Manufacturing Output Rises but Employment Lags Behind

India's industrial policy has moved from a protected, licence-based regime before 1991 to a liberalised framework, followed by deliberate attempts to revive manufacturing. The **National Manufacturing Policy, 2011** set a target of raising manufacturing's share in GDP to 25 per cent and creating 100 million additional jobs. Later initiatives such as *Make in India* and Production-Linked Incentive schemes continued this push. Despite this sustained policy attention, manufacturing's contribution to GDP and to total employment has barely moved over the decades, remaining well short of the ambitions set out in these documents. This persistence points to a structural problem often called jobless growth, where output and profits rise faster than the workforce needed to produce them. Economists measure this using employment elasticity, the ratio of employment growth to output growth. When this ratio falls, growth is being driven more by capital deepening and productivity gains than by absorbing more workers. This is precisely the pattern seen in organised manufacturing: invested capital has risen steadily, but output per worker has stayed roughly flat, meaning extra capital is not translating into proportionate worker welfare. This differs sharply from the historical experience of East Asian economies such as Korea and China, where early industrialisation relied on labour-intensive, export-oriented manufacturing, absorbing large numbers of workers from agriculture before shifting to higher-skill production. India's growth has largely skipped this labour-absorbing phase. The organised manufacturing sector is defined under the **Factories Act, 1948**, which classifies a factory as any premises employing ten or more workers using power, or twenty or more without power. The **Annual Survey of Industries (ASI)**, conducted by the National Statistical Office, covers only these registered units, while the **Periodic Labour Force Survey (PLFS)** captures the much larger informal workforce outside this net. …