… by Kartik Narayan, CEO- Jobs Marketplace, Apna.co
For much of the past decade, India’s manufacturing revival has been discussed in terms of capital. New factories, larger plants, better logistics, and policy support through incentives have shaped the narrative. The numbers back this up. Manufacturing output expanded by over 4% in FY25, and purchasing managers’ indices stayed in expansion despite a volatile global backdrop.
That phase has largely run its course. As India pushes to raise manufacturing’s share of GDP to 25%, the constraint is no longer capacity. It is labour. More precisely, it is how manufacturing thinks about labour.
When Growth Stops Pulling Jobs Along
Indian factories today look very different from those of the early 2000s. Automation, digital controls, and process engineering have lifted output, but they have also reduced the number of workers required for each incremental unit of production. Over time, manufacturing’s employment elasticity has declined. Output has grown faster than jobs.
This is not an anomaly. It is a structural shift. But it has consequences. Job creation can no longer be assumed to follow factory expansion. If manufacturing is to remain central to employment, hiring has to be planned into production models, not left as an after-effect.
That planning begins with geography.
The Cost of the Metro-First Model
For years, manufacturing expanded around a narrow set of urban and industrial belts. Labour followed, often across states and long distances. That system is now showing strain.
India has more than 45 crore internal migrants today. Many move because they have no viable option closer to home. Rising urban rents, congestion, and unstable living conditions have made metro-centric hiring expensive and fragile. During periods of disruption, attrition spikes and labour availability becomes unpredictable.
Manufacturing models built on constant inflows of migrant labour are finding it harder to sustain operations without volatility.
At the same time, the workforce itself has shifted.
Labour Lives Elsewhere Now
A growing share of India’s working-age population lives outside large metros. Tier 2 and Tier 3 cities are no longer peripheral labour markets. They are becoming the main reservoirs of working-age talent.
Hiring data reflects this change. Recruitment in smaller cities has been growing at an estimated 20 to 25% year on year, well ahead of metros. Places like Indore, Coimbatore, Jaipur, Surat, and Bhubaneswar are no longer feeder towns. They are emerging as production locations, logistics hubs, and supplier bases.
This shift is not driven by sentiment. It is driven by economics.
Stability Over Concentration
Hiring closer to labour pools changes the operating equation. Land and operating costs are lower. Industrial land acquisitions are increasingly concentrated outside major cities. Transport and logistics connectivity has improved enough to make decentralised production viable.
The workforce response matters even more. Workers employed closer to home have lower living costs and stronger social anchors. Attrition falls. Training investments last longer. Output becomes more predictable. What manufacturers once treated as decentralisation is increasingly viewed as operational insurance.
As supply chains move toward hub-based networks rather than single-location concentration, employment dispersion is becoming structural.
Flexibility Has Become the Default
Manufacturing employment itself has changed. Contract labour now accounts for over 40% of the formal manufacturing workforce, almost double its earlier share. This reflects cyclical demand patterns and a labour framework that has gradually allowed firms more room to adjust.
What is different today is where flexibility is being used. Contractual hiring is no longer confined to low-skill shopfloor roles. It is common across electronics assembly, logistics-linked manufacturing, and supplier operations that support large plants. Firms use these models to scale up and down without locking in fixed overheads.
But flexibility only works if it is visible.
Formalisation Is No Longer Optional
Flexible employment without documentation creates instability. That lesson is now widely understood.
Digital hiring systems, payroll platforms, and compliance tools are increasingly formalising work relationships. Wages are recorded, tenure is traceable, and access to benefits is improving. Early experiments with portable social security are helping ensure that flexible work does not mean invisible work.
This matters most in smaller cities, where proximity to Industrial Training Institutes and vocational centres creates a steadier talent pipeline. Factories located closer to these ecosystems are finding it easier to retain and upskill workers.
Why Manufacturing Still Matters for Jobs
India adds close to one crore people to its workforce each year. Very few sectors can absorb semi-skilled labour at this scale while improving productivity. Manufacturing remains one of them.
Localised industrial growth also reduces distress migration. It offers a more gradual transition from agriculture to formal employment. Women stand to gain disproportionately. Female labour force participation has crossed 37%, but much of it remains informal. Manufacturing roles in electronics, textiles, and allied sectors, especially in smaller cities with manageable commutes, provide a more stable entry point.
The Frictions Are Real
None of this eliminates existing constraints. Skill gaps persist as factories digitise faster than training systems respond. Micro, small, and medium enterprises, which employ over 11 crore people and contribute nearly 30% of GDP, continue to face high compliance costs.
Industrial towns need better housing, healthcare, and education to attract supervisory and technical talent. Automation must be paired with reskilling if productivity gains are to widen participation rather than narrow it.
From Scale to Sustainability
The direction, however, is clear. The first phase of Make in India was about capacity and credibility. The next phase will be defined by participation and resilience. Manufacturers that continue to rely on legacy hiring models risk building scale without stability. Those that rethink workforce strategy by hiring closer to labour pools, formalising flexible work, and investing in distributed talent ecosystems will be better positioned to compete in the next growth cycle.
Hiring in Bharat is not a departure from India’s manufacturing ambition. It is its evolution.
