Op-ed: India's factories are growing, but not creating jobs at the scale needed
Factory output and wage bills are rising. So why are most non-farm workers still in informal units?
Published 2 October 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
The Annual Survey of Industries (ASI) 2024-25, released by the Ministry of Statistics and Programme Implementation on 30 September 2026, shows a strong year for India's registered factories. Persons engaged rose from 1.96 crore to 2.10 crore, a growth of 7.19% that added more than 14 lakh jobs. Gross value added (GVA, the value of output minus inputs) grew 9.59%, output 7.81%, invested capital 11.10%, total emoluments 12.08% and net profit 7.73%. Five States (Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and Haryana) account for about 56% of factory employment. Five industries (basic metals, motor vehicles, chemicals, pharmaceuticals and food products) contribute more than 45% of GVA.
An opinion article in The Indian Express argues that these numbers hide a deeper problem: the formal factory sector is growing, but it is not becoming a mass employer. The writer cites the Periodic Labour Force Survey (PLFS) 2025 to say that 73.1% of non-farm workers are in informal-sector enterprises, and notes that the unorganised manufacturing segment employed 3.8 crore people in 2023-24, far more than the roughly 2 crore in registered factories. According to the article, output per worker has barely moved and wages per worker have grown more slowly than net profit, which points to a capital-intensive growth model.
The writer contrasts India with South Korea and China, where formal manufacturing absorbed millions of workers moving out of farming, and warns that without such absorption workers remain stuck in agriculture or gig work, which in turn weakens consumption, investment and productivity. Supporters of current policy would point to the 7.19% rise in factory jobs and the push through production-linked incentives. The debate matters for Mains because it links three syllabus themes: growth versus employment, the quality of jobs, and the structure of Indian industry.
Prelims facts
- ASI 2024-25: persons engaged in registered factories rose 7.19%, from 1.96 crore to 2.10 crore, adding more than 14 lakh jobs.
- ASI 2024-25: GVA grew 9.59%, output 7.81%, invested capital 11.10%, emoluments 12.08% and net profit 7.73%.
- Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and Haryana account for about 56% of factory employment.
- The op-ed cites PLFS 2025: 73.1% of non-farm workers are in informal-sector enterprises.
- The ASI covers factories registered under Sections 2(m)(i) and 2(m)(ii) of the Factories Act, 1948.
Quick recall
- Persons engaged in registered factories, ASI 2024-25?
- 2.10 crore, up 7.19% from 1.96 crore.
- GVA growth in ASI 2024-25?
- 9.59%.
- Which five States lead factory employment in ASI 2024-25?
- Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and Haryana, with about 56% together.
- Which five industries contribute over 45% of factory GVA?
- Basic metals, motor vehicles, chemicals, pharmaceuticals and food products.
- Which units does the ASI cover?
- Factories registered under Sections 2(m)(i) and 2(m)(ii) of the Factories Act, 1948.
- Which body conducts the ASI?
- The National Statistics Office (NSO) under MoSPI.
- Share of non-farm workers in informal-sector enterprises cited by the op-ed?
- 73.1%, from PLFS 2025.
- Growth in emoluments versus net profit in ASI 2024-25?
- Emoluments 12.08%, net profit 7.73%.
Prelims practice question
With reference to the Annual Survey of Industries (ASI), consider the following statements:
1. It covers factories registered under Sections 2(m)(i) and 2(m)(ii) of the Factories Act, 1948.
2. It is conducted by the Reserve Bank of India.
3. In ASI 2024-25, the number of persons engaged in the sector crossed 2 crore.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Show answer
Answer: (c) 1 and 3 only. 1 is correct: these are units with 10 or more workers using power or 20 or more without power. 2 is wrong: the ASI is conducted by the National Statistics Office under MoSPI. 3 is correct: persons engaged rose to 2.10 crore.
Use this in UPSC Mains: previous-year questions
Recurring theme: Manufacturing growth, employment and the structure of Indian industry
- How to use this
Use the ASI 2024-25 data and the op-ed's argument to show that Indian manufacturing growth remains capital-intensive, the root of weak labour-intensive output and exports.
