With cooperative and competitive federalism at play, states are increasingly vying with each other to attract private investment, especially in manufacturing, to not only boost economic activity but also give jobs to millions.
Over the years, India’s manufacturing landscape has shifted as fiscal incentives by some states gradually ended while several other states launched new industrial policies to attract companies.
To understand that, BT did a deep dive into data from the Annual Survey of Industries, which is the most comprehensive source on registered manufacturing units, over the last 10 years from FY14 to FY24. The research has revealed some interesting trends.
Tamil Nadu reigns supreme with the highest number of factories and jobs in the sector and comes third in the overall ranking of top manufacturing states. In absolute terms, it remained considerably ahead of its closest competitors, Gujarat and Maharashtra.
The state remains a major hub for automobiles and auto components, textiles, leather, electronics and electronic components and has several urban and manufacturing centres such as Coimbatore, Madurai, Tirupur, Tiruchirappalli and Salem, apart from Chennai. It’s also the fastest growing major state in exports, registering 75% growth over a seven-year period. Exports totalled $52.07 billion in FY25. The state’s Economic Survey 2024-25 has set a target of making the state a $1 trillion economy by 2030.
“One of Tamil Nadu’s greatest strengths has been its ability to stay a step ahead. Over the decades, successive industrial policies have anticipated where manufacturing was heading and positioned the state accordingly,” says S. Keerthana, Minister of Industries, Investment Promotion & Commerce, Tamil Nadu.
The number crunching by BT also reveals that over the last five years, Uttar Pradesh has become the fastest growing major state in terms of manufacturing units and jobs created while Haryana is the fastest growing major state in the last decade. Interestingly, Chhattisgarh has come up as the fastest growing emerging state with the sharpest growth in manufacturing units and jobs created.
Each of these states has been carving out a distinct identity in terms of industrial policies. In 2022, UP came out with an Industrial Investment and Employment Policy with a package of incentives and subsidy as well as fast-track allotment of land.
The Make in Haryana 2026 Policy targets an investment of Rs 5 lakh crore and creation of 10 lakh jobs over the next five years. Interestingly, BT data reveals that Haryana, which is a hub of several industries, including automotive and components, textiles and footwear as well as IT and ITeS, saw a decline in the number of factories between FY19 (11,835) and FY24 (10,389).
Mineral-rich Chhattisgarh, with its Industrial Policy 2024-30, aims to promote investment in agriculture products, mineral-based core sector enterprises, and other resource-based industries across all development blocks. Vishwesh Kumar, former Joint Secretary, Department of Commerce and Industry, Chhattisgarh, says the state is looking to expand from its core sectors of steel, cement, power and aluminium to nearly 250 thrust sectors, including textiles, readymade garments, clothing, health, pharma and medical devices, IT and ITeS.
Sunil Sinha, Professor of Economics at Chandigarh-based Institute of Development and Communication, says certain states have a natural advantage. Tamil Nadu, with its long coastline, is one of them. “On the whole, states in the South with a long coastline are well-suited for manufacturing,” he says. Meanwhile, landlocked Haryana and UP, with proximity to the national capital, are also doing well.
Manufacturing is the way forward for India to sustain and boost its economy growth and provide meaningful jobs to citizens. States have begun to realise this, and several are working on new industrial policies. The next decade could bring some more contenders!
@surabhi_prasad
