Manufacturing Or Services? PM's Economic Advisor Weighs In On India’s Next Growth Wave
The economist pointed out that India became a services-driven economy earlier than most nations.
Sanjeev Sanyal, a key economic advisor to Prime Minister Narendra Modi, said India's rapid growth requires faster expansion of both manufacturing and services over the next few decades.
"In a country which is as big as ours, I don't think you can do one and not the other," Sanyal said in the TheOddCastShow podcast.
The service sector covers over half of the country's GDP, with its share increasing from approximately 50.6% in FY14 to about 55.3% in FY25. Manufacturing has stagnated at around 15% of GDP in recent years.
"It's not the case that we'll do only manufacturing. We have 1.4 billion people, about a billion of those are in working age or shortly will be. So, we need the whole array of things which will include agriculture, construction, manufacturing and other utilities. It'll also have services," he said.
The economist pointed out that India became a services-driven economy earlier than most nations because of historical constraints on manufacturing and the rise of exportable digital services.
He said infrastructure and red tape environment system was much more attuned towards restraining manufacturing. "When we began to open up in the '90s, it took us a long time to get the infrastructure up there. So, it turned out that we expanded into services because there were lesser restrictions there."
Sanyal said India has now succeeded in key manufacturing areas like defence, pharma and electronics. "There are areas where we can compete. I'm quite confident and we are demonstrating that in electronics. We are world-class pharmaceuticals. And, now we are trying to build out other sectors," he said.
"We have become heavily dominated by services. I have no problem with that. But I do not think it is healthy for India not to build out a manufacturing sector," the economist said.
Sanjeev Sanyal is regarded as one of the key architects of the Modi government's economic policies, particularly the Production Linked Incentives (PLI) Scheme and regulatory reforms.
