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Gujarat displaces Maharashtra to become largest manufacturing hub in country

🔴Maharashtra, however, continues to lead as the nation’s biggest services hub.

Written by Karunjit Singh | New Delhi |
Updated: December 1, 2021 11:58:01 pm
Gujarat has emerged as the biggest manufacturing hub in India with the state’s Gross Value Addition (GVA) in manufacturing growing at 15.9 per cent annually on average between FY’12 and FY’20. (Representational image)

Gujarat has pipped Maharashtra to emerge the largest manufacturing hub in the country, with the former’s Gross Value Addition (GVA) in manufacturing growing 15.9 per cent annually on average between FY12 and FY20 to touch Rs 5.11 lakh crore, according to the data released by the Reserve Bank of India (RBI).

Maharashtra’s annual growth rate during the period was 7.5 per cent per annum, taking the state’s total manufacturing GVA to Rs 4.34 lakh crore in FY20. It continues to lead as the nation’s biggest services hub. 

The worst performers among states, which were already among the top 10 manufacturing ones during the period, were Rajasthan, Telangana and Andhra Pradesh, with average annual growth rates of 3.8 per cent, 5.5 per cent and 6.9 per cent, respectively.

GVA is essentially GDP minus net product taxes and reflects growth in supply of goods and services. The other states with the highest manufacturing GVA were Tamil Nadu at Rs 3.43 lakh crore, Karnataka at Rs 2.1 lakh crore and Uttar Pradesh at Rs 1.87 lakh crore. India’s manufacturing GVA grew to Rs 16.9 lakh crore in FY20 at an average growth rate of 9.7 per cent since FY12.

Higher investment in Gujarat during the period likely played a key role in allowing the state to outpace the rest of the country in manufacturing growth. Gujarat witnessed the highest level of capital investment in terms of gross fixed capital formation (GFCF) — a measure of investments — between FY12 and FY19 at a total of Rs 5.85 lakh crore, ahead of Maharashtra which saw investment of Rs 4.07 lakh crore during the period, and Andhra Pradesh, which witnessed cumulative GFCF of Rs 1.49 lakh crore.

A report by KPMG said key reforms by Gujarat, including the introduction of a single window for business clearances, easing of labour norms as well as smoother administration of incentive schemes, contributed to boosting ease of doing business in the state and making it one of most attractive destinations for Foreign Direct Investment.

Maharashtra, however, retained its spot as the leading provider of services in the country, with the state’s services GVA growing at 12.6 per cent per annum hitting Rs 15.1 lakh crore in FY20.

Karnataka posted the fastest growth in services GVA at 15.1 per cent per annum during the period, achieving the second highest services GVA in the country at Rs 9.72 lakh crore in FY20.

Telangana was the second fastest growing service economy in the country, with annual services GVA growth of 14.8 per cent leading the state to leapfrog Gujarat and Kerala to become the seventh largest services economy in the country.

Tamil Nadu, UP and West Bengal were third, fourth and fifth largest service economies in FY20.

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