Inter-sectoral productivity in Indian organized manufacturing sectors: A comparative snapshot

This study investigates the total factor productivity growth (TFPG) of India's organized manufacturing sector over 43 years (1980–2023), comparing pre- and post-liberalization periods. Using a gross output framework with three inputs (material, labour, capital) and a Translog index, the findings reveal negative TFPG in most disaggregated industries during the pre-reform era, a trend that largely persisted after liberalization. However, the sharpness of this negativity declined noticeably, and a positive shift emerged in the post-pandemic period (2016–17 to 2022–23), except in the chemical sector. Overall, aggregate manufacturing TFP showed pessimistic trends post-reforms. Despite this, Indian manufacturing remains vital for national economic growth, particularly outperforming selected countries during the COVID-19 pandemic. The results underscore the need for productivity-focused trade and industrial policies to help firms build competitive advantages and access export markets. This research offers novel insights into the long-standing debate on whether trade liberalization has significantly enhanced industrial performance in India's shifting policy landscape.