Lack of new investments threat to survival of manufacturing sector: Assocham

Says grave need to revive investments in food and beverage, textile sectors as they are highly labour-intensive areas

Lack of new investments is a real threat to the survival of manufacturing in India, apex industry body Associated Chambers of Commerce and Industry (Assocham) said on Tuesday, while releasing the analysis of ‘Investments in Manufacturing Sector,’ a study conducted by the industry body.

“Manufacturing accounts for about 4/5th of the industrial activity. But since the services sector has outranked industry in terms of its contribution to India’s Gross Domestic Product (GDP) in the 80s, the share of manufacturing has gradually been shrinking due to adverse terms of trade.”

Explaining the investment scenario in manufacturing sector, the industry body said that metals and metal products followed by chemicals industries has been dominating the domestic manufacturing sector in investments.

The share of metals and metal products in total outstanding investments in manufacturing increased from about 47 per cent to 50.5 per cent between March 2005 and March 2012, the analysis pointed out.

Share of chemicals in total outstanding investments in manufacturing sector dipped from over 35 per cent to about 26 per cent during the corresponding period, the analysis highlighted.

In other segments, non-metallic mineral products accounted for about nine per cent share in investments followed by transport equipment and machinery (five per cent each), food and beverages (two per cent) and textiles (over one per cent).

“Considering that investments in food and beverage, textile sectors have been less attractive, there is a grave need to revive investments in these areas as they are highly labour-intensive areas which is the key to realise employment objectives of National Manufacturing Policy (NMP),” said Assocham national secretary general D S Rawat.

The analysis further points out that Gujarat is emerging as a prominent manufacturing investment centre across the country and accounts for 26-33 per cent manufacturing share in key product segments of non-metallic mineral products, textiles and food and beverages from 2004-05 to 2011-12.

“Gujarat also attracted 25 per cent in investments in transport equipment and over 18 per cent in investments in chemicals industry during the same period,” it said.

In addition to metal and metal products segment, Gujarat is among the top five manufacturing investment centres in the entire product segment, the analysis stated.

Rawat said, “With investments worth over Rs 30 lakh crore, the manufacturing sector accounted for a share of about 25 per cent in the total outstanding investments worth over Rs 122 lakh crore attracted by various sectors across India as of March 2013.”