Major Industries in the Indian Gdp

8/3/2019 Major Industries in the Indian Gdp

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TABLE OF CONTENTS

S.No. CHAPTERS PAGE NUMBER

1. RESEARCH METHODOLOGY..............................................................................4

2. INTRODUCTION.....................................................................................................5

3. AN INSIGHT TO THE MAJOR INDUSTRIES IN INDIA....................................6

4. CONTRIBUTION OF TEXTILE INDUSTRY........................................................9

5. CONTRIBUTION OF CHEMICAL INDUSTRY...................................................9

6. CONTRIBUTION OF FOOD PROCESSING INDUSTRY..................................10

7. CONTRIBUTION OF STEEL INDUSTRY...........................................................10

8. CONTRIBUTION OF CEMENT INDUSTRY......................................................10

9. CONTRIBUTION OF MINING INDUSTRY........................................................11

10. CONTRIBUTION OF SOFTWARE INDUSTRY.................................................11

11. RECENT TREND SHOWN BY GDP....................................................................12

12. CONCLUSION.......................................................................................................13

13. BIBLIOGRAPHY...................................................................................................14


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Economics Project Page 2

RESEARCH METHODOLOGY

Aims and Objectives:

The aim of the project is to present a detailed study of the topic Role of Major Industries inIndia GDP through reports, suggestions and different writings. The aim has been to come to

a conclusion very much indigenous.

Scope and Limitations:

Though the topic Role of Major Industries in India GDP is an immense project and pages

can be written over the topic but because of certain restrictions and limitations we might not

have dealt with the topic in great detail.

Sources of Data:

The following secondary sources of data have been used in the project-

1. Books2. Internet

Method of Writing and Mode of Citation:

The method of writing followed in the course of this research paper is primarily analytical.

The researcher has followed Uniform method of citation throughout the course of this

research paper.


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INTRODUCTION

Indian economy being one of the fastest growing economy of the world, is the thing to be

looked out for in the coming few years. Along with India, the other Asian economy giving a

slight better performance than India has been the neighbouring country China. Both these

countries have left an impression that in a lapse of a few years both the countries will become

the new economic giants. . The estimated growth rate of India economy for 2004-05 was

7.5% and the projected rate for 2005-06 was 8.1% (CSO, 2006; RBI, 2006). Chinas GDP

growth rates, based on revised data, were 10.1% and 9.9% respectively in 2004 and 2005 and

the projected rate for 2006 is 9.2% (World Bank, 2006, Table 1). Thus both countries

continue to grow rapidly.

Indian economy is a mix is private and public sector. India is an emerging economy which

has witnessed unprecedented levels of economic expansion, alongside China, Russia, Mexico

and Brazil. India is a cost effective and labour intensive economy, and has benefited

immensely from outsourcing of work from developed countries, and has a strong

manufacturing and export oriented industrial framework.1 Legal Outsource industry which is

an emerging trend is India is successful only because of cheap labour intensive service

industry. It is said that the share of the US in the world GDP is expected to fall, from 21% to18%, and the share of India in the world GDP is going to rise from 6% to 11% by 2025.

Hence, India is to emerge as a third pole, after the US and China, in the global economy.

These figures indeed make every Indian happy and are very lucrative but the reality is hard to

achieve. To achieve the status of the 3rd largest economy in the World the major players of

the Indian Economy will have to work immensely very hard and can be achieved only with

the growth of all the sectors.

1 Economy Watch, Indian Economy Overview


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AN INSIGHT TO THE MAJOR INDUSTRIES IN INDIA

Textile Industry

The textile Industry in India adds a major chunk to the revenue of the country. The Indian

textile industry covers a wide gamut of activities. Its production ranges from raw materialssuch as cotton, jute, silk and wool to high value-added products like fabrics and garments to

consumers.

The industry make use of different varieties of fibres, be it natural fibres, manmade fibres or

blends of such fibres. The areas having the major proportion of textile industry includes

Maharashtra, Gujarat, Punjab and Madhya Pradesh.2 In Indian economy, the textile industry

plays a significant role. It provides direct employment to approximately 35 million people

and contributes 4 per cent of GDP. It fetches 35 per cent of gross export earnings and

contributes 14 per cent of the value-addition in the manufacturing sector. Some of the

important benefits offered by the Indian textile industry are as follows:

