Secondary sector

Also called: Industrial sector, secondary activities, Industry · Topic: Sectors of the Indian Economy · NCERT: Class 6, Ch 14 "Economic Activities Around Us"; Class 10, Ch 2 "Sectors of the Indian Economy"; Class 11, Ch 2 "Indian Economy 1950-1990"; Class 11, Ch 6 "Employment: Growth, Informalisation and Other Issues"; Class 11, Ch 8 "Comparative Development Experiences of India and its Neighbours"

Meaning

The secondary sector covers all activities that change natural products into new forms. It has three parts: manufacturing, construction, and electricity, gas and water supply. It is also called the "industrial sector".

It matters because it links farms and mines to the market. It turns raw materials into goods that people use. It is also the main way workers can move out of low-output farm work into better-paid non-farm jobs.

• Output share of the secondary sector (%) = (GVA of the secondary sector ÷ total GVA) × 100
• Employment share of the secondary sector (%) = (workers in the secondary sector ÷ total workers) × 100

GVA (Gross Value Added) is the value of output minus the value of the inputs used up. It measures the new value each producer adds.

Explanation

How to identify secondary work

• The test: ask what is being done, and with what.
• Taking something straight from nature → primary
• Changing a natural product into a new form → secondary

• Helping or serving, with no good produced → tertiary

• Output = manufactured goods. Nature does not make these goods. They need a process of making.

• A chain of making (each step adds value):
• cotton → yarn → cloth
• sugarcane → sugar / gur (jaggery)
• earth (clay) → bricks → houses

• iron ore → steel → cars (Class 6)

• More Class 6 examples: flour milling, groundnut oil, tea processing, and wood → furniture / paper.

• Manufacturer: a person or company that makes goods for sale.

The place does not decide the sector

• Making can happen in a factory, a workshop or even at home.
• A woman making papad at home is doing secondary work.

• A basket weaver, a potter and a tailor are all secondary workers (Class 10 exercises).

• Judge the activity, not the building and not the product.

Components: the official grouping (Class 11)

• Statistics group all activity into eight divisions. The secondary sector holds three of them:

Division	Examples
(iii) Manufacturing	cloth, sugar, steel, vehicles
(iv) Electricity, gas and water supply	utilities (basic services like power and water, supplied through a network)
(v) Construction	buildings, roads, dams

• Non-farm sector = secondary + tertiary.
• Mining is NOT here in NCERT. Mining and quarrying is primary, because it takes a resource directly from the earth.

Worked example: why moving workers into industry matters

• Relative productivity = output share ÷ employment share
• Above 1 → each worker produces more than the average worker.

• Below 1 → each worker produces less than the average worker.

• Toy numbers from the notes: an economy has total GVA of ₹100 crore and 100 workers.

• Farming: ₹18 crore GVA, 46 workers → 18 ÷ 46 = 0.39

• Services: ₹55 crore GVA, 29 workers → 55 ÷ 29 = 1.90

• What this means for the secondary sector:

• Farm workers produce much less than the average worker.
• When factories and building sites take in extra farm workers → output per worker rises → incomes rise.

• This is how industry can reduce disguised unemployment. Disguised unemployment means more people work on a farm than are needed, so some workers add almost nothing to output.

• Caution: these are illustration numbers built from different years and sources. They are not an official statistic.

In India

• Who measures it:
• Output: MoSPI/NSO, through National Accounts Statistics (NAS).

• Employment: the Periodic Labour Force Survey (PLFS), launched by the NSSO (MoSPI) in April 2017 [2].

• Employment (PLFS data cited in Economic Survey 2023-24):

• 11.4% of the workforce is in manufacturing [3].
• 13.0% is in construction [3].

• So construction employs more workers than manufacturing. Construction needs a lot of labour and takes in people leaving farms.

• Growth: manufacturing GVA and construction GVA each grew by 9.9% in 2023-24 [3].

• Formal vs informal manufacturing:
• Jobs in factories grew from 1.04 crore to 1.36 crore (2013-14 to 2021-22), about 3.6% a year [3].
• In unincorporated enterprises (small firms not registered as companies), manufacturing jobs fell by 54 lakh (2015-16 to 2022-23) [3].

• So formal manufacturing grew while informal manufacturing shrank.

• Job target: India must create about 78.5 lakh non-farm jobs every year until 2030 (Economic Survey 2023-24) [3].

• Example (Class 6 SIAM box, 2022): India produced about 45 lakh passenger vehicles, 10.3 lakh commercial vehicles, 8.6 lakh three-wheelers and 2 crore two-wheelers. SIAM is the Society of Indian Automobile Manufacturers.

Don't confuse with

• Primary sector: it takes from nature (dairy farmer, fisherman, miner). The secondary sector changes the form of what nature gives (cheese-maker, tailor, steel plant).
• "Industry" in NAS / Economic Survey GVA tables: this group includes mining and quarrying. The NCERT/PLFS secondary sector does not. Check the source before you compare shares.
• Manufacturing: this is only one part of the secondary sector. Construction and utilities are also secondary, and construction employs more people (13.0% vs 11.4%) [3].
• Tertiary sector: transporting, storing or selling goods (for example, a truck driver or a milk vendor) is tertiary. Only the making is secondary.

Prelims Hooks

• Secondary sector = manufacturing + electricity, gas and water supply + construction. Construction and utilities are not tertiary.
• Mining and quarrying is primary in NCERT and PLFS, but it falls under "Industry" in NAS and Economic Survey GVA tables.
• Place is irrelevant: home-based papad making, basket weaving and pottery are secondary.
• In India's workforce, construction (13.0%) employs more people than manufacturing (11.4%) (PLFS data cited in Economic Survey 2023-24) [3].
• Manufacturing and construction GVA each grew 9.9% in FY24 [3].
• Match-factory worker, tailor, potter → secondary. Milk vendor, courier → tertiary. Bee-keeper, fisherman → primary.

Mains Points

• India skipped the industrial step:
• In the Fisher–Clark model (the classic path of development), workers move from farms to factories, then to services.
• In India, output moved mostly to services (about 55% of GVA, FY24) [3], but more than 45% of the workforce is still in agriculture [3].
• A weak manufacturing base means farms keep extra workers, which leads to low output per worker and disguised unemployment.

• Remedies: manufacturing that uses a lot of labour, and food processing, which links the farm directly to the factory.

• Construction is a "holding sector", not a destination:

• It absorbs rural workers fast (13% of the workforce) [3].
• But its jobs are mostly informal, casual and seasonal, with little social security.

• So a move from farm to construction site does not always mean a better-quality job. This links to the Class 11 theme of informalisation.

• The job-creation challenge (GS-III):

• India needs about 78.5 lakh non-farm jobs a year until 2030 [3].
• Factory jobs grew (1.04 crore → 1.36 crore, 2013-14 to 2021-22), but informal manufacturing lost 54 lakh jobs (2015-16 to 2022-23) [3].
• Policy tools: PLI schemes (production-linked incentives, which give firms money for producing more), MSME credit, labour codes and skilling.
• When comparing sector shares, always name the source and the year, because NAS puts mining under "Industry" and PLFS puts it in the primary sector.

Related concepts

• Primary sector
• Tertiary sector
• Natural products
• Manufactured goods
• Manufacturer
• Service provider
• Industrial divisions
• Quaternary sector
• Quinary sector

Read more

• Primary, secondary and tertiary sectors: what goes where