.5
7.7
5.9
4.7
4.7
0.0
5.4
3.0
-4.0
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
Manufacturing GVA
Chemical products
Wood products and furniture
Transport equipments
Metal & metal products
Pharma and medicinal chemicals
Machinery and equipment
Rubber & plastic products
Non-metallic mineral products
Food products
Leather and related products
Beverages and tobacco
Electronic products
Textiles and apprarels
Coke & refined petroleum products
Source: IHS Markit
Note: The index has values ranging from 0 to 100.
Source: Survey calculations based on National Account 
Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and 
transport equipment
2   As per the Supply and Use Tables published by the Central Statistics Office for FY20.
Page 3


CHAPTER
10
INDUSTRY: SMALL AND 
MEDIUM MATTERS
Industrial growth accelerated in FY24, with manufacturing and construction leading 
the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the 
pre-Covid FY20 levels, affirming broad-based recovery and consolidation. This 
was supported by greater credit offtake, a thrust on capital formation to shore up 
infrastructure-oriented sectors, and a supportive policy framework. 
In the last decade, there were considerable changes in the sectoral composition of India’s 
manufacturing landscape. Some consumer-oriented industries like automobiles, wood 
products, furniture and pharmaceuticals have made large gains in output share and 
production-oriented sectors like machinery, chemicals, non-metallic minerals, and 
rubber and plastic products have also had share gains, balancing the growth dynamics. 
At a same time, sectors like petroleum products, textiles, beverage and tobacco have 
witnessed gradual decline in their output share.
Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and 
dynamics to labour-intensive segments like textiles, food processing, and MSMEs 
would lend greater balance to industrial expansion. Incentivising R&D investment, 
greater formalisation of smaller manufacturers, alleviating their supply chain 
bottlenecks, facilitating market access and improving access to finance will also 
foster industrialisation. Further reduction in the compliance burden for MSMEs will 
considerably improve their growth prospects.
Domestic demand conditions on account of consumption and investment are strong 
and conducive to smooth industrial output expansion in the near term. A forward-
looking survey of the Reserve Bank of India on business expectations and industrial 
outlook presents a positive outlook. However, headwinds persist in terms of uncertain 
global demand conditions and prices of key inputs for which India is import-dependent. 
INTRODUCTION
10.1 Economic growth of 8.2 per cent in FY24 was supported by an industrial growth of 
9.5 per cent.
1
 Among the four sub-sectors of industry, manufacturing and construction 
achieved close to double-digit growth, while mining & quarrying and electricity & water supply 
also recorded strong positive growth in FY24. This reflects the broad-based acceleration of 
1     As per the provisional estimates of GDP released by the Central Statistics Office on 30 May 2024. This is greater 
than the 9 per cent industrial growth estimated in the second advance estimates of GDP released in February 
2024, indicating faster than anticipated expansion of industrial output during the latter part of FY24.
Economic Survey 2023-24
348
industrial output. The HSBC India Purchasing Managers' Index (PMI) for manufacturing also 
consistently remained well above the threshold value of 50 in all months of FY24, indicating 
sustained expansion and stability in India's manufacturing sector. 
10.2 The share of manufacturing in total gross value added at current prices was 14.3 per 
cent in FY23.  However, the output share is 35.2 per cent during the same period, indicating 
that the sector has significant backward and forward linkages that are not fully captured within 
its value-added share. About 47.5 per cent of the total value of output in the country is used as 
inputs in productive activities (inter-industry consumption)
2
. Manufacturing activities account 
for about 50 per cent of the inter-industry consumption and, at the same time, supply almost 
50 per cent of inputs used in all productive activities (agriculture, industry and services). 
Chart X.1: Share of industry and its 
Components in total GVA 
(in constant prices)
Chart X.2: Annual growth of 
industry and its components 
(in constant prices)
 
