September 13, 2026

-

Premium

MANUFACTURING INDIA'S MOMENT

LAND, LABOUR, CAPITAL and entrepreneurship. These are the four factors of production taught in a basic economic theory class. But reality is far different, and India is a prime case study.Despite being one of the largest economies, the seventh-largest in the world with a total area of 3.287 million square kms and having some of the top industry leaders and a labour force of over 610 million, manufacturing in the country is yet to pick up pace. Successive governments have tried to increase the share of manufacturing in the GDP to 25%. It remains around 16%.As BT highlighted in an earlier edition, the economy continues to rely heavily on imports, and the West Asia crisis has again shown the need for greater self-reliance and ramping up manufacturing.Prime Minister Narendra Modi, in his Independence Day speech, also said that India needs to significantly advance the manufacturing sector and make everything from small components to large-scale products. "The entire value chain should be ours and we should move ahead with it. From design to manufacturing, India must emerge as a trusted hub in the global supply chain," he underlined.SCALING UP Policymakers and economists remain concerned about manufacturing not taking off in a big way despite efforts ranging from liberalisation of foreign investment norms, a competitive corporate tax rate, deregulation and decriminalisation of minor offences to lowering of compliance burden and labour reforms.Rakesh Mohan, Part Time Member of the EAC-PM and former Deputy Governor, Reserve Bank of India, who was closely associated with the 1991 economic reforms, finds it puzzling that the share of manufacturing in India's GDP has not increased in the last 35 years. "Development experience and history demonstrate that, in this period of development, the share of manufacturing should have grown

CHOOSING THE CHAMPION STATES

INDIA'S STATES PRESENT a differentiated and diverse landscape not only in terms of geography and culture but also socioeconomic development parameters, including population size, economic growth, fiscal health and industrial progress. With this in mind, Business Today conducted a study to identify India's top-performing manufacturing states and assess the strength of their manufacturing ecosystem. The rankings were prepared using the latest available state-level data from the Annual Survey of Industries (ASI) and the Reserve Bank of India (RBI), which compiles data from the Ministry of Commerce, and other official government sources. A total of 33 states and Union Territories (UTs) were considered for the study. However, the UTs of Dadra & Nagar Haveli and Daman & Diu, Ladakh, and Lakshadweep were excluded as data for several parameters was unavailable. (Table 1).TOP PERFORMING STATES For each parameter, the latest available annual data (FY25 or FY24, depending on availability) was used. State-wise data on the Number of Factories, Number of Workers, and Invested Capital was available only up to FY24. For Gross State Value Added (GSVA) ­ Manufacturing, Gross State Value Added (GSVA) ­ Construction, State-wise Exports, and Availability of Power, the latest available data was up to FY25. States were ranked based on their absolute values for each parameter, with the state recording the highest value being recognised as the top performing state in that category.FASTEST GROWING STATES To capture both long-term structural progress and recent momentum, the study identified the fastest growing major state and the fastest growing emerging state for each parameter over two different time horizons: · 10-year growth, reflecting sustained long-term development since the inception of Make in India in 2014 · 5-year growth, highlighting recent momentum and mediumterm progress since the Covid-19 pandemic and the focus on domestic self-reliance For the exports parameter, long-term growth was calculated over a seven-year period (FY18­ FY25), as comparable state-wise historical data was available only for this duration.To ensure meaningful comparisons, states were first classified into Major and Emerging