The manufacturing sector in India appears to be experiencing a revival. The manufacturing growth rate has increased from 5% in 2000-01 to over 9% in 2005-06. Manufacturing growth during the current financial year is estimated at 10.4%. Foreign Direct Investment (FDI) equity inflows into the manufacturing sector have increased from $671.47 million in 2003-04 to over $2 billion in 2005-06, a jump of 75%. Union Minister of Commerce and Industry Shri Kamal Nath underlined the importance of the manufacturing sector as a driving force for the country’s economic development, especially in terms of employment. He announced that further initiatives were under way to increase the share of manufacturing in GDP from the current level of around 17% to 25% by 2012.

Shri Kamal Nath said that 26 proposals envisaging total investment of Rs1766 crore ($382 million) and involving a central grant of Rs952 crore had been sanctioned under the Industrial Infrastructure Upgrading scheme, covering sectors such as auto components, textiles, chemicals, foundries, leather and rubber. An Integrated Leather Development Scheme was launched in November 2005 to enable modernisation and technology upgrading in all segments of leather industry with an outlay of Rs290 crore.

The National Strategy for Manufacturing has identified 20 sectors as having immediate potential for growth and employment in the country. These include textiles and garments; leather and leather goods; auto-components; and chemicals and petrochemicals.