The service sector has been a driver of the Indian economy but the country needs to expand its manufacturing base – through initiatives like Make in India and the development of economic corridors – if it hopes to reach the next level of growth, according to the Asian Development Bank report, Scaling New Heights: Vizag-Chennai Industrial Corridor, India’s First Coastal Corridor.

  1. India is the world’s third largest economy and has emerged as a global growth engine.

  2. India’s service sector has been a driver of the country’s economic growth, and is a major contributor to the country’s gross domestic product.

  3. As a result of the services sector, India has become a major exporter of information technology, business outsourcing, and software expertise, largely through the use of skilled workers.

  4. Services are the most dynamic aspect of the Indian economy but the sector employs less than one-third of the country’s labor force.

  5. While services have been booming in Asia, manufacturing has lagged. India’s manufacturing makes up around 17% of gross domestic product, compared to Malaysia at 24% and Thailand at 33%.

  6. India’s manufacturing sector is hamstrung by poor roads and unreliable power supplies; burdensome regulations, limited access to land and credit, and a lack of a workers skilled in high-end manufacturing.

  7. The Indian government has recognized that in order to spread the benefits of economic growth to the poor, India must further develop the manufacturing sector.

  8. India is seeking to increase manufacturing’s share of gross domestic product to 25% and create 100 million jobs within a decade by simplifying regulations, improving infrastructure and providing other incentives.

  9. The government is also promoting the Make in India initiative, which seeks to encourage global firms to set up manufacturing bases in India by offering tax incentives and simplified regulations.

  10. India is also promoting manufacturing through the development of economic corridors, defined as a route along which goods and people move.

  11. The Delhi–Mumbai Industrial Corridor is the country’s first and most advanced economic corridor. It is 1,483 kilometers long and links the country’s two most populous cities.

  12. In line with the Make in India initiative, the government is also developing the Vizag–Chennai Industrial Corridor, which is part of the East Coast Economic Corridor, the country’s first coastal economic corridor.