Despite the removal of industrial licensing in 1991 and the shift from public to private sector investment, India's manufacturing sector has shown limited growth acceleration. According to reports from Business Standard, the share of manufacturing in gross value added (GVA) at current prices rose from about 12% in 1950-51 to 18-19% by the mid-1990s, but has since declined steadily to reach 14% by 2024-25. The share of manufacturing in total investment has also fallen from 41% in 2011-12 to 32% in 2023-24, while the percentage share of manufacturing in employment remains at 10-11%. Only three Indian companies figure in the list of the top 100 non-US companies by market capitalisation.
The shift from public to private sector investment has been substantial, with the public sector's share in manufacturing investment declining from 40% in 1980-81 to 24% in 1991-92 due to early liberalisation moves. As reported by Business Standard, this decline continued further to 8% in 2023-24. However, historical RBI data shows that gross domestic investment rates were higher during the UPA-II reference period (2009-14) at 38.0% of GDP compared to 33.1% during NDA-I (2014-19), though investment quality should be examined beyond just quantity.
The opening up of the financial system has had a greater impact on private sector development compared to manufacturing delicensing. According to Business Standard reports, private-sector banks have increased their share of total bank advances from 17% in 2004-05 to 39% in 2024-25, while their share of total bank employees rose from 10% to 43% over the same period. Private mutual funds have also expanded significantly, now managing approximately ₹87 trillion in assets, contributing to a transformed financial system with market capitalisation rising close to 120% of nominal GDP.
India's software services sector has achieved remarkable growth since 1991, with exports growing from $400 million in 1991-92 to $240 billion in 2025-26 - a 600-fold increase. As reported by Business Standard, software exports now account for 28% of total exports and employ around 6 million people. This growth was founded on the 1981 landmark report by the V Rajaraman committee that proposed computer import concessions for software exports, which was implemented in 1983 after reversing earlier protectionist policies.
Historical RBI data reveals that industrial production growth was strongest during the mid-2000s reference period at 11.2%, but declined to 4.0% during 2014-19 and 4.6% during 2009-14. The Modi government has introduced several manufacturing initiatives including Production Linked Incentive schemes, industrial corridor development, electronics manufacturing incentives, semiconductor manufacturing support, and defence manufacturing reforms. While these initiatives have supported investment and production in selected industries, with electronics and mobile-phone manufacturing becoming important areas of expansion, the broader transformation into a manufacturing-intensive economy remains incomplete.
