Sunset industry

Indian Economy glossary

Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT

Meaning

A sunset industry is a mature or declining industry. Demand for its product is shrinking, usually because a newer technology or a cleaner option is replacing it. Examples are film cameras, landlines and coal-based power.

This matters because such an industry does not close in one day. It fades slowly. Its workers and the regions that depend on it can be left behind unless policy helps them move to new work.

Explanation

Where it sits in an industry's life

Every industry goes through stages, in the same way a product does:

  • Introduction and growth: a new product appears and demand rises fast. This is the sunrise stage.
  • Maturity: demand stops growing. The market is full and firms mostly fight over existing buyers.
  • Decline: demand keeps falling. This is the sunset stage.
  • The label comes from the long-term direction of demand. It does not depend on the size of firms, who owns them, or whether they make a profit this year.

Why an industry becomes "sunset"

  • Technological obsolescence (the product becomes outdated because something better arrives):
  • digital cameras and smartphones arrived;
  • so fewer people bought film;

  • so the film camera industry declined.

  • Substitutes (other goods that do the same job):

  • mobile phones do everything a landline does, and people can carry them;

  • so landline connections fell.

  • Policy and climate goals:

  • countries have committed to cut carbon emissions;
  • so electricity is slowly shifting to renewable sources;

  • so coal-based power becomes a sunset sector in the long run, even while it is still in use.

  • Changing tastes: buyers simply move to newer products.

What happens as it declines

  • New investment slows, because investors expect falling returns.
  • Firms merge, shrink or close. Jobs are lost.
  • The damage is concentrated in particular places. A town built around one mine or plant loses its main source of income.
  • This is why a sunset industry needs a just transition: help for workers and regions to move to new work through retraining, new local industries and social security.

In India

  • Examples in our notes: film cameras, landlines and coal-based power.
  • Coal is the key Indian case:
  • India aims for net zero by 2070 and is backing clean sectors;
  • so coal-based power is slowly moving into sunset;
  • but coal districts in Jharkhand, Odisha and Chhattisgarh depend heavily on it for jobs and income;

  • so India needs a just transition there: reskilling workers and diversifying the regional economy.

  • The other side: sunrise industries that the State supports. These are growing while sunset sectors shrink:

  • semiconductors;
  • green hydrogen, under the National Green Hydrogen Mission (2023), which targets 5 MMT (million metric tonnes) a year by 2030;
  • EV and Advanced Chemistry Cell (ACC) batteries;
  • drones;
  • space, opened to private firms after IN-SPACe (2020);

  • AI, under the IndiaAI Mission (2024).

  • The RDI scheme calls these "strategic and sunrise domains". It lists energy security, climate action, quantum, AI, biotech and the digital economy [1].

  • Upgrading older manufacturing: SAMARTH Udyog Bharat 4.0 (Ministry of Heavy Industries) spreads Industry 4.0 tools to manufacturers. Industry 4.0 means smart factories using IoT, AI, robotics and big data. This helps traditional units modernise instead of fading away.

Don't confuse with

  • Sunrise industry: a new, fast-growing sector with a big future, such as semiconductors or green hydrogen. Sunset is the opposite: mature or declining demand.
  • Sick industry / sick unit: a firm in financial trouble that cannot pay its debts. A sick unit can exist in a growing sector. A sunset industry is a whole sector whose demand is falling, even if some firms in it still make money.
  • Cyclical downturn: a temporary fall in demand during a recession, which recovers when the economy picks up. Sunset decline is structural and permanent, driven by technology or policy.
  • Industry 5.0: it is not a stage of decline. It is a human-centric, sustainable and resilient approach, where humans and "cobots" (collaborative robots) work together. It supports a just transition but is a separate concept.

Prelims Hooks

  • Sunset industry = mature or declining sector with shrinking demand. Examples: film cameras, landlines, coal-based power.
  • Trap: "sunset" describes the direction of demand for a whole sector. It is not the same as a loss-making or sick unit, and it has nothing to do with public or private ownership.
  • Just transition is linked to sunset industries, especially coal. It means helping workers and regions move to new work (retraining, new local industries, social security).
  • Sunrise examples: National Green Hydrogen Mission (2023) → 5 MMT a year by 2030; IN-SPACe (2020) → private space activity; IndiaAI Mission (2024) → AI.
  • The RDI scheme uses the phrase "strategic and sunrise domains" for its target areas [1].
  • SAMARTH Udyog Bharat 4.0 (Ministry of Heavy Industries) spreads Industry 4.0 to manufacturers.

Mains Points

  • Sunrise vs sunset needs a just transition:
  • supporting semiconductors, green hydrogen and EVs serves Atmanirbhar Bharat and net zero by 2070;
  • but the decline of coal hits specific districts in Jharkhand, Odisha and Chhattisgarh;

  • so frontier-industry support must be paired with reskilling and regional diversification. Otherwise climate policy creates new pockets of poverty.

  • Managed decline, not sudden closure:

  • a sunset industry often still meets current needs, as coal power does for electricity;
  • closing it too fast risks shortages and job losses, while protecting it too long locks capital into assets with no future;

  • good policy slows new investment in the sunset sector, moves fresh capital into sunrise sectors, and uses Industry 5.0's human-centric approach so workers are retrained, not discarded.

  • Upgrading as an option: not every mature industry has to die. Adopting Industry 4.0 (for example through SAMARTH Udyog Bharat 4.0) can make older manufacturing competitive again. So the policy choice is between renewing a mature sector and helping people leave a truly obsolete one.

Related concepts

Read more

Sources

  1. 1Cabinet Approves Research Development and Innovation (RDI) Scheme (PIB)pib.gov.in · tier 1