Industrial Geography of Indian States: Comparing the Organized Manufacturing Sector of Maharashtra & Uttar Pradesh –

Industrial Geography of Indian States: Comparing the Organized Manufacturing Sector of Maharashtra & Uttar Pradesh – 

Background & Rationale

Regional disparity in economic performance for a country like India, whose individual states fare larger than entire countries, is a truism. Debates abound whether these divergences are organically linked in the manner of ‘core’ and ‘periphery’ relations or whether they can be rectified, which institutions have a role to play, whether linkages (of factors and sectors, e.g.) are market-distorted or not, and what strategies should be chosen, or what even is an adequate geographic-administrative unit of regionality within India, etc.  (Dore & Narayanan, 2022; Triguniyat, 2024; Muralidharan, 2024; Gupta & Sachdeva, 2025; Chakraborty & Chakraborty, 2018). To give an example of this staggering internal diversity, one can note that though the per capita GDP CAGR from 1994 to 2020 of Gujarat is 6.7%, almost at a double of the 3.5% of Assam; the per capita availability of roads (in kms)—strongly correlated with economic growth—stands at 7 km in Assam, whereas it is less than half in Gujarat, at 2.6 km (Gupta & Sachdeva, 2025, p. 19).

The issue of regional economic disparity assumes a starker spectrum when we consider industrialization and, particularly, the broad manufacturing sector. Thus, to take up the organized sector data from the recent Annual Survey of Industries (2022-23), which covers the registered factories across many sub-sectors, Gujarat or Maharashtra alone perform better than the Bihar, Jharkhand, and Chhattisgarh combined in terms of Gross Value Added (GVA) or number of factories (National Statistics Office, MoSPI, 2024). Though ever since the 1991 reforms, states, and particularly their governments, have been constantly beckoned to lead industrialization efforts to curb the discrepancies (Planning Commission, 2002, p. 5; Ahluwalia, 2001), that there still lies a road ahead, waiting to be traversed, is easily asserted[1]. Moreover, in lieu of the fact that the manufacturing-focused economic growth model is still not abandoned for India (Khan, 2025; Ministry of Finance, 2025), a comparative analysis of state industrial profiles seems prudent and timely.

In doing so, we have deliberately chosen the states of Uttar Pradesh and Maharashtra for two reasons owing to their historical and contemporary location within the manufacturing sector geography of India. Whereas once considered a laggard in industrial development, Uttar Pradesh has, in the last decade or so, seen a significant industrial development so much so that it is considered, today, amongst the top 5 industrial states in India a number of indicators (Ahlwalia, 2002, pp. 71-73; Fernandes & Sharma, 2012; National Statistics Office, MoSPI, 2024, pp. S2-4). Nonetheless, as our analysis shows, placed vis-à-vis Maharashtra, a historically industrialized state, there still seems a considerable gap between them on a number of indicators, as demonstrated below, highlighting the necessity to move beyond of the binary judgements that underpin the regional economic (‘un-’ or ‘under-’) development discourse in India (Chakraborty M. , 2024).

In doing so, we have attempted to lay out the various indicators relevant to the industrial profile of both the states such as factories, GVA, persons engaged, MSME concentration, export or domestic orientation, FDIs, employment centric data, etc. on an aggregate level along with on a disaggregated level of Food Processing (NIC 10), Textiles & Apparels (NIC 13 & 14) and Automobile Manufacturing (NIC 29) – all of which forms some of the most important sub-sectors of the Indian manufacturing sector[2]. In doing so, we have utilized the most current data available from Annual Survey of Industries, 2022-23, Periodic Labour Force Survey along with the state-centric statistical and economic publications.

It is to be noted that this commentary does not delve into the industrial policies or sector specific policies of both the states and merely posits the industrial profile and relevant inferences for both the states building on the idea that the state is merely one of the actors of industrial relations. However, it does attempt to posit details and draw inferences with the aim of being beneficial to public policy practitioners and researchers.

Overview of Maharashtra and Uttar Pradesh

Maharashtra and Uttar Pradesh are two of the bigger Indian states, occupying roughly 9.3% and 7.3% of the total Indian geographical area, respectively. Moreover, according to the census of 2011 and projections, they are the two top populous states, with Uttar Pradesh leading at 16.5% of the total Indian population and Maharashtra at 9.28%  (Directorate of Economics & Statistics, Planning Commission (Govt. of Maharashtra), 2023, pp. 3,6; Economics & Statistics Division, State Planning Institute (Government of Uttar Pradesh), 2024, p. 1).