2.4 2.3 2.2 2.1 2.1
17.1
18.4 18.5
16.9 17.3
2.3
2.3 2.3
2.4
2.4
7.9
7.8
8.6
8.8
9.0
2 9.6
3 0.8
3 1.6
3 0.2
3 0.9
FY20 FY21 FY22 FY23 FY24
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
 
- 1 .4
- 0 .4
12 .2
2.1
9.5
-10
-5
0
5
10
15
20
25
FY 20 FY 2 1 FY 22 FY 2 3 FY 2 4
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Chart X.3: India Manufacturing 
Purchasing Managers' Index
Chart X.4: Average annual growth in 
components of manufacturing GVA in 
constant prices (FY14 to FY23) in per cent
 
57.2
58.7 58.6
54.9
59.1
57.5
40
42
44
46
48
50
52
54
56
58
60
I nd e x
 
5.3
9.6
9.2
6.0
6.7
8.3
6.5
7.7
5.9
4.7
4.7
0.0
5.4
3.0
-4.0
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
Manufacturing GVA
Chemical products
Wood products and furniture
Transport equipments
Metal & metal products
Pharma and medicinal chemicals
Machinery and equipment
Rubber & plastic products
Non-metallic mineral products
Food products
Leather and related products
Beverages and tobacco
Electronic products
Textiles and apprarels
Coke & refined petroleum products
Source: IHS Markit
Note: The index has values ranging from 0 to 100.
Source: Survey calculations based on National Account 
Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and 
transport equipment
2   As per the Supply and Use Tables published by the Central Statistics Office for FY20.
Industry
349
10.3 Despite the pandemic and consequent impairment of manufacturing value chains, the 
manufacturing sector achieved an average annual growth rate of 5.2 per cent in the last decade. 
The manufacturing sub-sectors witnessed considerable realignment in output shares in the 
last decade. Catalysts of manufacturing growth in the last decade included chemicals, wood 
products and furniture, transport equipment, pharmaceuticals and machinery and equipment. 
Out of them, the expansion of steel, machinery and equipment, wood products, and transport 
equipment signifies a thrust on capital formation in the economy, especially in the public sector. 
Chart X.5: Change in share of manufactured products GVA 
in total GVA between FY14 to FY23 (in constant Prices)
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and transport equipment
10.4 India’s industrialisation was held in check by the absence of physical infrastructure and 
logistics as well as intrusive and cumbersome licensing requirements on capacity creation and 
expansion. Further, the manufacture of specific items was reserved for the small-scale sector. 
Much of these restrictions have been now lifted, and physical infrastructure is being created 
at a rapid pace. Connectivity has improved. The Goods and Services Tax has created a single 
market for several commodities, enabling manufacturing at scale. However, India faces stiff 
challenges in growing its manufacturing base. Public policy must do whatever it can to boost 
competitiveness. Action lies predominantly in deregulation. The private sector must think 
long-term and invest in quality through R&D spending. These may not be sufficient, but they 
are necessary conditions for the growth of the sector. Manufacturing still has the ability to 
generate low and semi-skilled jobs and bring development closer to the people. India needs to 
prioritise the sector.
10.5 The remaining sections of the Chapter are organised in the following way. The next 
section examines progress, challenges and policy initiatives in different industrial segments, 
such as key industrial intermediates and consumer-oriented industries
3
. This is followed by a 
brief discussion on cross-cutting themes like production-linked incentives (PLIs), micro, small 
3  Fertiliser is covered in chapter 9 on Agriculture and Food Management
Page 4


