Smokestacks and shoppers

India's National Manufacturing Policy of 2011 set out to raise manufacturing to a quarter of the economy by 2022, and Make in India, launched in September 2014, took up the same goal.¹ The date has since slipped. In September 2024 the commerce minister, Piyush Goyal, placed the 25% share in the decades running to 2047.²

India's consumer class did not wait for the factories. In 2009 about 201 million Indians spent more than $13.20 a day, the line World Data Lab uses for the consumer class, and by 2024 there were 589 million.

Registered factories made only a small part of that rise. The government's survey of about 70,000 factories a year shows them adding 9.3 million jobs over the same years, one for every 42 new consumers, and on any reasonable count those jobs carried between a twentieth and a tenth of the people who joined the consumer class.

How many consumers did the factories make?

Registered factories hired steadily. Their workforce grew from 11.6 million in 2009-10 to 20.9 million in 2024-25, and about two thirds of the growth in their output came from more people at work. Over the same years the consumer class grew by 388 million.

Even if every one of those 9.3 million jobs had lifted a whole household of 4.4 people into the consumer class, the jobs would account for 41 million of the 388 million, about a tenth.

Which factories hired matters as much as how many. Three in ten of the jobs added between 2014-15 and 2024-25 were in industries whose wage keeps fewer than two people above the line, led by food, the biggest hirer of all, at 1.7, and clothing at 1.6.

Why so few?

A factory wage keeps two people above the line, not a household. The average factory worker earned about Rs 2.28 lakh in 2024-25, or $27.5 a day in 2021 prices, more than 83% of Indians spend. Shared across a household of 4.4 people it comes to $6.3 a day each, under half the consumer-class line, so a factory job lifts about two people above the line rather than four. Counted that way, the new jobs carried about 19 million new consumers, a twentieth of the rise.

The wage has also lost ground on the people around it. In 2009-10 a factory worker's pay was 2.5 times what the average Indian spent, and by 2024-25 it was 1.6 times, as real factory pay rose 1.6% between 2019-20 and 2024-25 while the average Indian's spending rose 23%.

Where did the new consumers come from?

The new consumers came mostly from places with few factories. Gujarat and Tamil Nadu took 32% of the factory jobs India added from 2014-15 to 2024-25 and 15% of the added consumer spending, while Kerala, West Bengal and Bihar took 18% of the added spending with under 2% of the added jobs.

Manufacturing outside the survey moved the other way. Between 2015 and 2022, when registered factories added 4.2 million jobs, the small unregistered workshops lost 5.4 million, according to the government's surveys of unincorporated enterprises, while the consumer class grew by 203 million.

So did the factories make India's consumers?

Factories made about a twentieth of India's new consumers, and at most a tenth. The other nine in ten earned their way in through services, trade and construction, mostly in states with few factories.

A regression across states points the same way. In the 21 states with more than 100,000 factory jobs, adding factory jobs faster, measured per 100 residents and allowing for how factory-heavy each state already was, shows no detectable link with growth in spending per person, whether from 2014 to 2019, from 2019 to 2024 or over the whole decade. The intervals are wide, so the test cannot rule out a modest effect, but it finds no sign that the states which hired fastest pulled ahead. Some of any factory effect will also land far from the factory, in the spending of migrant workers' families back home.

Whatever the 2047 target achieves, the consumer class India built between 2009 and 2024 was made mostly outside its factories.