More output, fewer workers: Why are labour-heavy industries becoming leaner

Rising production, ageing workforces, and rapid automation are pushing India's industrial companies towards leaner, productivity-driven workforce structures

Steel Authority of India Limited (SAIL) Chairman Amarendu Prakash’s recent comment highlights a shift underway in the country's industrial economy. According to him, nearly 3,500 employees could exit annually over the next few years, largely due to retirements, even as the company expands production and modernisation.

 

Across the labour-intensive steel mills, coal mines and mineral public sector undertakings (PSUs), production is rising and capacity is expanding, but workforce sizes are steadily shrinking. Industry executives and workforce experts say these sectors are increasingly relying on automation, mechanisation and specialised workers to improve productivity rather than expanding the workforce.

More production, fewer workers

Coal India, among the country’s largest employers, has seen its workforce decline sharply over the past decade even as output continued to rise.

   

Coal India’s workforce declined from around 276,000 in FY15 to about 214,000 employees in FY25 (as of January 1, 2026), according to the Ministry of Coal's annual report 2025-26. At the same time, the miner produced 781 million tonnes of coal in FY25, one of its highest-ever production levels.

 

Coal India has previously linked mechanisation and productivity gains with lower workforce intensity.

 

The shift is significant because coal mining has historically been among India’s most labour-intensive industries. However, large earth-moving equipment, conveyor-based evacuation systems, digital mine planning, and remote operations are steadily reducing dependence on manual labour.

 

Even at SAIL, the company’s employee count has steadily declined over the years. Its workforce fell from around 65,500 employees in FY21 to nearly 53,100 employees in FY25, according to company disclosures and employee trend data. Yet the steelmaker continues capacity expansion and plant modernisation. The company is targeting crude steel production of about 22.5 million tonnes in FY27 against an installed capacity of around 21 million tonnes, according to the management.

 

A similar trend is visible at NMDC (formerly National Mineral Development Corporation). India’s largest iron ore producer reported a 19 per cent year-on-year rise in production to 42.65 million tonnes during the first nine months of FY26. The company also recently became the first iron ore miner in India to cross 50 million tonnes of annual production in a financial year. At the same time, NMDC’s manpower remained relatively stable at 5,677 employees as of March 2025, compared with around 5,630 employees in FY24 and about 5,713 employees in FY23, according to company annual reports.

 

NMDC has also been investing heavily in digital mining systems, integrated surveillance, automation and operational digitisation, according to its sustainability and annual reports.

 

The shift reflects how industrial companies are increasingly prioritising output per employee, operating efficiency and automation-led productivity instead of workforce expansion.

'Silent restructuring' through retirements

Experts say ageing workforces across PSUs are also enabling companies to gradually redesign labour structures without politically sensitive layoffs.

 

“For many PSUs and large industrial enterprises, workforce rationalisation is increasingly becoming part of a long-term operational strategy rather than a short-term cost exercise,” said Balasubramanian A, senior vice-president at TeamLease Services.

 

“A significant portion of the workforce in traditional sectors is nearing retirement age, and companies are using this transition phase to redesign workforce structures around automation, mechanisation and productivity-led operations instead of replacing employees on a like-for-like basis,” he said.

 

According to him, retirements are helping companies reset labour costs without aggressive layoffs.

 

“Across the industrial world, the focus today is more on improving productivity and operational efficiency rather than only reducing workforce numbers,” said Harsh Bansal, managing director at BMW Industries.

 

“In sectors like ours, production levels have continued to rise even as workforce numbers have gradually been rationalised due to higher automation, mechanisation or digitisation,” he said.

 

Bansal added that manufacturing still remains heavily dependent on skilled manpower for operations, maintenance, quality control, and supervision, even as companies become more selective in hiring.

The rise of automation-led operations

Experts say automation and AI-driven systems are helping companies increase output with smaller teams.

 

“Mechanisation and automation are the biggest drivers of lower manpower needs in steel, mining, and coal sectors,” said Balasubramanian.

 

“Technologies such as automated drilling and hauling equipment, conveyor-based material handling, centralised digital control rooms and robotic process automation are helping companies increase output with leaner teams,” he said.

 

Companies are also increasingly deploying internet of things (IoT) sensors, drones, remote monitoring systems and AI-driven predictive maintenance tools to improve machine utilisation and reduce operational downtime.

 

Bansal said digital systems are streamlining inventory, production planning, and supply chain operations.

 

“In steel processing, automated cutting, slitting, and fabrication systems are helping improve speed and precision while reducing manual handling,” he said.

 

The Ministry of Steel and industry bodies have increasingly highlighted the adoption of Industry 4.0 technologies, AI-led systems and digital manufacturing tools by Indian steelmakers to improve productivity and competitiveness, according to the annual report 2023-24 of the Ministry of Steel. At India AI Impact Summit 2026, the Ministry of Steel unveiled an AI-enabled modernisation roadmap to expand the capacity from the current level of approximately 200 million tonnes to 300 million tonnes by 2030 to 2031 and further to 400 million tonnes by 2035 to 2036.

Fewer workers, but more specialised hiring

Experts say industrial companies are increasingly hiring technicians and digitally skilled workers instead of large pools of general labour.

 

“There is a visible shift across manufacturing industries towards hiring more specialised and technically skilled workers,” said Bansal.

 

“As production systems become more technology-driven, companies require employees who can operate automated machinery, manage digital systems and handle advanced manufacturing processes,” he said.

 

At the same time, companies are increasingly relying on contractual staffing models in non-core functions to maintain operational flexibility.

 

“Industrial companies are increasingly moving towards smaller but more specialised workforce models,” Balasubramanian said. “There is also a gradual increase in the use of flexible and contract-based staffing for non-core and support functions, especially where companies want greater cost and workforce flexibility."

 

Economists say the trend reflects a broader global shift towards more capital-intensive and technology-driven industrial growth. As output per employee and productivity become increasingly important boardroom metrics, the transformation also raises questions about how much employment India’s manufacturing push can generate in the years ahead.