The finance minister in his budget speech has talked of increasing the share of manufacturing from 16% of the GDP to 25% over the next decade. This is quite a challenge, given that the share of the sector in India?s GDP has stagnated and even declined in the last few decades. Only a handful of countries have been able to achieve this feat; most notable of them is China, where the share of manufacturing in GDP was 34% at the end of the decade. Others include Indonesia (28%), Malaysia (28%), the Czech Republic (25%), Swaziland (44%) and Turkmenistan (50%).
For India to join this exclusive set of nations, it has to grow at double digits for a decade or two. Nations where manufacturing sector has grown at double digits for at least a decade are yet another exclusive but slightly larger club?8 countries in 1990s up to 10 at present, according to the World Bank.
But the most exclusive club?of just 3 members?is of the nations that registered double-digit growth in manufacturing for almost 2 decades. Topping the list is Cambodia, where manufacturing grew by 18.9% in the 1990s and a slower 12.9% in 2000-08. Next is China, with 12.9% and 11.6% growth respectively, followed by Vietnam, where the corresponding rates were 11.2% and 11.9%.
One notable feature of the countries registering double-digit growth in manufacturing for a sustained period is that almost all of them were small economies, with the exception of China. So the big question is whether a $2 trillion economy like India, where the manufacturing growth rate has slowly edged up from 6.7% in the 1990s to 7.8% in the current decade, will be able to replicate the success story of the Chinese manufacturing sector.