CHAPTER
10
INDUSTRY: SMALL AND 
MEDIUM MATTERS
Industrial growth accelerated in FY24, with manufacturing and construction leading 
the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the 
pre-Covid FY20 levels, affirming broad-based recovery and consolidation. This 
was supported by greater credit offtake, a thrust on capital formation to shore up 
infrastructure-oriented sectors, and a supportive policy framework. 
In the last decade, there were considerable changes in the sectoral composition of India’s 
manufacturing landscape. Some consumer-oriented industries like automobiles, wood 
products, furniture and pharmaceuticals have made large gains in output share and 
production-oriented sectors like machinery, chemicals, non-metallic minerals, and 
rubber and plastic products have also had share gains, balancing the growth dynamics. 
At a same time, sectors like petroleum products, textiles, beverage and tobacco have 
witnessed gradual decline in their output share.
Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and 
dynamics to labour-intensive segments like textiles, food processing, and MSMEs 
would lend greater balance to industrial expansion. Incentivising R&D investment, 
greater formalisation of smaller manufacturers, alleviating their supply chain 
bottlenecks, facilitating market access and improving access to finance will also 
foster industrialisation. Further reduction in the compliance burden for MSMEs will 
considerably improve their growth prospects.
Domestic demand conditions on account of consumption and investment are strong 
and conducive to smooth industrial output expansion in the near term. A forward-
looking survey of the Reserve Bank of India on business expectations and industrial 
outlook presents a positive outlook. However, headwinds persist in terms of uncertain 
global demand conditions and prices of key inputs for which India is import-dependent. 
INTRODUCTION
10.1 Economic growth of 8.2 per cent in FY24 was supported by an industrial growth of 
9.5 per cent.
1
 Among the four sub-sectors of industry, manufacturing and construction 
achieved close to double-digit growth, while mining & quarrying and electricity & water supply 
also recorded strong positive growth in FY24. This reflects the broad-based acceleration of 
1     As per the provisional estimates of GDP released by the Central Statistics Office on 30 May 2024. This is greater 
than the 9 per cent industrial growth estimated in the second advance estimates of GDP released in February 
2024, indicating faster than anticipated expansion of industrial output during the latter part of FY24.
Economic Survey 2023-24
348
industrial output. The HSBC India Purchasing Managers' Index (PMI) for manufacturing also 
consistently remained well above the threshold value of 50 in all months of FY24, indicating 
sustained expansion and stability in India's manufacturing sector. 
10.2 The share of manufacturing in total gross value added at current prices was 14.3 per 
cent in FY23.  However, the output share is 35.2 per cent during the same period, indicating 
that the sector has significant backward and forward linkages that are not fully captured within 
its value-added share. About 47.5 per cent of the total value of output in the country is used as 
inputs in productive activities (inter-industry consumption)
2
. Manufacturing activities account 
for about 50 per cent of the inter-industry consumption and, at the same time, supply almost 
50 per cent of inputs used in all productive activities (agriculture, industry and services). 
Chart X.1: Share of industry and its 
Components in total GVA 
(in constant prices)
Chart X.2: Annual growth of 
industry and its components 
(in constant prices)
 
2.4 2.3 2.2 2.1 2.1
17.1
18.4 18.5
16.9 17.3
2.3
2.3 2.3
2.4
2.4
7.9
7.8
8.6
8.8
9.0
2 9.6
3 0.8
3 1.6
3 0.2
3 0.9
FY20 FY21 FY22 FY23 FY24
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
 
- 1 .4
- 0 .4
12 .2
2.1
9.5
-10
-5
0
5
10
15
20
25
FY 20 FY 2 1 FY 22 FY 2 3 FY 2 4
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Chart X.3: India Manufacturing 
Purchasing Managers' Index
Chart X.4: Average annual growth in 
components of manufacturing GVA in 
constant prices (FY14 to FY23) in per cent
 