- Basic metals, motor vehicles, chemicals, pharmaceuticals and food products contribute over 45% of factory GVA; invested capital grew 11.10% against 7.19% growth in persons engaged (ASI 2024-25).
- The op-ed argues output per worker has barely moved and wages per worker grew more slowly than net profit, pointing to a capital-intensive growth model.
- Suggest tilting incentives such as PLI towards labour-intensive sectors (textiles, apparel, footwear, food processing, toys) and simplifying compliance so units grow from micro to medium size.
- How to use this
Use it to show the scale of informality outside registered factories and to argue, as the op-ed does, that failure to absorb workers into formal manufacturing harms development.
- The op-ed cites PLFS 2025: 73.1% of non-farm workers are in informal-sector enterprises.
- Unorganised manufacturing employed 3.8 crore people in 2023-24, against about 2.10 crore persons engaged in registered factories in 2024-25.
- The writer warns that without formal absorption, as happened in South Korea and China, workers stay stuck in agriculture or gig work, weakening consumption, investment and productivity.
- How to use this
Use the latest ASI to show that registered industry is now growing strongly in value terms, while questioning whether that growth is broad-based and job-rich.
- ASI 2024-25 (released 30 September 2026): factory GVA grew 9.59%, output 7.81%, invested capital 11.10%, emoluments 12.08% and net profit 7.73%.
- Growth is concentrated: Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh and Haryana hold about 56% of factory employment.
- Supporters of current policy point to the 7.19% rise in factory jobs (over 14 lakh added) and production-linked incentives; the op-ed calls the model capital-intensive.
Mains practice question
India's registered manufacturing sector is growing faster in output and capital than in employment. Examine the reasons and suggest measures to make manufacturing a larger source of formal jobs. (250 words)
Model answer
The Annual Survey of Industries 2024-25 shows GVA growth of 9.59% and invested capital growth of 11.10%, while persons engaged rose 7.19% to 2.10 crore. Yet most non-farm workers remain in informal enterprises.
Reasons for weak job intensity
- Capital-intensive mix: basic metals, motor vehicles, chemicals and pharmaceuticals contribute over 45% of GVA and use more machines per worker.
- Size structure: many firms stay small to avoid compliance costs, so employment sits in the unorganised segment (3.8 crore in 2023-24, as cited by the op-ed).
- Regional concentration: five States hold about 56% of factory jobs.
- Skill gaps: workers leaving agriculture lack industrial skills.
- Wage share: the op-ed notes wages per worker grew slower than profit, limiting demand.
Consequences
- Surplus labour stays in farming or gig work.
- Weak mass consumption limits private investment.
- Productivity gains are not widely shared.
Measures
- Tilt incentives such as PLI towards labour-intensive sectors: textiles, apparel, footwear, food processing, toys.
- Simplify compliance so that units can grow from micro to medium size.
- Plug-and-play industrial parks and clusters in labour-surplus States.
- Link skilling to industry demand through apprenticeships.
- Improve credit for MSMEs and access to export markets.
- Track job outcomes using ASI, PLFS and ASUSE data together.
Conclusion
India's demographic window makes job-rich manufacturing a necessity; the goal must shift from output growth alone to output with employment.
The basics
Why this matters
Every developing country hopes that factories will pull workers out of low-income farming. In India, manufacturing is growing, but most workers outside farms still work in small informal units. The latest Annual Survey of Industries lets us see both sides.
What grew, and how fast
Capital grew faster than employment. That is the pattern economists describe as rising Capital intensity and jobless growth: each new job needs more machinery, so a given amount of investment creates fewer jobs.
Two worlds of manufacturing
India's industry has a small formal part and a large informal part. The Organised and unorganised sectors differ in size, productivity, wages and social security. The op-ed in The Indian Express says the unorganised manufacturing segment employed 3.8 crore people in 2023-24, against about 2 crore in registered factories.
