According to RBI data, Gujarat has exceeded Maharashtra as the largest manufacturing hub in India, with the state’s Gross Value Addition (GVA) in manufacturing increasing at a rate of 15.9 percent per year on average between FY’12 and FY’20 to reach Rs 5.11 lakh crore. During the period, Maharashtra’s annual growth rate was 7.5%, bringing the state’s total manufacturing GVA to Rs 4.34 lakh crore in FY’20. Maharashtra maintains its position as the nation’s largest services hub.
Rajasthan, Telangana, and Andhra Pradesh were the worst performers among states that were already among the top ten manufacturing states during the period, with average annual growth rates of 3.8%, 5.5%, and 6.9%, respectively. GVA is essentially GDP minus net product taxes, and it reflects changes in the supply of goods and services.
Tamil Nadu had the highest manufacturing GVA at Rs 3.43 lakh crore, Karnataka had Rs 2.1 lakh crore, and Uttar Pradesh had 1.87 lakh crore. India’s manufacturing GVA increased by 9.7 percent year on year to Rs 16.9 lakh crore in FY20.
Higher investment in Gujarat during the period is likely to have played a significant role in the state outperforming the rest of the country in manufacturing growth.
Gujarat saw the highest level of capital investment in terms of gross fixed capital formation (GFCF) – a measure of investments – between FY’12 and FY’19, at Rs 5.85 lakh crore, ahead of Maharashtra, which saw investment of Rs 4.07 lakh crore during the period, and Andhra Pradesh, which saw GFCF of Rs 1.49 lakh crore.
According to a KPMG report, key reforms by Gujarat, such as the introduction of a single window for business clearances, easing of labour norms, and smoother administration of incentive schemes, have contributed to the state’s ease of doing business and making it one of the country’s most appealing destinations for Foreign Direct Investment.
Maharashtra, on the other hand, retained its position as the country’s leading provider of services, with the state’s services GVA growing at a rate of 12.6% per year, reaching Rs 15.1 lakh crore in FY’20. Karnataka had the fastest growth in services GVA during the period, at 15.1% per year, and had the second highest services GVA in the country, at Rs 9.72 lakh crore in FY’20.
Telangana had the second fastest growing service economy in the country, with an annual services GVA growth rate of 14.8%, overtaking Gujarat and Kerala to become the country’s seventh largest services economy.
In fiscal year 2020, Tamil Nadu, Uttar Pradesh, and West Bengal were India’s third, fourth, and fifth largest service economies, respectively.