Why are people in India moving from manufacturing to services sector?

Mumbai-based businessman Dinesh Tripathi, who was a major glass manufacturer for eight years, moved into the education business in 2017. He decided to stop manufacturing and start a service business because the profits from manufacturing were insufficient. Manufacturing was not a profitable business, especially due to the monopoly of big players and an unfavourable goods and services tax (GST) regime, says Dinesh Tripathi.

Experts say this practice may come into vogue as running a manufacturing business is fraught with a lot of challenges. The trend of shutting down manufacturing and starting a service business signals a disaster.

Anil Bhardwaj, secretary general of the Federation of Indian Micro Small and Medium Enterprises (FISME), says the difference between manufacturing and services is that the products of manufacturing have to face global competition, while the situation is exactly the opposite in services.

Manufacturing requires an extensive supply chain and large-scale investment, making it difficult for small companies. Bhardwaj argues that reforms are needed in all areas, including land reform, finance and access to technology. Also, there is a need to advance the ease of doing business.

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