India covers 61 percent of the international textile market India covers 22 percent of the global market India is known to be the third largest manufacturer of cotton across the globe India claims to be the second largest manufacturer as well as provider of cotton yarn

and textiles in the world

India holds around 25 percent share in the cotton yarn industry across the globe India contributes to around 12 percent of the world's production of cotton yarn and

textiles

2 Ministry of textiles,
http://www.texmin.nic.in/http://www.texmin.nic.in/


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Chemical Industry

This is one of the fastest growing sectors of Indian economy.3 The chemical industry in India

is one of the oldest domestic industries and it currently produces nearly 70,000 commercial

products, from cosmetics and toiletries, to plastics and pesticides. The country is the 13th

largest exporter of pesticides and disinfectants globally. In terms of volume, it figures 12th

largest producer of chemicals. The petrochemical, agrochemical, and pharmaceutical

industries are some of the fastest growing sectors in the Indian economy. The estimated

worth of chemical industry is $28 billion and it accounts for 12.5 per cent of the total

industrial production of India and 16.2 per cent of its total exports. 4

Food Processing Industry

India is the world's second largest producer of food next to China, and has the potential of

being the biggest with the food and agricultural sector. The total food production in India is

likely to double in the next ten years and there is an opportunity for large investments in food

and food processing technologies, skills and equipment, especially in areas of Canning, Dairy

and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration and

Thermo Processing. Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry,

Packaged/Convenience Foods, Alcoholic Beverages & Soft Drinks and Grains are important

sub-sectors of the food processing industry.

3 Indian Chemical Portal, 4Ibid
http://www.indianchemicalportal.com/chemical-industry-overview/http://www.indianchemicalportal.com/chemical-industry-overview/


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Health food and health food supplements are another rapidly rising segment of this industry

which is gaining vast popularity amongst the health conscious. 5India is one of the major food

producing country in the world but accounts less than 1.5 per cent of international food trade.

Hence, there is a vast scope for the expansion of this industry.

Steel Industry

Since its independence, India has experienced steady growth in the steel industry, thanks in

part to the successive governments that have supported the industry and pushed for its robust

development.6 During April-December 2004-05, the production of the finished steed recorded

a growth of 4 per cent and reached 28.3 million tonnes. In the world scenario, Indian steel

industry ranks 10th. It represents approximately Rs. 9,000 crore of capital and provides direct

employment to more than 0.5 million people. The major players in the industry are Steel

Authority of India (SAIL), Bhilai Steel Plant, Durgapur Steel Plant, Rourkela Steel

Plant, Bokaro Steel Plant.

5 6The Economy watch, < http://www.economywatch.com/business-and-economy/steel-industry.html>
http://www.indianfoodindustry.net/http://www.economywatch.com/business-and-economy/steel-industry.htmlhttp://www.economywatch.com/business-and-economy/steel-industry.htmlhttp://www.indianfoodindustry.net/


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Cement Industry

Cement industry in India comprises of 125 large cement plants and over 300 mini cement

plants having total installed capacity of 148.28 million tonnes and 11.10 million tonnes per

annum respectively. In addition to this, there are 10 large cement plants owned by various

State Governments. So, the total installed capacity of the country as a whole stands at 159.38million tonnes. The export of cement in 2003-04 was 6.92 million tonnes. The Major Players

are Ambuja cement, Aditya Cement, J K Cement and L & T Cement.

Mining Industry

India is a major mineral producer in Asia and globally. It is currently a global producer of

chromites, coal, iron ore and bauxite. India has been enjoying economic growth during the

nineties. Several of Indias current state owned mining and beneficiation companies have

been faced with drastic production cuts, resulting in operations becoming uneconomical. This

has resulted in the closure of several mining operations. Reasons for poor results have been

given as lower grade reserves and excessive manpower quotas.

Since the enunciation of the National Mineral Policy, 1993, India has made good progress inattracting foreign investment in its mining sector, with attractive incentives. The National

Mineral Policy was revised in 1994 and as a result, private investment (both domestic and

foreign), has been permitted for the exploration and exploitation of the following minerals:

Iron ore, Copper, Manganese, Lead, Chrome ore, Zinc, Sulphur, Molybdenum, Gold,

Tungsten ore, Diamond, Nickel and Platinum group of metals.


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As a result, several foreign companies have begun investing in India, with the majority

coming from Canada and the USA, followed by Australia, the UK and South Africa. Most

interest has been shown in the base metals, diamond, mineral sands and gold sectors.

The Indian Bureau of Mines (IBM) is the principal government agency responsible for

compiling exploration data and mineral maps and for providing access to the latest

information is respect of mineral resources in the country. IBM has both regulatory as well as

service functions.

Software Industry

The software industry in India symbolizes India's strength in the knowledge based economy.It has witnessed a phenomenal growth in last decade. The Compounded Annual Growth Rate

(CAGR) is 42.3%. According to NASSCOM's projection, the software industries contribution

is expected to grow to 7% by 2008 which started with 0.59% in 1994-95 and reached to

2.87% by 2001-02.


