Manufacturing share in listed firms' FY25 GVA fell below pre-Covid levels

Manufacturing companies now contribute a smaller share of gross value added by listed firms than before the pandemic, even as services and other sectors have expanded faster, an analysis shows

Manufacturing companies contributed less to gross value added (GVA) by listed firms last financial year than they did before the Covid-19 pandemic, an analysis of corporate data shows.

 

The share of manufacturing companies in the GVA of listed firms was over 40 per cent in the years leading up to the pandemic, a Business Standard analysis of corporate data showed, but has since dropped to 33.4 per cent in the financial year ended March 2025 (FY25).

How do recent GDP data compare with listed-company trends?

The government recently released gross domestic product (GDP) data which showed a slightly larger-than-expected share for manufacturing in the overall economy between FY23–FY26. The analysis compares this with longer-term trends in the listed space, using data based on available company disclosures. Consequently, the listed GVA trends given here should be considered indicative rather than absolute.

 

Broadly, the GVA is the value addition after taking into account the value of input prices. For example, the value added by a tyre company would be ₹50 if it takes ₹100 worth of inputs such as rubber and produces a tyre that is sold for ₹150.

What do government data suggest about manufacturing’s recent share?

The latest government data showed an increase in the average share of manufacturing in the economy between FY23 and FY26 at current prices (12.9 per cent under the old series to 13.3 per cent under the new series). While this data on recent trends shows signs of a pick-up, the long-term trend in the listed space suggests that growth in manufacturing has not kept pace with other parts of the economy.

Why has manufacturing lagged other sectors?

“Companies aren’t investing,” said Santosh Mehrotra, visiting professor at the University of Bath in the United Kingdom.

 

The lack of strong capital expenditure for more than a decade — with investment-to-GDP range-bound between 26–32 per cent — has resulted in the manufacturing sector losing ground even as the rest of the economy, especially the services sector, has grown. Rising concentration of ownership across sectors enables corporates to raise margins. Wages have also been largely stagnant, which may have affected demand. Lower demand, despite high profits, translates into a lower need for companies to increase production capacity by investing in new factories.

 

The increase in manufacturing GVA under the new series likely reflects a bounce-back by the informal sector between FY23–FY26 following the shocks of demonetisation, the introduction of the goods and services tax (GST), and Covid-19, according to Mehrotra.

 

What concerns have statisticians raised about the new GDP series?

The rise in the share and level of GDP in agriculture and the lower share and level of services in the economy (under the new series) was unexpected as there were no clear signs of such a change, suggested PC Mohanan, former acting chairman of the National Statistical Commission.

 

The government methodology takes into account the share of manufacturing for individual companies and other granular details, along with methodological improvements like double deflation. These could have resulted in the change in the landscape over the previous series, and may well be a more accurate picture than earlier. Labour data, though, would suggest limited gains for manufacturing, according to Mohanan, with an employment mix which has largely been in the same range as before the pandemic.

 

“Distribution across the sectors has changed, though not very drastically,” he said.

 

(For the purposes of this analysis, GVA has been calculated as the sum of profit before tax, depreciation, and compensation to employees after deducting prior-period and extraordinary income and adding back prior-period and extraordinary expenses. This draws on similar calculations by Radhika Pandey and Pramod Sinha [NIPFP, ‘Decoding the manufacturing slowdown: A sectoral analysis of Indian industry sectoral analysis of Indian industry’].)