In value terms, in 2021-22, Maharashtra’s GSDP was INR 31,08,022 cr and that of Uttar Pradesh was INR 19,75,595 Cr at 13.1 % and 8.3% of the national GDP (at current prices), and their respective per capita income was at INR 2,15,233 and at INR 68,810  (at constant prices with base year 2011-12) (Directorate of Economics & Statistics, Planning Commission (Govt. of Maharashtra), 2023, pp. 7-9; Economics & Statistics Division, State Planning Institute (Government of Uttar Pradesh), 2024, p. 16).

Table 1: Sectoral Share of GSDP from 2011-12 to 2021-22 (in current prices)[3]

Source: (Directorate of Economics & Statistics, Planning Commission (Govt. of Maharashtra), 2023; Economics & Statistics Division, State Planning Institute (Government of Uttar Pradesh), 2024)

Moreover, sectoral disaggregation by broad economic activities reveals interesting patterns. The manufacturing sector average share in GSDP of both the states is marked by a significant difference of ~7% in the favour of Maharashtra between 2011-12 and 2021-22. Surprisingly, however, the growth rate in terms net value added by the manufacturing sector (at constant prices with base year of 2011-12) for Maharashtra between 2018-19 to 2021-22 was -0.11 and for the same period for Uttar Pradesh was 0.14 (RBI, 2024).[4]

In terms of attracting foreign direct investment (FDI), there, again appears a rather stark difference with Maharashtra at the top of all the Indian states attracting over 30% of all FDI equity inflow into India and Uttar Pradesh at the 10th rank with a substantially low 0.71% of the total FDI inflow into the country (between Oct, 2019 to Dec, 2024) (DPIIT, 2024).

Manufacturing Sector Comparison of Maharashtra and Uttar Pradesh

Comparing the data available from the registered factory sector from Annual Survey of Industries (2022-23) which broadly focuses of the manufacturing sector for both the states, interesting trends emerge. Thus, as visible from table 2.1. and table 2.2. below, one can notice that its is almost 3 time more profitable to establish a factory in Maharashtra than in Uttar Pradesh. Moreover, the fact that the average GVA per person engaged, average GVA per establishment, and the average profit per establishment is at least double in Maharashtra in comparison to Uttar Pradesh, implies that industrial sector is much more advanced in the former than in the latter signifying the importance of the economies of scale thesis.

Although one may draw from these a certain defense of the thesis of ‘trickle-down’ economics that economic growth tends to trickle to all the segments of the industrial relations, including workers and management, it is also interesting to note that the share of contract workers to the total workers in the former is Maharashtra is much higher than the latter. What it seems to suggest is that as industrialization advances, though there may be a higher share that accrues to the workers in the shape of wages and salaries, there is also a higher precarity which increases marked by contractualization and lack of job security.

This can also be borne by the fact that the gross fixed capital formation (GFCF) in Maharashtra is higher than in Uttar Pradesh, suggesting a trend of increased mechanization of production process or what is known as rising capital intensity (Mishra, 2025). Moreover, this is also correlated with the export dynamics of Indian industries, whereby increased export orientation is closely linked to contractualization (Goldar, 2023). As is to be expected, Uttar Pradesh contributes ~5% to the total export of merchandise goods of India and Maharashtra contributes ~15% (GoI, 2025). In terms of labour productivity, Uttar Pradesh has the labour productivity of INR 0.13 lakh output value produced per man-day employed and Maharashtra fares, at this, at INR 0.29 lakh output value produced per man-day (National Statistics Office, MoSPI, 2024).

