India Aims to Boost Manufacturing Sector's Contribution to 23% by 2045: FM

Finance Minister Nirmala Sitharaman announced that India intends to raise the contribution of the manufacturing sector from 12% to 23% in the upcoming twenty years, with the goal of generating employment and stimulating economic development.

India is concentrating on 14 designated sunrise sectors such as semiconductors, renewable energy components, medical devices, batteries, and labor-intensive industries, including leather and textiles, to increase the manufacturing contribution to GDP, she stated while addressing the Hoover Institution at Stanford University in California.

She stated that "scaling up manufacturing is essential to absorb a youthful workforce, reduce import dependencies and build competitive global supply chains".

Noticing that the world is experiencing a total reset in manufacturing due to industrial revolution 4.0, she stated that India is also experiencing transformations.

"In India's GDP, the service sector's contribution is about 64% and if that is one side, at the lower end, the gig economy's growth is rapid. In fact, if 7.1 million people are in the gig economy today, as of 2021-22 data, we expect that to go to 230 million by 2030. That's not manufacturing," she said.

"So the service sector disproportionately contributes both to the GDP and to employment… but that's not to say manufacturing should be left aside. We have been hoping to increase the contribution of manufacturing from 12% to about 22-23%," she said.

The government has recognized 14 sunrise sectors—semiconductors, renewable energy components, medical devices, hydrogen mission, batteries, and others—to bolster manufacturing and has launched the production-linked incentive (PLI) scheme to encourage their growth.

PLI is being provided to sectors with higher employment potential, such as electronic products, as well as similarly labor-intensive industries like textiles and leather.

Emphasizing the significance of the manufacturing sector, she stated that it unites societies and fosters cohesion within communities by creating job opportunities and enhancing financial stability.