Now Reading: Manufacturing value addition dips, hits Viksit Bharat target
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Manufacturing value addition dips, hits Viksit Bharat target
A key measure of manufacturing efficiency in India has fallen, threatening the government's Viksit Bharat goal for 2047. The ratio of Gross Value Added to Gross Value of Output for manufacturing declined…
A key measure of manufacturing efficiency in India has fallen, threatening the government's Viksit Bharat goal for 2047. The ratio of Gross Value Added to Gross Value of Output for manufacturing declined to below FY15 levels by FY22 and has fallen further since FY23, according to official data analysed by Business Standard.
The sectors driving India's top exports, petroleum products and telecom equipment, show some of the lowest value addition, with GVA-to-GVO ratios of 12.33 per cent and 8.86 per cent respectively in FY24. These sectors rely heavily on imported intermediate goods, with domestic value addition in gross exports at just 10.02 per cent for petroleum products and 20.93 per cent for communication equipment in 2022.
Prime Minister Narendra Modi identified manufacturing as the first of seven streams of power in his Independence Day speech. The declining efficiency suggests India's export growth is input-intensive rather than driven by domestic value creation, posing a challenge to the vision of a developed India by 2047.
Indian Opinion Analysis
The GVA-to-GVO ratio is a standard industrial efficiency metric tracked by the Ministry of Statistics and Programme Implementation. A sustained decline signals that manufacturing is consuming more raw materials and components per unit of output, which undercuts the job creation and supply-chain deepening needed for the Viksit Bharat target. The low domestic value addition in petroleum and electronics exports mirrors a pattern seen in assembly-oriented economies that have struggled to move up the technology ladder. The next key data point will be the Annual Survey of Industries for FY25, due in late 2025, which will show whether the trend is stabilising or worsening under the Production Linked Incentive schemes.
Source: businessstandard.substack.com
This brief was synthesised by AI from the source linked above.
