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Surpassing China in manufacturing growth

India has been one of the best performing manufacturing economies in the last decade.

Print Edition: April 4, 2010

India has been one of the best performing manufacturing economies in the last decade. Yet, the manufacturing to GDP ratio is substantially lower in India compared to other rapidly developing economies. Over the next decade, the performance of Indian manufacturing will be crucial to achieving India's overall growth aspirations and employment generation.

A CII-Boston Consulting Group report asserts that India can match, and even surpass, the best performing manufacturing economy in recent years—China. This would entail an annual growth rate of about 11 per cent (compared to 6.8 per cent for FY 1999-2009) Achieving and sustaining the high growth trajectory will be contingent on a few factors. Some of them are:

  • Gross fixed assets will require a 4-5 fold increase in investment in the next five years, to eventually increase by Rs. 55-80 lakh crore by 2025.
  • Exports growth will need to accelerate to 15-20 per cent from the 11 per cent growth seen in the last decade.
  • India's labour productivity will need to increase substantially to catch up with China.

All this is achievable, says the report, and will make India the fourth-largest manufacturing economy in the world by 2025 from its current ranking of 13th.

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