Indian Economic Structure: Indian Industry Sectors & Industries

By: EconomyWatch Content   Date: 5 April 2010

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Agriculture

More than 52 percent of India's population depend on agriculture for employment. However, the sector contributes only 17.5 percent to its gross domestic product (GDP). Food grain production in 2010 was 216.9mt, 17.6mt lower than 2008 outputs.

India is the largest producer of tea, and also the largest consumer of tea in the world. India accounts for more than 15 percent of the global tea trade. Indian tea is exported in various forms, such as tea bags and instant tea, to more than 80 countries of the world. Milk production in India is also the highest in the world.

India also has the largest irrigated land area in the world and is placed third for world cereal production, second for largest production capacity of wheat and rice, and has largest production capacity of pulses.

Livestock, fisheries, horticulture, organic farming, commercial crops and agro-processing remain on the high-priority list for the Indian government. Reforms in legislation, strengthening R&D and improvements in post harvest management technologies will boost the Indian agriculture sector.

Contribution of agriculture to GDP is likely to decline in 2010 and beyond. There is also an increasing demand to absorb excess agricultural manpower into other sectors such as industry. Rapid developments in the agro-processing industry can influence this shift, without moving people from rural to urban areas. Public investment in agriculture also needs to be augmented, especially in rural infrastructure, irrigation and agricultural research and development - and better access to institutional credit for farmers should also be of high priority to the government to encourage growth in India's agricultural sector.

Industry

India's industrial production growth rate in 2010 was 7.5 percent, up from 5.2 percent in 2009.

The textile industry is the largest industry in terms of employment and is expected to generate $85 billion by 2010 and create 12 million new jobs, as well as pave the way for modernization.

The automobile sector has performed well in India and created good employment opportunities as well. Pharmaceutical and IT industries are also sectors that have performed exceedingly well and experienced significant growth.

India's WTO involvement during the last decade has encouraged the country’s pharmaceutical firms to adopt a strategy of R&D based growth. Apart from the manufacturing of drugs, the pharmaceutical industry offers a huge market for outsourcing of clinical research. By participating in the international system of intellectual property protection, India can unlock vast opportunities in both exports as well as become a global hub in the area of R&D based clinical research outsourcing - particularly in the area of bio-technology.

Indian firms have also succeeded in integrating into global production chains and realized the rapid growth of exports. With appropriate scale, investment and technology, rapid industrial growth is indeed possible for India.

Services                                                                                

The services sector accounted for 62.6 percent of India’s total GDP in 2010. The services sector has maintained a steady growth pattern between 1996-1997, taking a fall in 2000-2001. Trade hotels, transport and communications have experienced growth, along with financial services.

While in most parts of the developed world, the service sector's share of employment rises faster than its share of GDP, India witnesses a relatively slow growth in employment in the service sector despite its high GDP contribution. This is primarily due to the rise in labor productivity in sectors such as information technology, which is dependent on skilled labor. Growth in tourism and tourism-related services, such as hotels, hold large potential for job creation.

IT enabled services, such as Business Process Outsourcing, have grown rapidly in the recent years and will continue to rise. India's large English-speaking skilled work force has made the nation a major exporter of software services and skilled manpower.

 


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