57.2
58.7 58.6
54.9
59.1
57.5
40
42
44
46
48
50
52
54
56
58
60
I nd e x
 
5.3
9.6
9.2
6.0
6.7
8.3
6.5
7.7
5.9
4.7
4.7
0.0
5.4
3.0
-4.0
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
Manufacturing GVA
Chemical products
Wood products and furniture
Transport equipments
Metal & metal products
Pharma and medicinal chemicals
Machinery and equipment
Rubber & plastic products
Non-metallic mineral products
Food products
Leather and related products
Beverages and tobacco
Electronic products
Textiles and apprarels
Coke & refined petroleum products
Source: IHS Markit
Note: The index has values ranging from 0 to 100.
Source: Survey calculations based on National Account 
Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and 
transport equipment
2   As per the Supply and Use Tables published by the Central Statistics Office for FY20.
Industry
349
10.3 Despite the pandemic and consequent impairment of manufacturing value chains, the 
manufacturing sector achieved an average annual growth rate of 5.2 per cent in the last decade. 
The manufacturing sub-sectors witnessed considerable realignment in output shares in the 
last decade. Catalysts of manufacturing growth in the last decade included chemicals, wood 
products and furniture, transport equipment, pharmaceuticals and machinery and equipment. 
Out of them, the expansion of steel, machinery and equipment, wood products, and transport 
equipment signifies a thrust on capital formation in the economy, especially in the public sector. 
Chart X.5: Change in share of manufactured products GVA 
in total GVA between FY14 to FY23 (in constant Prices)
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and transport equipment
10.4 India’s industrialisation was held in check by the absence of physical infrastructure and 
logistics as well as intrusive and cumbersome licensing requirements on capacity creation and 
expansion. Further, the manufacture of specific items was reserved for the small-scale sector. 
Much of these restrictions have been now lifted, and physical infrastructure is being created 
at a rapid pace. Connectivity has improved. The Goods and Services Tax has created a single 
market for several commodities, enabling manufacturing at scale. However, India faces stiff 
challenges in growing its manufacturing base. Public policy must do whatever it can to boost 
competitiveness. Action lies predominantly in deregulation. The private sector must think 
long-term and invest in quality through R&D spending. These may not be sufficient, but they 
are necessary conditions for the growth of the sector. Manufacturing still has the ability to 
generate low and semi-skilled jobs and bring development closer to the people. India needs to 
prioritise the sector.
10.5 The remaining sections of the Chapter are organised in the following way. The next 
section examines progress, challenges and policy initiatives in different industrial segments, 
such as key industrial intermediates and consumer-oriented industries
3
. This is followed by a 
brief discussion on cross-cutting themes like production-linked incentives (PLIs), micro, small 
3  Fertiliser is covered in chapter 9 on Agriculture and Food Management
Economic Survey 2023-24
350
and medium enterprises (MSMEs), central public sector undertakings (CPSEs) and industrial 
R&D and innovation. The final section concludes the discussions and provides a wayforward.
PERFORMANCE OF KEY SECTORS AND RELATED ISSUES
Key Industrial Intermediates
Cement: Building the future
10.6 The cement industry contributes approximately 11 per cent of the input cost to the 
construction sector in India.
4
 Since de-licensing in 1991, the cement industry has progressed 
significantly both in capacity and process technology, so much so that India is the second largest 
cement producer in the world after China.
5
10.7 The Indian cement industry comprises 159 integrated large cement plants, 120 grinding 
units and 62 mini cement plants. The current annual installed capacity of the cement industry 
in India is about 622 million tonnes, with cement production of around 427 million tonnes in 
FY24. Most of the cement plants in India are located in proximity to the raw material source. 
About 85 per cent of the cement industry is concentrated in the States of Rajasthan, Andhra 
Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Tamil Nadu, Maharashtra, Uttar 
Pradesh, Chhattisgarh and West Bengal.
10.8 The industry has adequate capacity to meet the domestic cement demand; the quantity 
of cement imported in the year FY23 is about 0.2 per cent of total domestic cement production.  
The export of clinker and other cement increased until FY19 and then started declining except 
for other hydraulic cement on account of lower global demand and increasing competition from 
other countries. In FY23, India exported only a negligible quantity of clinker. 
Chart X.6: Installed capacity, production and capacity 
utilisation of cement industry
 
0
20
40
60
80
100
0
100
200
300
400
500
600
700
FY20 FY21 FY22 FY23
per cent
million tonnes per year
Installed Capacity Production Capacity Utilisation (RHS)
Source: Department for Promotion of Industry and Internal Trade (DPIIT)
4   National Accounts Statistics, 2023-24, Statement 8.8: Output and value added from construction, MoSPI
5   DPIIT
Page 5