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CONTRIBUTION OF TEXTILE INDUSTRY TO GDP IN INDIA

The textile industry is one of the leading sectors in the Indian economy as it contributes

nearly 14 percent to the total industrial production. The textile industry in India is claimed to

be the biggest revenue earners in terms of foreign exchange among all other industrial sectors

in India. This industry provides direct employment to around 35 million people, which has

made it one of the most advantageous industrial sectors in the country.

India textile industry largely depends upon the textile manufacturing and export. It also plays

a major role in the economy of the country. India earns about 27% of its total foreign

exchange through textile exports. Further, the textile industry of India also contributes nearly

14% of the total industrial production of the country. It also contributes around 3% to the

GDP of the country. India textile industry is also the largest in the country in terms of

employment generation. It not only generates jobs in its own industry, but also opens up

scopes for the other ancillary sectors. India textile industry currently generates employment

to more than 35 million people. It is also estimated that, the industry will generate 12 million

new jobs by the year 2010. India holds 22 percent share in the textile market in Europe and

43 percent share in the apparel market of the country. USA holds 10 percent and 32.6 percent

shares in Indian textiles and apparel. The Role of Textile Industry in India GDP also includes

a hike in the investment flow both in the domestic market and the export production of

textiles. The investment range in the Indian textile industry has increased from USD 2.94

billion to USD 7.85 billion within three years, from 2004 to 2007. It has been assumed that


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track to ensure profitability in the coming decades. The sector is expected to attract

phenomenal investments of about Rs 1,400 billion in the next decade.9

CONTRIBUTION OF STEEL INDUSTRY TO THE GDP IN INDIA

The Role of Iron and Steel Industry in India GDP is very important for the development of

the country. In India the visionary Shri Jamshedji Tata set up the first Iron and Steel

manufacturing unit called Tata Iron and Steel Company, at Jamshedpur in Jharkhand. Iron

and steel are among the most important components required for the infrastructure

development in the country. Government targets to increase the production capacity from 56

million tonnes annually to 124 MT in the first phase which will come to an end by 2011 - 12.

Currently with a production of 56 million tonnes India accounts for over 7% of the total steel

produced globally, while it accounts to about 5% of global steel consumption. The steel

sector in India grew by 5.3% in May 2009. Globally India is the only country to post a

positive overall growth in the production of crude steel at 1.01% for the period of January -

March in 2009.

CONTRIBUTION OF CEMENT INDUSTRY TO GDP IN INDIA

The Role of Cement Industry in India GDP is significant in the economic development of the

country. The cement industry in India is one of the oldest sectors in India. The industry is

9 India Brand Equity Foundation, < http://www.ibef.org/industry/foodindustry.aspx>
http://www.ibef.org/industry/foodindustry.aspxhttp://www.ibef.org/industry/foodindustry.aspx


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driven by the immense growth in the housing sector, the infrastructure development, and

construction of transportation systems.10

India ranks second in the production of cement in the world. The growth rate of the

production of cement during the year 2006-07 was 9.1%. The export of the cement in the year

2006-07 was 9.3 million tonnes. The large manufacturing units accounts for 94% of the total

output of cement

CONTRIBUTION OF MINING INDUSTRY TO GDP IN INDIA

Industry Growth Rate in India GDPhas been impressive in the last few years. The Growth

Rate of the Industry in the India GDP has grown due to sustained manufacturing activity over

the years. This has given a major boost to the Indian economy. The mining industries share in

India's GDP is from 2.2% to 2/5% only but it contributes to 10-11% in industrial sector's

10
http://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://business.mapsofindia.com/india-gdp/industries/cement.html


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GDP. The organised mining sector employs nearly 0.7 million people. Small scale mining

approximately contributes to 6% of the total value of mineral production.

CONTRIBUTION OF SOFTWARE INDUSTRY TO GDP IN INDIA

IT-ITeS sector's contribution to the country's GDP has increased more than four times to 5.2

per cent in 2006-07 as compared to 1.2 per cent in FY'98, a study has said on Wednesday. It

has been carried out jointly by Nasscom Foundation and global consultancy Deloitte. 11 With

the huge success of the software companies in India, the Indian software industry in turn has

become successful in making a mark in the global arena. This industry has been instrumental

in driving the economy of the nation on to a rapid growth curve. As per the study of

NASSCOM the IT/ITES industry recorded a growth of 4 - 7 percent in the year 2010.

