Spatial Concentration of Unorganized Manufacturing Industries in India in the Liberalized Era:A Disaggregated Analysis

The objective of this study is to examine the inter-state variation of unorganized manufacturing industries in India. Analysis has been carried out using unit-level data at three-digit industry level for 25 major Indian states for the period 1994-95 to 2005-06. The findings suggest that unorganized manufacturing industries continued to concentrate in a few advanced states, while there is barely any improvement in the condition of the backward states. The high technology intensive industries are highly concentrated, whereas concentration is low for the resource-based low technology intensive industries. Spatial concentration has declined in the post-reform period for the overall unorganized manufacturing sector as well as for about two–third of the 55 three-digit industry groups. The findings raise a number of policy issues for regional industrial development in India. The paper emphasizes the need for special policy attention for improvement of socioeconomic infrastructure and investment climate in the backward states to enhance industrial development through attracting new investments.