Module 62. Industrial Sector, MSME & Major Industries

India’s industrial sector forms one of the crucial pillars of its economy, contributing significantly to employment generation, technological advancement, and overall national development. Encompassing large-scale industries, medium, small and micro enterprises (MSMEs), and a rapidly expanding service-linked industrial base, this sector reflects the country’s transition from an agrarian economy to a modern, diversified one.

Evolution and Structure of the Industrial Sector

The development of India’s industrial sector has been shaped by historical phases and economic policy shifts. During the colonial period, industrial growth was limited and largely confined to textiles, mining, and plantation-based industries, with most manufacturing dependent on raw material exports. Post-independence, India adopted a mixed economy model, emphasising public sector dominance in core industries such as steel, heavy machinery, and energy.
The Industrial Policy Resolution of 1956 laid the foundation for state-led industrialisation, categorising industries into three groups based on ownership and control. However, by the 1980s, inefficiencies arising from excessive regulation and protectionist policies—known as the Licence Raj—led to stagnation. The economic reforms of 1991 marked a turning point, ushering in liberalisation, privatisation, and globalisation. This period saw the dismantling of industrial licensing, opening of foreign investment, and strengthening of market competition.
Today, the industrial sector is broadly classified into three segments:

• Primary Industries: Extractive activities such as mining, quarrying, and petroleum.
• Secondary Industries: Manufacturing, construction, and energy production.
• Tertiary-linked Industries: High-tech, service-oriented, and export-based industries.

The manufacturing sector currently contributes around 17–18 per cent of India’s Gross Domestic Product (GDP), with the government targeting 25 per cent under the Make in India initiative.

Micro, Small and Medium Enterprises (MSMEs)

The MSME sector serves as the backbone of India’s industrial ecosystem. It plays a vital role in employment generation, export promotion, and regional development by fostering entrepreneurship at the grassroots level. As per the revised classification (based on turnover and investment) under the MSME Development Act, 2006 (amended 2020):

• Micro enterprises: Investment up to ₹1 crore and turnover up to ₹5 crore.
• Small enterprises: Investment up to ₹10 crore and turnover up to ₹50 crore.
• Medium enterprises: Investment up to ₹50 crore and turnover up to ₹250 crore.

MSMEs contribute nearly 30 per cent of India’s GDP and account for about 45 per cent of total exports. They are spread across both urban and rural areas, covering diverse sectors including textiles, leather, food processing, handicrafts, and engineering goods. States such as Tamil Nadu, Gujarat, Maharashtra, and Uttar Pradesh host the largest number of MSME units.
Government initiatives to strengthen this sector include:

• Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for collateral-free loans.
• Prime Minister’s Employment Generation Programme (PMEGP) for promoting self-employment.
• Cluster Development Programme (CDP) to improve competitiveness through shared infrastructure.
• Udyam Registration Portal for simplified enterprise registration.
• Digital MSME Scheme and ZED (Zero Defect, Zero Effect) certification promoting quality and sustainability.

Despite their contribution, MSMEs face challenges such as limited access to finance, outdated technology, inadequate marketing support, and competition from large-scale producers. Digitalisation, e-commerce integration, and skill training have emerged as key strategies for enhancing productivity and global competitiveness.

Major Industries in India

India’s industrial base is highly diversified, comprising both heavy and light industries across the country. Major industries are often classified according to raw materials, production scale, and technological intensity.
1. Iron and Steel IndustryThe steel industry forms the backbone of industrial development, providing raw material for construction, infrastructure, transport, and manufacturing. The first modern steel plant was established at Jamshedpur by the Tata Iron and Steel Company (TISCO) in 1907. Major centres now include Bhilai, Durgapur, Rourkela, Bokaro, and Visakhapatnam. India is among the world’s top producers of crude steel, supported by abundant iron ore deposits in Jharkhand, Odisha, and Chhattisgarh.
2. Textile IndustryAs one of the oldest and largest industries, textiles account for around 12 per cent of manufacturing output and 10 per cent of total exports. The sector includes handlooms, power looms, and modern garment manufacturing. Centres such as Mumbai, Ahmedabad, Surat, Coimbatore, and Ludhiana are prominent textile hubs. The Technical Textiles Mission and Integrated Textile Parks have been established to enhance global competitiveness.
3. Automobile IndustryIndia has emerged as a global hub for automobile manufacturing, producing passenger cars, commercial vehicles, and two-wheelers for both domestic and export markets. Major automobile clusters are located around Pune, Chennai, Gurugram-Manesar, and Sanand. Companies like Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai, and Ashok Leyland dominate the sector. Electric vehicle (EV) manufacturing and component exports are rapidly expanding under the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme.
4. Information Technology and Electronics IndustryThough part of the broader service economy, IT and electronics industries are vital components of industrial growth. Centres such as Bengaluru, Hyderabad, Pune, and Noida have become technology hubs hosting firms like Infosys, TCS, and Wipro. The Production Linked Incentive (PLI) scheme has boosted domestic electronics and semiconductor manufacturing.
5. Chemical and Petrochemical IndustriesIndia is among the world’s leading producers of chemicals, including fertilisers, plastics, and pharmaceuticals. The chemical industry contributes nearly 7 per cent to the GDP. Major centres include Gujarat, Maharashtra, and Tamil Nadu. The Pharmaceutical Industry, sometimes termed the Pharmacy of the World, supplies affordable generic medicines globally.
6. Cement and Construction MaterialsThe cement industry, essential for infrastructure development, is dominated by firms such as UltraTech Cement, ACC, and Ambuja. Production is concentrated near limestone belts in Madhya Pradesh, Chhattisgarh, Andhra Pradesh, and Rajasthan.
7. Food Processing IndustryThis industry bridges agriculture and manufacturing, encompassing dairy, meat, beverages, and packaged foods. It provides significant rural employment and value addition. Programmes like Pradhan Mantri Kisan Sampada Yojana and Mega Food Parks Scheme support processing clusters and cold-chain infrastructure.
8. Energy and Heavy EngineeringThe power and heavy engineering industries underpin large-scale industrialisation. Public sector enterprises such as BHEL (Bharat Heavy Electricals Limited) and NTPC (National Thermal Power Corporation) play major roles in equipment and energy generation. Increasing emphasis is placed on renewable energy, with India among the top global producers of solar and wind power equipment.

Regional Distribution and Industrial Corridors

Industrial development in India is spatially uneven, concentrated in states with strong infrastructure, ports, and entrepreneurial ecosystems. The western and southern regions, particularly Gujarat, Maharashtra, Tamil Nadu, and Karnataka, account for a major share of industrial output. To reduce regional disparities, the government has promoted Industrial Corridors such as:

• Delhi–Mumbai Industrial Corridor (DMIC)
• Chennai–Bengaluru Industrial Corridor (CBIC)
• Amritsar–Kolkata Industrial Corridor (AKIC)These corridors integrate smart infrastructure, logistics hubs, and manufacturing clusters to promote balanced growth and foreign investment.

Challenges and Future Prospects

The industrial sector faces persistent challenges, including inadequate infrastructure, high logistics costs, energy constraints, and technological obsolescence. The COVID-19 pandemic disrupted supply chains, highlighting the need for resilience and self-reliance. In response, initiatives such as Atmanirbhar Bharat, Make in India 2.0, and National Industrial Policy (2023 draft) aim to enhance domestic production, digital transformation, and skill development.