Software export from India accounts for more than 65% of the total software revenue. The

domestic software market largely depends upon sale of software packages and products,

which constitute major part of revenues. Products account for almost 40% of the domestic

market. On the other hand, more than 80% of revenue from software exports comes fromsoftware services like custom software development and consultancy services etc. The IT

industry accounts for 5 percent of India's GDP

RECENT TREND SHOWN BY GDP IN INDIAN ECONOMY

Gross Domestic Product (GDP) is the measure of a country's economic performance. It is the

market value of all the goods and services produced in a year. In 2007, the Indian economy

11IT's contribution to GDP up: Study ,
http://www.rediff.com/money/2008/feb/13it.htmhttp://www.rediff.com/money/2008/feb/13it.htm


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GDP crossed over a trillion dollar which made it one of the twelve trillion dollar economy

countries in the world. There has been excellent progress in knowledge process services,

information technology, and high end services. But the economic growth has been sector and

location specific.

The trend for Indias GDP growth rate is given below.

1960-1980 - 3.5%

1980-1990 - 5.4%

1990-2000 - 4.4%

2000-2009 - 6.4%

Below are the contributions of different sectors in the India's GDP for 2005-2006.

Agriculture: 20%

Service: 54%

Industry: 26%

Below are the contributions of different sectors in the India's GDP for 2007-2008.

Agriculture: 17%

Service: - 54%

Industry: - 29%

According to Goldman Sachs, India's GDP in current prices may overtake France and Italy by

2020, Russia, Germany and UK by 2025 and Japan by 2035. It is also predicted that Indian

economy will be the third largest after US and China by 2035. Industry contributes around

27.6% of the GDP (2007 est). The services sector contributed to 55% of the GDP in 2007.

The IT industry contributed around 7% of the GDP in 2008 which was 4.8% in 2005-06.

Remittances from overseas Indian migrants were around $27 billion or around 3% of the

GDP of India's economy in 2006.

CONCLUSION


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The Gross Domestic Product (GDP) in India expanded 8.20 percent in the fourth quarter of

2010 over the same quarter, previous year. From 2004 until 2010, India's average quarterly

GDP Growth was 8.40 percent reaching an historical high of 10.10 percent in September of

2006 and a record low of 5.50 percent in December of 2004. India's diverse economy

encompasses traditional village farming, modern agriculture, handicrafts, a wide range of

modern industries, and a multitude of services. Services are the major source of economic

growth, accounting for more than half of India's output with less than one third of its labor

force. The economy has posted an average growth rate of more than 7% in the decade since

1997, reducing poverty by about 10 percentage points.

The composition of Indian GDP includes many sectors like industry, infrastructure,

agriculture, and services. The percentage of the share of these sectors in the composition of

India GDP differs and also has changed over the years. India GDP Composition Sector Wise

was that the agriculture sector contributed around 32%, services sector contributed 41%, and

the industry sector contributed 27% in 1990- 1991. The sector of industry accounts for 27.6%

of India GDP for it employs around 17% of the total workforce in India. The industrial sector

contributed 7.6% to India GDP in 2005- 2006 and the next year, this figure increased to

9.8%. This shows that the contribution of the industrial sector is increasing in India GDP.

Industry Growth Rate in India GDP has been impressive in the last few years. The Growth

Rate of the Industry in the India GDP has grown due to sustained manufacturing activity over

the years. This has given a major boost to the Indian economy. The reasons for the increase

of Industry Growth Rate in India GDP are that huge amounts of investments are being made

in this sector and this has helped the industries to grow. Further the reasons for the rise of the

Growth Rate of the Industrial Sector in India are that the consumption of the industrial goods

has increased a great deal in the country, which in its turn has boosted the industrial sector.

Also the reasons for the increase of Industry Growth Rate in India GDP are that the industrial

goods are being exported in huge quantities from the country. Industry Growth Rate in India

GDP thus has been registering steady growth over the past few years. This has given a major

boost to the Indian economy. The government of India thus must continue to make efforts to

boost the industrial sector in the country. For this will in turn help to grow the country's

economy.


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BIBLIOGRAPHY

Internet Sources:

1. http://www.economywatch.com/indianeconomy/indian-economy-overview.html 2. http://business.mapsofindia.com/india-gdp/industries/cement.html3. http://business.mapsofindia.com/india-gdp/industries/cement.html 4. http://www.ibef.org/industry/foodindustry.aspx
http://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://www.economywatch.com/indianeconomy/indian-economy-overview.htmlhttp://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://www.ibef.org/industry/foodindustry.aspxhttp://www.ibef.org/industry/foodindustry.aspxhttp://www.ibef.org/industry/foodindustry.aspxhttp://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://business.mapsofindia.com/india-gdp/industries/cement.htmlhttp://www.economywatch.com/indianeconomy/indian-economy-overview.html

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Major Industries in the Indian Gdp

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