CHAPTER
10
INDUSTRY: SMALL AND 
MEDIUM MATTERS
Industrial growth accelerated in FY24, with manufacturing and construction leading 
the way. Industrial GVA at constant prices in FY24 was 25 per cent higher than the 
pre-Covid FY20 levels, affirming broad-based recovery and consolidation. This 
was supported by greater credit offtake, a thrust on capital formation to shore up 
infrastructure-oriented sectors, and a supportive policy framework. 
In the last decade, there were considerable changes in the sectoral composition of India’s 
manufacturing landscape. Some consumer-oriented industries like automobiles, wood 
products, furniture and pharmaceuticals have made large gains in output share and 
production-oriented sectors like machinery, chemicals, non-metallic minerals, and 
rubber and plastic products have also had share gains, balancing the growth dynamics. 
At a same time, sectors like petroleum products, textiles, beverage and tobacco have 
witnessed gradual decline in their output share.
Going forward, invigorating ongoing efforts to impart greater efficiencies, skills, and 
dynamics to labour-intensive segments like textiles, food processing, and MSMEs 
would lend greater balance to industrial expansion. Incentivising R&D investment, 
greater formalisation of smaller manufacturers, alleviating their supply chain 
bottlenecks, facilitating market access and improving access to finance will also 
foster industrialisation. Further reduction in the compliance burden for MSMEs will 
considerably improve their growth prospects.
Domestic demand conditions on account of consumption and investment are strong 
and conducive to smooth industrial output expansion in the near term. A forward-
looking survey of the Reserve Bank of India on business expectations and industrial 
outlook presents a positive outlook. However, headwinds persist in terms of uncertain 
global demand conditions and prices of key inputs for which India is import-dependent. 
INTRODUCTION
10.1 Economic growth of 8.2 per cent in FY24 was supported by an industrial growth of 
9.5 per cent.
1
 Among the four sub-sectors of industry, manufacturing and construction 
achieved close to double-digit growth, while mining & quarrying and electricity & water supply 
also recorded strong positive growth in FY24. This reflects the broad-based acceleration of 
1     As per the provisional estimates of GDP released by the Central Statistics Office on 30 May 2024. This is greater 
than the 9 per cent industrial growth estimated in the second advance estimates of GDP released in February 
2024, indicating faster than anticipated expansion of industrial output during the latter part of FY24.
Economic Survey 2023-24
348
industrial output. The HSBC India Purchasing Managers' Index (PMI) for manufacturing also 
consistently remained well above the threshold value of 50 in all months of FY24, indicating 
sustained expansion and stability in India's manufacturing sector. 
10.2 The share of manufacturing in total gross value added at current prices was 14.3 per 
cent in FY23.  However, the output share is 35.2 per cent during the same period, indicating 
that the sector has significant backward and forward linkages that are not fully captured within 
its value-added share. About 47.5 per cent of the total value of output in the country is used as 
inputs in productive activities (inter-industry consumption)
2
. Manufacturing activities account 
for about 50 per cent of the inter-industry consumption and, at the same time, supply almost 
50 per cent of inputs used in all productive activities (agriculture, industry and services). 
Chart X.1: Share of industry and its 
Components in total GVA 
(in constant prices)
Chart X.2: Annual growth of 
industry and its components 
(in constant prices)
 
2.4 2.3 2.2 2.1 2.1
17.1
18.4 18.5
16.9 17.3
2.3
2.3 2.3
2.4
2.4
7.9
7.8
8.6
8.8
9.0
2 9.6
3 0.8
3 1.6
3 0.2
3 0.9
FY20 FY21 FY22 FY23 FY24
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
 
