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Evolvement Of Manufacturing Industry Since Independence

It is now time for India to seize the moment that history has presented and accelerate its manufacturing engine into high gear.

Photo Credit : Reuters



Manufacturing is not only the foundation of an economy but also the muscle behind national security. Therefore, a strong manufacturing sector is indispensable for any developing country. India chose the path of planned self-reliant development after Independence in 1947, like most countries in the developing world, with manufacturing activity considered to be the main engine of economic growth.

Since independence, the development path for the Indian economy has been charted out in the form of Five-Year Plans. The first five-year plan allocated a meagre 8.6% of the total budget (8000 cr. approx.) towards manufacturing. 

The domestic manufacturing sector had evolved from an industrial base in the 1950s and 1960s to a licensing Raj between 1965 and 1980. The industry then opened up following economic liberalization in the 1990s which brought international competition to the country. Presently, India's Manufacturing sector contributes 14.43% (2021) to the GDP. India prides itself on being the sixth largest manufacturer in the world.


The manufacturing industry, like a majority of other industries, have been impacted by the pandemic. The resultant lockdowns led to a great deal of disruption in supply chains. Like other industries manufacturing fought back with innovation to overcome the challenges posed by the pandemic. Companies in the sector began using big data and analytics to help them predict the future and thus survive and thrive during challenging times. At the same time, they turned to the ‘Internet of Things’ and Artificial Intelligence to tide over the supply chain and manpower challenges of today. The adoption of these technologies is only set to grow. The potential for AI especially is enormous. Although today the use of AI in Indian production ecosystem (manufacturing sector) is not widespread, its use is common among the newly introduced start-ups in the manufacturing sector.

The diversity of the Indian workforce serves as a catalyst for innovation in the manufacturing sector. According to a World Bank report, India is one of the world's leading players in the biotechnology industry, making pharmaceuticals, automotive parts and assembly sectors in the manufacturing industry.  While India is still a developing country, it climbed by three points to 57th place in the 2018 Global Innovation Index (GII) and stood at 48th place in 2020. Considering the current technology and also the scope for innovation with wider adoption of Blockchain + AI + Computational Empathy the sector is expected to work its “magic” on the Indian economy.

Way Forward:

Technology will be a critical pillar for Indian manufacturers to adapt, innovate, and scale in the times to come. The partnership between India’s technology start-up companies and manufacturing enterprises will be crucial in rethinking India as a global manufacturing hub and furthering the ‘Make in India’ initiative.

The lockdowns during Covid-19 have been particularly difficult for the Indian manufacturing sector. Considering that it contributes about 14.43% of the country's GDP, its rapid recovery is important. As the government pushes the nation to be “Vocal for Local”, the sector must increase strategic investment in technology so that it not only recovers from the impact of the pandemic, but also becomes a leading driver of India's $5 trillion economic vision by 2025.

In recent times, global supply chain disruptions and international trade wars, both of which had China in focus, have allowed India to present itself as a global manufacturing hub. The political intent to make India a global hub for manufacturing is evident. The idea of Atmanirbhar Bharat, Make in India 2.0, and Vocal for Local has shown the priority the government places on the sector. The narrative has started to pay off (has worked in favor of the country) as Apple and other technology companies have started manufacturing in India.

It is now time for India to seize the moment that history has presented and accelerate its manufacturing engine into high gear.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Kamal Nandi

The author is President-CEAMA, Business Head and EVP-Godrej Appliances.

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