How Manufacturing Sectors help in economic growth?

The building sector has a fundamental role to play in the economic growth of the country. The manufacturing sector creates more jobs than any other sector. It creates job opportunities for people in developed as well as developing markets. It adds value to the overall economic growth and makes it sustainable. There has always been employment in the manufacturing sector which grows at a slow and steady pace. It is only during times of recession that the economy suffers because of decreased productivity, debt and outsourcing of wealth.

The Indian manufacturing sector is a competitive market. What can help in the economic growth is an advanced manufacturing strategy. Technology, innovation, and the opportunity should be used at its best for successful economic growth. Since the 18th century, the manufacturing sector has been the main engine of growth. Currently in India the service sector also contributes to the growth. Below are few points on how the manufacturing sector helps in economic growth in a developing country like India:

  • In manufacturing sectors there in an empirical correlation between the degree on industrialization and per capita income of the country.

  • The productivity is found to be higher.

There is a transfer of resources from the manufacturing sector to the service sector. But in developing economies like India the manufacturing sector still has higher shares compared to the service sector.

Towards the rise in growth

Finally, as per capita incomes rise, the share of agricultural expenditure in total expenditure declines and the share of expenditure on manufactured goods increases.If a country increases the output of the manufacturing sector then there will be a corresponding increase in transportation, communication and other services upon which the manufacturing sector relies.


This will further cause a rise in the economic growth of the country.There is no doubt on the fact that the manufacturing sector creates jobs. It creates indirect employment. In the coming years, India is expected to witness significant demographic growth and a disproportionate expansion in the working age population. Growth in the manufacturing sector promotes growth and employment in the service sector. A country’s global trade is based on the goods and not its services. How are these goods created? These goods are created in a manufacturing unit. These finished goods form the basis of the export in the country. Goods are exported on which we earn revenue and economic growth increases. Services are dependent on the manufactured goods.Small and Medium Enterprises (SMEs) constitute 95% of the total industrial activity in India and play a vital role in employment generation.

According to the National Manufacturing Policy towards economic growth of the country, there will be an increase in the share of the manufacturing sector which will contribute to 25% of the GDP by 2022 and provide employment to 100 million people. Therefore, the manufacturing sector plays a vital role in raising the economic growth of the country.

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