- 1 .4
- 0 .4
12 .2
2.1
9.5
-10
-5
0
5
10
15
20
25
FY 20 FY 2 1 FY 22 FY 2 3 FY 2 4
per cent
Mining & quarrying Manufacturing
Electricity, gas & other utilities Construction
Industry
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Chart X.3: India Manufacturing 
Purchasing Managers' Index
Chart X.4: Average annual growth in 
components of manufacturing GVA in 
constant prices (FY14 to FY23) in per cent
 
57.2
58.7 58.6
54.9
59.1
57.5
40
42
44
46
48
50
52
54
56
58
60
I nd e x
 
5.3
9.6
9.2
6.0
6.7
8.3
6.5
7.7
5.9
4.7
4.7
0.0
5.4
3.0
-4.0
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0
Manufacturing GVA
Chemical products
Wood products and furniture
Transport equipments
Metal & metal products
Pharma and medicinal chemicals
Machinery and equipment
Rubber & plastic products
Non-metallic mineral products
Food products
Leather and related products
Beverages and tobacco
Electronic products
Textiles and apprarels
Coke & refined petroleum products
Source: IHS Markit
Note: The index has values ranging from 0 to 100.
Source: Survey calculations based on National Account 
Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and 
transport equipment
2   As per the Supply and Use Tables published by the Central Statistics Office for FY20.
Industry
349
10.3 Despite the pandemic and consequent impairment of manufacturing value chains, the 
manufacturing sector achieved an average annual growth rate of 5.2 per cent in the last decade. 
The manufacturing sub-sectors witnessed considerable realignment in output shares in the 
last decade. Catalysts of manufacturing growth in the last decade included chemicals, wood 
products and furniture, transport equipment, pharmaceuticals and machinery and equipment. 
Out of them, the expansion of steel, machinery and equipment, wood products, and transport 
equipment signifies a thrust on capital formation in the economy, especially in the public sector. 
Chart X.5: Change in share of manufactured products GVA 
in total GVA between FY14 to FY23 (in constant Prices)
Source: Survey calculations based on National Account Statistics 2024 (Statement 8.6.1 & 8.6.2), MoSPI
Note: *excludes electrical, electronic, computer and transport equipment
10.4 India’s industrialisation was held in check by the absence of physical infrastructure and 
logistics as well as intrusive and cumbersome licensing requirements on capacity creation and 
expansion. Further, the manufacture of specific items was reserved for the small-scale sector. 
Much of these restrictions have been now lifted, and physical infrastructure is being created 
at a rapid pace. Connectivity has improved. The Goods and Services Tax has created a single 
market for several commodities, enabling manufacturing at scale. However, India faces stiff 
challenges in growing its manufacturing base. Public policy must do whatever it can to boost 
competitiveness. Action lies predominantly in deregulation. The private sector must think 
long-term and invest in quality through R&D spending. These may not be sufficient, but they 
are necessary conditions for the growth of the sector. Manufacturing still has the ability to 
generate low and semi-skilled jobs and bring development closer to the people. India needs to 
prioritise the sector.
10.5 The remaining sections of the Chapter are organised in the following way. The next 
section examines progress, challenges and policy initiatives in different industrial segments, 
such as key industrial intermediates and consumer-oriented industries
3
. This is followed by a 
brief discussion on cross-cutting themes like production-linked incentives (PLIs), micro, small 
3  Fertiliser is covered in chapter 9 on Agriculture and Food Management
Economic Survey 2023-24
350
and medium enterprises (MSMEs), central public sector undertakings (CPSEs) and industrial 
R&D and innovation. The final section concludes the discussions and provides a wayforward.
PERFORMANCE OF KEY SECTORS AND RELATED ISSUES
Key Industrial Intermediates
Cement: Building the future
10.6 The cement industry contributes approximately 11 per cent of the input cost to the 
construction sector in India.
4
 Since de-licensing in 1991, the cement industry has progressed 
significantly both in capacity and process technology, so much so that India is the second largest 
cement producer in the world after China.
5
10.7 The Indian cement industry comprises 159 integrated large cement plants, 120 grinding 
units and 62 mini cement plants. The current annual installed capacity of the cement industry 
in India is about 622 million tonnes, with cement production of around 427 million tonnes in 
FY24. Most of the cement plants in India are located in proximity to the raw material source. 
About 85 per cent of the cement industry is concentrated in the States of Rajasthan, Andhra 
Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Tamil Nadu, Maharashtra, Uttar 
Pradesh, Chhattisgarh and West Bengal.
10.8 The industry has adequate capacity to meet the domestic cement demand; the quantity 
of cement imported in the year FY23 is about 0.2 per cent of total domestic cement production.  
The export of clinker and other cement increased until FY19 and then started declining except 
for other hydraulic cement on account of lower global demand and increasing competition from 
other countries. In FY23, India exported only a negligible quantity of clinker. 
Chart X.6: Installed capacity, production and capacity 
utilisation of cement industry
 
