Industry is growing, but isn’t creating jobs

Successive governments have taken steps to boost the manufacturing sector. But its contribution to GDP and share in employment has barely budged.

2 min readOct 2, 2026 06:05 AM IST First published on: Oct 2, 2026 at 06:05 AM IST

India’s formal manufacturing sector continues to chug along at a fairly healthy pace. This is evident across a range of indicators. In 2024-25, the registered manufacturing segment’s output grew by 7.8 per cent, employment by 7.2 per cent, and emoluments by 12.08 per cent, according to the Annual Survey of Industries. However, other key indicators also warrant close attention. Wages per worker have grown at a slower pace than net profit, output per worker has remained roughly the same over the years, while invested capital has increased steadily. These developments have had implications for consumption, investment and productivity in the economy.

ASI data shows that total persons engaged in organised manufacturing crossed 2 crore in 2024-25, up from 1.72 crore in 2021-22. But this is only a fraction of the labour force. A substantial share of the labour force is still engaged in the informal economy. In fact, of all non-farm workers in the country, 73.1 per cent are engaged in informal-sector enterprises as per the Periodic Labour Force Survey 2025. The formal sector, both manufacturing and services, simply does not provide enough job opportunities. In 2023-24, while 1.9 crore persons were employed in organised manufacturing, about 3.3 crore were employed in the unorganised segment as per the Economic Survey. Organised manufacturing also continues to be dominated by small firms, whereas, according to the Economic Survey, it’s the bigger factories (those employing more than 100 workers) that employ a larger share of workers, pay higher wages and have higher labour productivity.

Successive governments have taken steps to boost the manufacturing sector. But its contribution to GDP and share in employment has barely budged. Manufacturing in India has not emerged as an engine of mass employment, unlike in the development trajectory of Asian economies such as Korea and China. It has not provided avenues for the millions entering the labour force each year, and those wanting to exit the farm sector. And, without such avenues, the low-skilled and unskilled simply have no alternative but to either remain on the farm or engage in gig work. Therein remains India’s employment challenge.