India's manufacturing sector, particularly capital-intensive sub-sectors such as electronics, chemicals, and machinery, has seen a significant surge in employment and exports over the past decade, according to a report by Goldman Sachs. This growth is attributed to the government's focus on promoting the assembly of electronics, machinery, and pharmaceutical products, resulting in double-digit growth in exports to developed markets.

The report highlights that these capital-intensive industries are experiencing double-digit export growth, reflecting India's shift towards a more valuable export portfolio. This growth indicates progress in developing high-value products for international markets. Notably, employment growth in capital-intensive sectors has outpaced that in labor-intensive sectors, such as textiles, footwear, and food and beverages.

The manufacturing sector has been undergoing a significant transformation, driven by government reforms aimed at boosting competitiveness and fostering sustainable economic growth.

Government Reforms and PLI Schemes Driving Growth

Central to these reforms are the Production-Linked Incentive (PLI) schemes, introduced in phases starting in 2020. These initiatives aim to boost domestic manufacturing, stimulate technological advancements, and attract both foreign and local investments.

With an overall incentive outlay of Rs 1.97 lakh crore, the PLI schemes cover 14 critical sectors ranging from electronics and pharmaceuticals to drones and speciality steel. These incentives aim to enhance production capacity, create employment opportunities, promote exports and reduce import dependency while driving India toward its Viksit Bharat 2047 vision on a framework of Atmanirbhar Bharat.

As of June 2024, the PLI Schemes have attracted investments amounting to Rs 1.32 lakh crore and a significant boost in manufacturing output of Rs 10.9 lakh crore as of June 2024. Additionally, these schemes have directly and indirectly created 8.5 lakh jobs, furthering the socio-economic impact.

India's IT and Semiconductor Industries on the Rise

In exports, the schemes have contributed an impressive Rs 4 lakh crore, showcasing the integral role in making India a formidable player on the global stage. The report also highlights that despite an impressive growth in the capital-intensive sector, the labour-intensive sectors account for an overall higher share of jobs in the country.

The IT industry, in the last eight years, has added about 1.9 million jobs, boosting the total workforce to around 5.4 million. Technology advancements and e-commerce expansion have transformed the retail industry. About 41% of offline traders are creating new jobs by shifting their business online, thus demanding digital skills, logistics, and warehouse roles across the country.

The government has also been focusing on the development of semiconductors and display manufacturing ecosystems in India. The Union Cabinet, chaired by Prime Minister Narendra Modi, approved Kaynes Semicon Pvt Ltd's proposal to set up a semiconductor unit in Sanand, Gujarat. The proposed unit will be set up with an investment of Rs 3,300 crore. Its capacity will be 60 Lakh chips per day. The chips produced in this unit will cater to a wide variety of applications, including industrial, automotive, electric vehicles, consumer electronics, telecom, mobile phones, etc.

In conclusion, the surge in employment in India's capital-intensive industries is a testament to the government's strategic initiatives and reforms. The focus on promoting domestic manufacturing, technological advancements, and attracting investments has resulted in significant growth in both employment and exports. The success of the PLI schemes and the focus on sustainable energy solutions further underscore India's progress towards becoming a global manufacturing hub. The future of India's manufacturing sector looks promising, with continued government support and strategic initiatives aimed at fostering growth and competitiveness.