- Registered under the Factories Act, 1948
- About 2.10 crore persons engaged in 2024-25
- Higher capital and output per worker
- Small, unregistered enterprises
- 3.8 crore workers in 2023-24, as cited by the op-ed
- Lower wages and little social security
The argument in the op-ed
The writer uses the Periodic Labour Force Survey to say 73.1% of non-farm workers are in informal-sector enterprises, and argues that unlike South Korea and China, India's formal manufacturing has not become a mass employment engine. These are the writer's claims and should be read as an argument, not settled fact.
- 1Factories add machines faster than workers.
- 2Most workers stay in farming, informal units or gig work.
- 3Low and insecure incomes limit spending.
- 4Firms see little reason to expand labour-heavy capacity.
Go deeper
In one line: ASI 2024-25 shows factory GVA up 9.59% and jobs up 7.19% to 2.10 crore, but an op-ed argues formal manufacturing is still not absorbing workers at the scale India needs.
Why it matters for UPSC
GS3 asks repeatedly about manufacturing, employment and inclusive growth. The ASI is also a Prelims staple: who conducts it, what it covers and what it found.
The core idea
The Annual Survey of Industries measures registered factories. They are only one part of manufacturing; the Organised and unorganised sectors differ sharply. When capital grows faster than workers, we see Capital intensity and jobless growth. Labour data from the Periodic Labour Force Survey show where workers actually are.
Numbers and dates to remember
- ASI 2024-25 released 30 September 2026; reference period April 2024 to March 2025.
- Persons engaged: 1.96 crore to 2.10 crore (+7.19%, more than 14 lakh).
- GVA +9.59%; output +7.81%; invested capital +11.10%; emoluments +12.08%; net profit +7.73%.
- Top five States hold about 56% of factory jobs; top five industries give more than 45% of GVA.
- Op-ed: 73.1% of non-farm workers in informal-sector enterprises (PLFS 2025).
Where to go next
- Annual Survey of Industries: what it measures and how.
- Organised and unorganised sectors: the two worlds of Indian industry.
- Capital intensity and jobless growth: why output can outrun jobs.
- Periodic Labour Force Survey: India's main source of labour data.
Go deeper: is this jobless growth or slow structural change?
The op-ed's case. The writer argues that formal manufacturing is capital-heavy and that wages per worker have lagged profit, so growth does not spread. The Periodic Labour Force Survey figure of 73.1% of non-farm workers in informal enterprises and the 3.8 crore workers in unorganised manufacturing point to an economy where most workers remain outside the formal system. South Korea and China, by contrast, moved millions from farms to formal factories.
The other reading. The Annual Survey of Industries also shows that registered factories added more than 14 lakh jobs in a single year and that total emoluments grew 12.08%, faster than net profit. On this view, formalisation is happening, only slowly, and the issue is pace rather than direction.
What the data cannot say alone. ASI covers only registered factories; the Organised and unorganised sectors must be read together to see whether jobs are shifting from informal to formal units or simply being added in both. A sector mix tilted to metals, vehicles and chemicals naturally raises Capital intensity and jobless growth.
Policy angles. Production-linked incentives, labour law reform, industrial clusters and skilling are the usual tools. The Mains test is to show how each could make growth more job-rich, with data from ASI and PLFS as evidence.
Annual Survey of Industries
India's main source of data on registered factories.
In one line: The Annual Survey of Industries (ASI) is the National Statistics Office's yearly survey of registered factories in India.
Coverage
It covers factories registered under Sections 2(m)(i) and 2(m)(ii) of the Factories Act, 1948, that is, units with 10 or more workers using power or 20 or more workers without power. It is conducted under the Collection of Statistics Act, 2008.
What it measures
Number of factories, persons engaged, wages and emoluments, fixed and invested capital, inputs, output, gross value added and profit, by industry and by State.
The latest round
ASI 2024-25, released on 30 September 2026, shows persons engaged at 2.10 crore and GVA growth of 9.59%.
Where to go next
Organised and unorganised sectors
Why most Indian workers are outside the factories the ASI measures.
