India's manufacturing sector is recovering, and the government's increased funding for manufacturing employment may be the spark that turns a swell into a tsunami.

In an exclusive report, the manufacturing sector has outpaced the services sector in terms of employment creation. The services industry has been the largest employer for several decades since the early 2000s IT boom. Manufacturing employment grew at a 200% annual rate throughout the course of the last two years (2022–2024), whereas the services sector had a 35% decline in employment.

Undoubtedly, the majority of employment produced in India are attributed to the services industry, which includes both IT and non-IT sectors. The manufacturing sector has experienced accelerated growth, mostly in the past two years due to the implementation of production-linked incentive (PLI) programs and workforce expansion initiatives by corporations. In the meanwhile, worry over the state of the world economy has hurt the IT sector.

According to the statistics, the number of direct manufacturing employment has grown significantly year over year, rising from a low of -27% in 2021 (total 29.83 million jobs) to 5.8% in 2022 (to 31.57 million jobs), 12.9% in 2023 (to 35.65 million jobs), and a predicted 18.4% (42.2 million jobs) in 2024. By comparison, the growth rates in the services sector have decreased, falling from 49.9% in 2021 (21.75 million jobs) to 35.5% in 2022 (29.48 million jobs), 27.5% in 2023 (37.6 million jobs), and projected to expand at a pace of 23.1% in 2024 (46.32 million jobs).

The automotive, electronics, infrastructure, construction, textile, and engineering manufacturing industries are among those included by the investigation.

"The manufacturing sector (and job creation) needs to grow significantly," Mahindra Group group CEO and MD Anish Shah stated.

Focus on Capex

According to Shah of Mahindra, "manufacturing has to be multiples of where it is today in terms of job creation" in order to meet the government's Viksit Bharat objectives.

"As India becomes the manufacturing hub for the world, which is where you would like it to be with the government's Make in India goal, that's what is going to drive a much greater focus on manufacturing."

According to Teamlease statistics, manufacturing is expected to create 6.5 million jobs by 2024, growing at an anticipated 18.4% annual pace.

"Many local and international businesses are developing manufacturing facilities as a result of government incentives. great-quality manufactured items are in great demand because to the growing domestic market and the growing middle class, which has more spending income, according to Sumit Kumar, chief strategy officer of TeamLease Degree Apprenticeship. "ELI (employment-linked incentive) plans may potentially create an additional 8 million jobs over the course of the next three years, with a budget investment of Rs 10,000 crore. For the next five years, the initiative wants to skill 10 million young people."Top executives stated that more work has to be done to increase manufacturing jobs.

"We will require horizontal growth in new facilities, new products and sectors, and contract production in addition to capacity increase. Along with recent additions like electronics, pharmaceutical and defense are other potential contributors, according to RPG Enterprises Chairman Harsh Goenka. "The government is looking to revive the capex cycle by allocating Rs 11.11 lakh crore for infrastructure."

Manufacturing employment has increased as a result of government programs like "Made in India," infrastructural development, and technology breakthroughs.

Sharad Mahendra, joint MD and CEO of JSW Energy, stated that "key opportunities are emerging in renewable energy, electric vehicles, and strengthening supply chains." "Global supply chain movements favoring India as a manufacturing hub, increasing investments, and economic recovery are the main causes of the expansion in manufacturing jobs. These patterns will support the industry's job growth going forward.

He stated that most of this employment would be in the construction industry, which has been doing quite well. However, the labor force will be made up of both skilled and unskilled workers.

"There will be significant contributions from the electronics sector as well," stated Madan Sabnavis, chief economist at Bank of Baroda. "On the services side, on the other hand, there has been a slowdown in the IT sector, while BFSI, travel, tourism, hospitality and aviation are doing very well."

"With current businesses expanding actively as well as newer players entering manufacturing across many sectors, core and consumption-based, the opportunities for new jobs have gone up," stated Ashok Ramchandran, director of HR at Aditya Birla Group.