0
20
40
60
80
100
0
100
200
300
400
500
600
700
FY20 FY21 FY22 FY23
per cent
million tonnes per year
Installed Capacity Production Capacity Utilisation (RHS)
Source: Department for Promotion of Industry and Internal Trade (DPIIT)
4   National Accounts Statistics, 2023-24, Statement 8.8: Output and value added from construction, MoSPI
5   DPIIT
Industry
351
10.9 The industry has maintained a capacity utilisation rate of approximately 60-65 per cent 
in recent years. Reports also expect that the global demand for cement is likely to be flat during 
2024-2030, with bright spots in demand emanating only from India, Africa, the Middle East 
and North America to an extent. Yet gross margins in the cement industry are likely to be 
robust globally, helped by higher prices and lower fuel costs.
6
10.10 Domestic cement consumption in India is around 260 kg per capita against a global 
average of 540 kg per capita, signifying potential for growth.  In the last ten years, the import of 
clinker has increased. However, the quantity of imports is still low.  
10.11 The cement industry is mainly driven by robust infrastructure development and 
urbanisation. The government's focus on mega infrastructure projects such as highways, 
railways, housing schemes and smart cities will boost cement demand significantly. The push 
for rural development and increased investment in industrial and commercial construction 
support growth prospects.
10.12 Globally, the cement sector generates about 7 per cent of the total anthropogenic 
emissions. The Indian cement industry has been working on the issue. Greenhouse gas 
emissions are estimated to have been reduced to 0.56 t CO2 per tonne of cement in 2023. CO2 
emissions are targeted to be further reduced to 0.35 t CO2 per tonne of cement by 2050, as 
estimated in the cement industry technology roadmap.
7
Steel sector on the growth path
10.13 Iron and steel contribute approximately 47 per cent of all inputs in the building & 
construction sector.
8
 It also serves as a critical input for the production of machinery and 
consumer goods. The steel sector achieved its highest levels of production and consumption 
during FY24.
10.14 India became a net exporter of finished steel over the past decade. In FY24, India started 
off as a net exporter in Q1. However, in Q2 and Q3, it became a net importer. This was largely 
driven by price differentials between international and domestic prices of finished steel. Low 
prices in the international market led to reduced profit margins for exports and made imports 
more affordable, affecting the trade balance in steel. However, the import dependence on 
coking coal, an essential raw material for steel production went up from 56.1 MT in FY23 to 
58.1 MT in FY24.
10.15 As the world moves towards a low-carbon economy, green steel is poised to play a pivotal 
role in reshaping the future of the steel industry. India’s steel sector accounts for 12 per cent
9
 of 
India’s greenhouse gas emissions with an emission intensity of 2.5 tonnes of CO2 per tonne of 
crude steel compared to the global average of 1.9 tonnes of CO2 per tonne of crude steel. 
6     Global Cement Industry Outlook: Trends and Forecasts. Link: https://www.worldcementassociation.org/blog/
news/global-cement-industry-outlook-trends-and-forecasts.
7   World Business Council for Sustainable Development, 2018
8   National Accounts Statistics, 2023-24, Statement 8.8: Output and value added from construction, MoSPI
9   Ministry of Steel