Core Industries and the Make in India Programme
The core industries are the eight infrastructure sectors whose performance drives the rest of the economy, and the Make in India programme is the government's flagship effort to turn the country into a global manufacturing hub. Together they make a compact topic that combines the Index of Eight Core Industries, the Index of Industrial Production, the classification of industries and the main manufacturing policy initiatives. Examinations usually ask which industries are counted as core, which has the highest weight, who releases the index, and what Make in India set out to achieve. These notes bring all of this together in one place.
What are the core industries?
The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. They are called core because their output feeds into almost every other sector: coal and electricity power factories, steel and cement build infrastructure, fertiliser supports agriculture, and refinery products supply fuel and raw material for plastics and chemicals. The Index of Eight Core Industries measures the monthly production of these eight sectors and is released by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade. Together these eight industries carry a weight of about forty per cent in the Index of Industrial Production, so their performance is a leading indicator of industrial activity.
Weights of the eight core industries
Among the eight, refinery products carry the highest weight of about twenty-eight per cent, followed by electricity at about twenty per cent and steel at about eighteen per cent. Coal has a weight of about ten per cent, crude oil about nine per cent, natural gas about seven per cent, cement about five per cent and fertiliser about two and a half per cent. The index uses 2011-12 as the base year and is published with a one-month lag. Candidates should remember the order of the weights, because questions frequently ask which core industry has the largest or the smallest weight, and the answer is not always the industry that appears most important in daily life.
The Index of Industrial Production
The Index of Industrial Production measures the growth of industrial output and is compiled by the National Statistical Office with 2011-12 as its base year. It has three sectors: mining, manufacturing and electricity. Manufacturing has by far the largest weight of about seventy-eight per cent, electricity about eight per cent and mining about fourteen per cent. Within manufacturing the index covers a wide range of industries grouped by use-based classification, namely basic goods, capital goods, intermediate goods and consumer goods, both durable and non-durable. The Index of Eight Core Industries is used along with the Index of Industrial Production because the core sectors explain a large part of the movement in industrial output.
Make in India: objectives and features
Make in India was launched on 25 September 2014 with the aim of making India a global hub for manufacturing, design and innovation. Its objectives were to raise the contribution of manufacturing to gross domestic product, to create jobs on a large scale, to attract foreign direct investment and to build world-class infrastructure. The programme identified twenty-five sectors, later expanded, for focused attention, ranging from automobiles, aviation and defence to textiles, food processing and renewable energy. The strategy rested on improving the ease of doing business, simplifying rules, protecting intellectual property, developing industrial corridors and skilling the workforce. Over time the Production Linked Incentive schemes and the Atmanirbhar Bharat campaign became major instruments of the same manufacturing push.
Manufacturing policy and industrial classification
The National Manufacturing Policy of 2011 had already set a target of raising the share of manufacturing in gross domestic product to twenty-five per cent and creating a large number of jobs, and it introduced National Investment and Manufacturing Zones to provide world-class infrastructure. The Production Linked Incentive scheme gives companies an incentive linked to incremental sales, and it covers a number of sectors including electronics, pharmaceuticals, automobiles and textiles. Industries are also classified for study and policy: by size into micro, small, medium and large; by ownership into public, private, cooperative and joint; by raw material into agro-based, mineral-based and forest-based; and by output into basic or heavy industries, capital goods industries, intermediate goods industries and consumer goods industries. This classification is a common objective question.
Key facts at a glance
- Eight core industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity.
- Combined weight of core industries in IIP: about 40 per cent.
- Highest weight among core industries: refinery products (about 28 per cent).
- Lowest weight among core industries: fertiliser (about 2.6 per cent).
- Index of Eight Core Industries released by the Office of the Economic Adviser, DPIIT.
- Core industries index base year: 2011-12.
- IIP compiled by the National Statistical Office; base year 2011-12.
- IIP sectors: mining, manufacturing and electricity.
- Largest IIP sector by weight: manufacturing (about 78 per cent).
- Make in India launched on 25 September 2014.
- Make in India initially covered 25 sectors.
- National Manufacturing Policy 2011 target: manufacturing share of 25 per cent of GDP.
- Production Linked Incentive: incentive linked to incremental sales.
- Atmanirbhar Bharat and Vocal for Local support the manufacturing push.
Quick revision points
- Refinery products lead the core index by weight, not coal or electricity.
- Core industries are an infrastructure measure, not a sector of the IIP by name.
- Manufacturing dominates the IIP with a weight of nearly eighty per cent.
- Make in India is about manufacturing, investment, jobs and infrastructure.
- PLI rewards companies for additional production, not for capacity alone.
- Industries can be classified by size, ownership, raw material and output.
- Capital goods make machines; consumer goods are bought by households.
How to prepare this topic
- Memorise the eight core industries and the order of their weights.
- Learn the releasing agency and base year of both the core index and the IIP.
- Note the three sectors of the IIP and their approximate weights.
- Remember the launch date of Make in India and the number of initial sectors.
- Connect PLI and Atmanirbhar Bharat with the manufacturing objective.
- Revise the four bases of industrial classification with one example each.
Common exam traps
- Assuming coal has the highest weight; refinery products do.
- Counting electricity as part of the IIP's manufacturing sector; it is a separate sector.
- Attributing the core industries index to the RBI or NSO; it is released by the Office of the Economic Adviser.
- Saying Make in India was launched in 2015; it was launched on 25 September 2014.
- Confusing capital goods with consumer goods.
- Forgetting that the base year of both the core index and the IIP is 2011-12.
Frequently Asked Questions
What are the eight core industries of India?
The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. They are called core industries because their output is used by almost every other sector of the economy and because they together carry a weight of about forty per cent in the Index of Industrial Production. The Index of Eight Core Industries measures their monthly production.
Which core industry has the highest and the lowest weight?
Among the eight core industries, refinery products carry the highest weight of about twenty-eight per cent, followed by electricity and steel. Fertiliser carries the lowest weight of about two and a half per cent. Because the weights do not always match everyday impressions, candidates should memorise the order rather than guess it in the examination hall.
Who releases the Index of Eight Core Industries?
The Index of Eight Core Industries is released by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry. It uses 2011-12 as the base year and is published every month with a lag of about one month. It is different from the Index of Industrial Production, which is compiled by the National Statistical Office.
What is the objective of the Make in India programme?
Make in India, launched on 25 September 2014, aims to make India a global hub for manufacturing, design and innovation. Its main objectives are to increase the share of manufacturing in gross domestic product, to create large-scale employment, to attract foreign direct investment and to develop world-class infrastructure. It initially identified twenty-five sectors for focused development, and later Production Linked Incentive schemes strengthened the same push.
What is the Production Linked Incentive scheme?
The Production Linked Incentive scheme provides a financial incentive to companies that is linked to the additional sales they achieve from production in India. It encourages firms to expand manufacturing, improve competitiveness and build domestic supply chains, and it covers sectors such as electronics, pharmaceuticals, automobiles and textiles. The scheme is an important instrument of the government's effort to raise the manufacturing share of the economy.