Economic Survey FY 2023-24: Unveiling Industrial Sector Achievements & Future Projections

The Economic Survey FY 2023-24 examines the performance of India’s industrial sector, highlighting both achievements and projections for future growth. This survey underscores the sector’s pivotal role in driving economic recovery in the post-pandemic era. It showcases robust growth and resilience despite global challenges. Significant reforms, technological advancements, and strategic government initiatives have markedly strengthened the industrial landscape. Consequently, the sector has become a cornerstone of the nation’s economic framework.

This Economic Survey FY 2023-24 further reveals substantial growth within the industrial sector, significantly contributing to India’s projected GDP increase of 8.2%. This growth is bolstered by a remarkable 9.5% rise in industrial output. Notably, among the four sub-sectors, manufacturing and construction have achieved nearly double-digit growth. Meanwhile, mining & quarrying and electricity & water supply have also experienced strong positive growth.

Let’s delve into the key highlights of the Economic Survey FY 2023-24 and explore its detailed insights.

Also Read: India’s Construction Industry in FY 2023-24: A Zone-Wise Analysis

Key Industrial Intermediates

Cement: Building the future

India stands as the world’s second-largest cement producer. The cement industry contributes approximately 11% of the input cost to the construction sector. With an annual installed capacity of about 622 million tonnes, India produced around 427 million tonnes of cement in FY 2023-24. This growth is driven by robust infrastructure development and urbanization. Government projects like highways, railways, housing schemes, and smart cities are expected to boost cement demand significantly.

Steel sector on the growth path

Iron and steel account for approximately 47% of all inputs in the building and construction sector. FY 2023-24 saw the steel sector achieve its highest levels of production and consumption. The Production-Linked Incentive (PLI) Scheme for specialty steel has attracted investment of INR 15,519 Crore till May 24. This scheme is expected to attract a total investment commitment of INR 29,531 Crore, with a capacity addition of 24,780 thousand tonnes.

Coal: Reducing external dependence

Coal accounts for more than 55% of India’s primary commercial energy, with coal-fired power generation constituting about 70% of total power generation. As per the Economic Survey FY 2023-24, India produced 997.2 million tonnes of coal, reducing import dependence. The government aims to gasify 100 million tonnes of coal by 2030 and set up 3,000 MW of renewable power capacity for mining operations by 2025-26.

Major Consumer-oriented Industries:

Pharmaceuticals:

India’s pharmaceutical market, valued at USD 50 Billion, ranks as the world’s third-largest by volume. Key initiatives highlighted in the Economic Survey FY 2023-24 include:

• Atmanirbharta initiative: boosting domestic manufacturing of key starting materials (KSMs), drug intermediates (DIs), and active pharmaceutical ingredients (APIs), attracting significant investment and reducing import dependence.
• Pradhan Mantri Bhartiya Janaushadhi Pariyojana: With over 12,500 outlets, provides affordable generic medicines, resulting in substantial savings for the public.

In FY 2023-24, the Pharmaceuticals & Medical Devices Bureau of India sold Jan Aushadhi medicines worth INR 1,470 Crore, saving approximately INR 7,350 Crore.

Textile industry:

The textile sector, including wearing apparel, generated a gross value added of INR 3.77 lakh Crore in FY 2022-23. Despite challenges, exports of textiles and apparel, including handicrafts, reached INR 2.97 lakh Crore in FY 2023-24. Key initiatives include: 

• PM MITRA Parks: 7 parks with 1,000-acre infrastructure each, funded with INR 4,445 Crore from FY 2021-22 to FY 2027-28.
• PLI Scheme for Textiles: INR 10,683 Crore over five years, aiming for INR 19,000 Crore in investment and 2.5 lakh jobs.
• National Technical Textiles Mission: INR 1,480 Crore for FY 2020-21 to FY 2023-24 to boost technical textiles usage.
• National Handloom Development Programme: INR 998 Crore for FY 2021-22 to FY 2025-26.
• Handloom Clusters: 96 small and 9 mega clusters were established in FY 2023-24.

Electronics industry:

India has become an attractive destination for electronics manufacturing. Government initiatives such as the PLI Scheme and the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme have significantly boosted investment and production in the sector. Key initiatives, as mentioned in the Economic Survey FY 2023-24 include:

• PLI 2.0 for IT Hardware: Offers an average incentive of around 5% on net incremental sales of eligible goods manufactured in India for six years.
  • Progress:
    • Total production: INR 3,367.63 Crore
    • Additional investment: INR 269.44 Crore
    • Additional direct jobs: 3,493
• Electronics Manufacturing Clusters (EMC/EMC 2.0) Scheme: Supports EMC projects and Common Facility Centres to attract electronics manufacturing in India.
  • Progress:
    • INR 184.91 Crore released under the scheme
    • Expected to attract INR 40,429 Crore in investment
    • Expected to generate employment for 5.02 Lakh

Automotive industry 

The automotive sector saw moderate growth in production and consumption during FY 2023-24. The Economic Survey FY 2023-24 reveals India produced approximately 49 lakh passenger vehicles, 9.9 lakh three-wheelers, 214.7 lakh two-wheelers, and 10.7 lakh commercial vehicles. The PLI Scheme for automotive and auto components has attracted significant investment and is expected to generate employment.

• PLI Scheme:
  • Budget: INR 25,938 Crore (FY23 to FY27)
  • Proposed investment: INR 67,690 Crore
  • Investment to date: INR 14,043 Crore
• Battery Storage:
  • National Programme on Advanced Chemistry Cell (ACC) Battery Storage: INR 18,100 Crore budget
  • Focus on setting up Giga scale ACC and battery manufacturing facilities
  • Request for Proposal (Jan 2024): 10 GWh capacity planned, with bids for 70 GWh received
• Phase II of the FAME Scheme:
  • Budget: INR 11,500 Crore (FY20 to FY24)
  • Supports: 7,000 e-buses, 5 lakh e-three wheelers, up to 5,000 e-four wheelers, and 10 lakh e-two wheelers
• New Initiatives:
  • Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI): Approved March 2024
  • Electric Mobility Promotion Scheme 2024 (EMPS 2024): INR 500 Crore for 4 months, aims to boost e-two wheelers, e-three wheelers, e-rickshaws, e-carts, and L5 vehicles

Cross-Cutting Themes

Production Linked Incentive (PLI) Scheme

The PLI Schemes for 14 key sectors aim to enhance India’s manufacturing capabilities and exports. The schemes have attracted over INR 1.28 Lakh-Crore in investment, leading to significant production, sales, and employment generation.

Micro, Small & Medium Enterprises (MSMEs)

The Union Budget 2023-24 allocated INR 9,000 Crore to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), enabling additional credit with reduced costs for MSMEs.

Industrial R&D and Innovation

Industrial R&D in India remains concentrated in a few sectors, with the top five sectors accounting for over 70% of total R&D expenditure.

Conclusion and Outlook

Over the last decade, output shares among industrial segments have realigned, with sectors like chemicals, pharmaceuticals, and transport equipment gaining strength. The export-import balance has varied significantly across different segments. The medium-term outlook for capital goods and key construction inputs like steel and cement remains positive, indicating momentum in private sector capital formation.

The Economic Survey FY 2023-24 underscores the industrial sector’s critical role in India’s economic growth, emphasizing the positive impacts of government policies and technological adoption.

For more detailed insights, you can access the full document INDUSTRY: SMALL AND MEDIUM MATTERS.

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