Table 2.1: Organized Factory Sector Aggregates (Value Figures in INR Lakhs)

Source: (National Statistics Office, MoSPI, 2024)

Table 2.2: Organized Factory Sector Aggregates (Value figures in INR lakhs, unless otherwise specified)

Source: (National Statistics Office, MoSPI, 2024)

To talk in terms of the labour market, in terms of the working age population of people between 15 to 59 years of age, the labour force participation rate (LFPR) according to UP+SS status in Maharashtra stands at 63.9% with males at 82.2% and females at 44.4%. The same in Uttar Pradesh is at a lower rate of 58.6 for all persons and at 82.2 for males and 35.8 for females (NSSO, MoSPI, 2024, pp. A-61). Relatedly, for the specific manufacturing sector, 12.66% of the working persons (by UP+SS status) in Maharashtra are engaged, whereas for Uttar Pradesh, this stands at 8.45% (NSSO, MoSPI, 2024, pp. A-174)

Sub-Sectoral Comparison of Select Industries in Maharashtra & Uttar Pradesh

Based on tables 3.1. to 3.3. below, the following inferences can be drawn:

Broadly speaking, Maharashtra seems to perform better than Uttar Pradesh on almost all metrics except % share of contractualization within the workforce, as suggested even in aggregate terms above (except the case of the food processing sub sector in UP).

Within the food processing industry in both the states, though the number of factories is almost similar in both (a difference of ~350 in the favor of Maharashtra) and labour productivity and average persons engaged in an establishment is also roughly similar, the stark difference in value terms in the favor of Maharashtra implies exogenous factors at play. It is also striking to note that the profitability in Uttar Pradesh in this sub-sector is negative.

In sync with a longee durée tendency of the Indian labor-intensive manufacturing sector, the case of textiles and apparel (in comparison with other sub-sectors in focus) demonstrates a weak performance with the gap in between the two states not as much as other sub-sectors. It is also important to note that the average population engaged in this sector in UP is bigger than Maharashtra, yet the value indicators perform worse than Maharashtra, suggesting a rising capital intensification.

One of the most striking comparative results can be seen in terms of the automotive industry between the two states when one looks at the average indicators in Table 3.3. and considers that the difference between the factories in UP and Maharashtra is that of over 1000 with Maharashtra having 1367 factories and UP merely 348. The study of the structure and history of the automotive industry in UP. could serve as an interesting case study.

In both the states examples, it can be argued that the ‘economies of scale’ model works well since (in comparison to other sub-sectors, irrespective of state) avg. persons per establishment, avg. GVA per person engaged and per establishment, avg. profit per establishment and per capita emoluments rise significantly. Moreover, this may also point towards the tendency that capital-intensity is much more strongly correlated with growth metrics than labour-intensity in production (Gupta & Sachdeva, 2025, p. 9). If this correlation stands true, it might be hypothesized that despite equal or more labour productivity, it is the question of scale which diminishes the performance of the food processing industry vis-à-vis the automotive industry.

 Table 3.1: Food Processing Industry Avg. Indicators (Value Figures in INR lakhs)

Calculations: Authors own according to (National Statistics Office, MoSPI, 2024)

Table 3.2: Textiles and Garment Industry Avg. Indicators (Value Figures in INR lakhs)

Calculations: Authors own according to (National Statistics Office, MoSPI, 2024)

 Table 3.3: Automotive Industry Avg. Indicators (Value Figures in INR lakhs)

Calculations: Authors own according to (National Statistics Office, MoSPI, 2024)

Conclusion

Notwithstanding the historical factors at play in comparing Maharashtra, the state which has epitomized the origin of industrial capitalism in India, and Uttar Pradesh, where industrialization has been historically noted as a missed opportunity, yields interesting trends. Foremost among these is the ascendancy of Uttar Pradesh in the years following the 1991 macroeconomic reforms in catching up, yet its significant distance from the top few industrialized states in India on a number of indicators.

On more disaggregated level in terms of specific industries, however, Uttar Pradesh seems to have even more interesting stories to tell—in the case of automotive industry a more pronounced economy of scale model seems apparent; in terms of the textiles and garments industry, a shared issue of its low performance vis-à-vis other sectors, on a national level, but also vis-à-vis Maharashtra, an implication of more internal (domestic) orientation; and finally, in terms of the food processing industries, a similar internal (domestic) orientation but an alarming negative profit tendency.

Generally speaking, the tendency of ‘trickle-down’ economics seems to hold true in value terms, but seems to default in terms of providing stable terms of employment seen as through higher contractualization in Maharashtra (with the exception, again, of Uttar Pradesh’s food processing industry). A lacuna of this paper, and something which can be explored later, is how the state industrial policies interacted with the manufacturing sector development and whether the policy structure can be accredited as a major determinant of boosting (or depressing) industrialization in states.