The concentration of manufacturing GVA in a handful of States poses challenges to balanced regional development. Discuss with reference to recent ASI data.

The Annual Survey of Industries (ASI) 2024-25 counted 2,66,931 registered factories [3]. Value addition among them is concentrated in a few States. This pattern gives agglomeration gains, but it also strains the goal of balanced regional development.

ASI evidence of concentration

• Five States produce over 54% of manufacturing GVA: Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh [1].
• The same five hold 53.30% of establishments. The top five States for employment account for about 56% of jobs [2].
• The pattern persists: the top five States held about 54% of GVA in 2023-24 as well [4].
• The leading industries are basic metals, motor vehicles, chemicals and pharmaceuticals. They are capital-heavy and depend on clusters, which strengthens existing hubs [2].

Challenges to balanced development

• Economic divergence: lagging States lose value addition, which widens per-capita income gaps and shrinks their own tax base.
• Distress migration: workers move to western and southern hubs. This strains urban housing in host cities and drains young workers from source regions.
• Fiscal-federal friction: Finance Commission transfers must make up for weaker States, which reopens the equity-versus-efficiency debate.
• Hub congestion: land, water and pollution stress build up in the leading clusters.
• Dualism: 78.69% of factories hold only 10.55% of fixed capital [1], so small units outside the hubs stay marginal.

The other side

• Agglomeration lowers costs and makes firms more competitive, so concentration is partly efficient.
• The GVA and employment lists differ. Karnataka is capital-intensive, while Haryana absorbs more labour [2]. States are following different industrial paths.
• ASI leaves out informal units. ASUSE found about 3.4 crore unincorporated manufacturing workers [5], against about 2.10 crore persons in factories [2]. Regional maps based on ASI alone therefore understate dispersed manufacturing.

Way forward

• Extend logistics to lagging regions through PM Gati Shakti and the industrial corridors.
• Use PLI and cluster incentives for labour-intensive sectors such as textiles and food processing in eastern and central States.
• In lagging States, invest in skilling, create land banks and simplify approvals.
• Publish finer State-level data: ASI currently classifies State results only down to the NIC 3-digit level [1].

Recent ASI data show that manufacturing's strength is concentrated in a few States, while potential elsewhere remains untapped. Spreading infrastructure, skills and cluster-based incentives can turn lagging regions into new growth poles. Doing so would advance Article 38(2)'s mandate to reduce inequalities between regions and SDGs 9 and 10, making industrialisation both efficient and inclusive.