Page 23 - CII ARTHA

OCTOBER 2025

Regional Distribution of together host more than 45.0 per cent of India’s factories and
Manufacturing workers, and a similar share of output and value added,
underscoring their role as industrial hubs.

The state-level distribution of industrial activity highlights Maharashtra and Gujarat alone contribute more than 30.0 per
India’s regional manufacturing asymmetries. A handful of cent to output and value added, followed by Tamil Nadu which
states account for a disproportionate share of factories, contributed more than 10.0 per cent.
employment, and output. Tamil Nadu, Maharashtra and Gujarat

Sectoral Shares in Manufacturing Value Added and Employment (%)

18.00
16.00 Maharashtra
Gujarat
14.00
Share of VA in All-India Average FY20-24 (%) 10..0 Karnataka Tamil Nadu
12.00

8.00
6.00
Haryana
4.00 Odisha Rajasthan Telangana Uttar Pradesh
AP
Jharkhand MP West Bengal
2.00 Punjab
Chattisgarh Kerala
0.00 Bihar
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
Share of Workers in All-India Average FY20-24 (%)

Source: ASI (various rounds), CII Research

Manufacturing growth is gradually dispersing continue to provide large-scale employment. Regional patterns
beyond traditional industrial hubs show emerging industrial activity in eastern and central states,
suggesting a gradual dispersion beyond traditional hubs.

Growth patterns further reveal differentiated state trajectories. However, structural challenges remain. Labour-intensive
While the all-India growth of real output grew at a CAGR of 8.4 sectors remain fragmented with low efficiency and limited
per cent in FY20–25, states such as Chhattisgarh (13.5 per cent), value creation. Without addressing these issues, the benefits
Uttar Pradesh (12.6 per cent), Punjab (12.5 per cent), Jharkhand of India’s manufacturing expansion risk being concentrated
(11.6 per cent), Odisha (11.5 per cent) and Rajasthan (10.7 per and unsustainable.
cent) recorded above-average expansion. Value added growth
was particularly strong in Bihar, Andhra Pradesh, Jharkhand, Targeted interventions are required to ensure
Haryana, and Odisha. In contrast, growth in mature industrial
hubs like Gujarat (7.3 per cent) and Maharashtra (8.7 per cent) India’s manufacturing growth drives
has been more moderate. In terms of workers employed, states broad-based economic transformation
like Odisha, Chhattisgarh and Uttar Pradesh outperformed.
The state-level analysis shows that while traditional industrial To ensure that India’s manufacturing growth translates into
powerhouses continue to dominate in scale, newer geographies broad-based economic transformation, real wages need to rise
particularly eastern and central states are exhibiting faster alongside productivity. Capital productivity should be
growth in output, value added and employment. strengthened through adoption of advanced manufacturing
technologies and process upgrades. Labour-intensive
industries, including textiles, apparel, leather, and non-metallic
Conclusion minerals, require modernisation and consolidation, supported
by cluster-based infrastructure, technology adoption, and
Overall, India’s manufacturing push is firmly underway. Output, integration into global value chains to enhance productivity
value added, and employment have strengthened, underpinned and value addition. Finally, regional disparities should be
by robust investment and rising labour productivity. addressed by promoting investment and industrial
Capital-intensive sectors like electronics, automobiles, and development in emerging high-growth states to ensure
chemicals are driving growth, while labour-intensive industries manufacturing growth benefits are widely shared.

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