India’s industrial activity sees robust performance


  • Industrial activity saw robust growth for the second consecutive month in December, with the Index of Industrial Production growing 7.07%.

Present status:

  • The Index of Industrial Production (IIP) registered second consecutive month of high growth in December on the back of robust manufacturing activity which expanded by 8.4 per cent.
  • Within manufacturing, 16 out of 23 industry groups showed positive growth on an annual basis.  IIP had grown by 8.8 per cent in November 2017.
  • In December, the capital goods segment grew by 16.4 per cent against a contraction of 6.2 per cent in the same month last year.
  • Infrastructure and construction goods grew by 6.7 per cent in December against 5.5 per cent in the same month in 2016.
  • Consumer non-durables expanded by 16.5 per cent in December

Importance of industrial sector:

  • Industrialization has an important role to play in the economic development of the under-developed countries like India with huge man power and large and varied resources.
  • The first and the foremost argument in favor of industrialization is that it can provide a base for rapid growth of income.
  • With the increasing population agriculture is unable to provide for employment. Hence it is very important to set up industries to absorb this surplus labor.Hence industries can solve the problem of unemployment.
  • Industries are capable of utilizing all the resources present in the economy. They can even make use of scraps and waste materials.
  • The rapid development of capital goods industries promotes the growth of agriculture, transport and communication. It also enables the country to produce a variety of consumer goods in large quantities and at low costs.

What are the present challenges facing by industrial sector in India?

Some of the issues pertaining to manufacturing are:

  • Indian market is flooded with foreign products especially Chinese. This hinders growth of domestic firms.
  • India has more than 45 labor laws combining center and states. This leads to harassment and undue interference in industrial activity by bureaucracy.
  • Lack of skilled manpower: – India severely lacks skilled professionals. Only 2.5% of Indian have received skill training, compared to Japan (75%) and Germany (80%).
  • High NPA’s of banks have reduced flow of money to industrial credit.
  • Complex government regulations and taxation laws.
  • Lack of technology, and R&D.
  • Infrastructural bottlenecks: poor road and rail connectivity.

What are the reasons for the present growth in the sector?

The recently released IIP data revealed the following reasons responsible for growth in industrial sector:

  • Growth in the manufacturing sector.
  • Growth in capital goods and consumer non-durable sectors
  • Retail inflation eased somewhat in January, but remained at 5%.
  • The Consumer Price Index quickened by 5.07% in that month, boosted by the persistently high inflation in the food and fuel segments.
  • The relatively strong growth in the IIP comes on top of an even stronger growth of 8.8% in November.
  • Focus on Make in India programme is showing desired results.
  • Manufacturing sector recorded a robust growth of 8.4% in December 2017 over December 2016.
  • Double digit growth of 16.4% in capital goods and consumer non-durables at 16.5% reinforces heightened economic activity.

Government’s initiatives in this regard:

New Industrial Policy:

Government has decided to review the old Indian Industrial Policy 1991. It will subsume National Manufacturing Policy. The proposed new Industrial Policy should take care of the following things:

  • Addressing ways to incorporate the use of modern smart technologies for advanced manufacturing in India.
  • Should also look at creating more jobs as well as boosting the economic activities of Self –Help Groups(SHGs)
  • To make India a manufacturing hub.
  • Enhancing industrial competitiveness.
  • Employing gainfully a growing workforce.
  • Ensuring sustainability and responsible industrialization
  • Enabling an ecosystem for technology adoption and innovation.
  • Review of the FDI policy to ensure that it facilitates greater
    technology transfer, leverages strategic linkages and innovation.

Possible implications of new industrial policy on Indian industry:

Implications of above reforms:-

  • It can lead to reduce in unemployment rate by creating large number of Jobs in the Manufacturing.
  • It aims to improve effectiveness of Indian industries by harnessing latest technologies like Artificial Intelligence which can help in increasing India’s share in world trade.
  • It suggests incentives to select sunrise sectors, and possibly enterprises, which could potentially disincentivize competition and innovation, and curb the growth of other sectors.

Way ahead:

  • The industrial policy of the govt. must be well defined, clear and progressive. Moreover, it should be adhered to and implemented earnestly.


India dream to make India global manufacturing Hub need to supported by conducive policy which should be far sighted vision and consultative . Recent Initiative like GST , importance to governance ,conducive policy and initiative for IPR generation will complement new industrial policy .

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