Registered factories increased 14.5% over the past decade, but high inactivity, weaker investment and regional disparities suggest industrial capacity is expanding more slowly than the headline numbers indicate.
India’s manufacturing base expanded between 2015-16 and 2024-25, but the latest Annual Survey of Industries suggests the gains have been less robust than the headline factory count implies. The number of registered factories rose 14.5 per cent over the decade, yet nearly one in five units was not operating in FY25, when 18.13 per cent were classified as non-operational, according to Business Standard’s analysis of the data.
That matters because a larger factory register does not automatically translate into more industrial capacity or stronger output. Business Standard reported that factory numbers picked up in the last two years, rising 2.66 per cent in FY24 and 2.64 per cent in FY25, but the persistence of inactive units points to a mismatch between registration and productive use. The survey therefore suggests that the recovery in factory creation has been real, but not necessarily matched by an equivalent rise in operational capacity.
The unevenness is especially clear in India’s biggest manufacturing states. Tamil Nadu, Gujarat and Maharashtra together accounted for about 38 per cent of all factories, but each has recently recorded a higher share of non-operational units than the national average, according to the report. Over the same period, Tamil Nadu increased its share of all-India factory gross value added by 0.58 percentage points, while Gujarat’s share fell by 2.47 points and Maharashtra’s by 3.59 points. Even so, Tamil Nadu still lagged the national average on labour productivity, with output per person engaged below the countrywide figure.
The broader industrial picture is also mixed. In a separate Business Standard report based on the same official survey, new factory investment fell 8 per cent in FY25, the first decline since the pandemic year of FY21, after surging 77 per cent in FY23 and a further 18 per cent in FY24. That suggests the recent expansion in factory numbers has not yet been accompanied by steady capital spending, even as factories continued to add workers and wage growth outpaced profit growth. Together, the figures point to an industrial sector that is still growing, but with weaker efficiency, patchier investment and significant regional disparities.
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