In one line: India's industry has a smaller organised segment of registered, larger units and a much larger unorganised segment of small, unregistered enterprises.
How they differ
Organised units are registered under laws such as the Factories Act, keep formal accounts and usually provide some social security. Unorganised units are small, often family-run, with low capital, low productivity and insecure jobs.
How they are measured
The ASI covers registered factories. Unincorporated non-farm enterprises are measured by the Annual Survey of Unincorporated Sector Enterprises (ASUSE). The op-ed cites 3.8 crore workers in unorganised manufacturing in 2023-24.
Where to go next
Capital intensity and jobless growth
Why output and capital can grow faster than jobs.
In one line: Capital intensity is the amount of capital used per worker; when it rises quickly, output can grow while employment grows slowly, a pattern called jobless growth.
Why it happens
Some industries, such as metals, chemicals and vehicles, need heavy machinery. Automation, cheap capital relative to labour, and the cost of hiring and compliance can all push firms to use more machines and fewer workers.
Why it matters
A labour-surplus country needs sectors that absorb many workers: textiles, apparel, leather, food processing and assembly. In ASI 2024-25, invested capital grew 11.10% while persons engaged grew 7.19%.
Where to go next
Periodic Labour Force Survey
The main survey that tells us where Indians work.
In one line: The Periodic Labour Force Survey (PLFS) is the National Statistics Office's survey of employment and unemployment, launched in 2017.
What it measures
It estimates the labour force participation rate, worker population ratio and unemployment rate, and the type of work people do: self-employed, regular salaried or casual. It uses the current weekly status (activity in the last seven days) and the usual status (activity over the past year).
Why it is in the news
The op-ed uses PLFS 2025 to argue that 73.1% of non-farm workers are in informal-sector enterprises, showing that factory growth has not yet changed the overall structure of work.
Where to go next
Periodic Labour Force Survey: every story that connects to it (3)
Prelims-style quiz
Consider the following statements about ASI 2024-25:
1. Invested capital grew faster than persons engaged.
2. Total emoluments grew faster than net profit.
3. Output grew faster than GVA.
How many of the statements given above are correct?- Only one
- Only two
- All three
- None
Show answer
Answer: (b) Only two. 1 is correct: 11.10% against 7.19%. 2 is correct: 12.08% against 7.73%. 3 is wrong: output grew 7.81% while GVA grew 9.59%.
Consider the following States:
1. Tamil Nadu
2. Gujarat
3. Haryana
4. West Bengal
How many of the above are among the top five States by factory employment in ASI 2024-25?- Only one
- Only two
- Only three
- All four
Show answer
Answer: (c) Only three. Tamil Nadu, Gujarat and Haryana are in the top five, along with Maharashtra and Uttar Pradesh. West Bengal is not.
Consider the following statements:
Statement-I: In ASI 2024-25, invested capital in registered factories grew faster than the number of persons engaged.
Statement-II: A rise in capital intensity means each additional worker is employed with more capital.
Which one of the following is correct in respect of the above statements?- Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- Both Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
- Statement-I is correct but Statement-II is incorrect
- Statement-I is incorrect but Statement-II is correct
Show answer
Answer: (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I. Statement-I is correct (11.10% against 7.19%). Statement-II correctly defines rising capital intensity, and it explains why capital grew faster than employment.
Which of the following is the best description of 'gross value added' in the ASI?
- Total sales of factories
- Value of output minus value of inputs used up in production
- Total wages paid to workers
- Net profit after tax
Show answer
Answer: (b) Value of output minus value of inputs used up in production. GVA is output minus intermediate inputs. It is the value the factory sector adds to the economy; it is not sales, wages or profit.
Consider the following statements:
1. The Periodic Labour Force Survey is conducted by the National Statistics Office.
2. The Annual Survey of Industries covers unregistered household enterprises.
Which of the statements given above is/are correct?- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Show answer
Answer: (a) 1 only. 1 is correct. 2 is wrong: the ASI covers registered factories; unincorporated enterprises are covered by the Annual Survey of Unincorporated Sector Enterprises (ASUSE).