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EP 20 | Diplomacy and Dialogue: Peace Pathways in West Asia | Policy Beyond Borders
August 9, 2025
QUAD After Trump: India’s Role in Fostering Regional Security | FNF Policy Paper
September 17, 2025EP 63 | India’s Manufacturing Strategy of Multi-Plants | Policy Beyond Politics
India’s manufacturing sector, despite liberalization and decades of economic reforms, continues to underperform relative to its potential.
A recent study, “Multiplying Multi-Plants: A New and Consequential Phenomenon” by Arvind Subramanian, Abhishek Anand, and Dr Naveen Joseph Thomas sheds light on a critical yet overlooked factor influencing this stagnation—the rise of multi-plants. These are multiple small production facilities established by firms within a state, rather than expanding existing plants.
Contrary to previous assumptions, large plants in India have not scaled up; instead, they remain fragmented and small by international standards. This has profound implications for productivity, competitiveness, and policy.
Exploring the multi-plant phenomenon is crucial because it challenges conventional narratives about firm growth and labour market dynamics in India. The paper highlights that ‘multi-plants’, while offering firms flexibility and risk diversification, also lead to lower productivity and hinder economies of scale. This behaviour is partly driven by regulatory and political risks, suggesting that current policies may inadvertently discourage plant expansion.
The study also shows that official data has been misleading because it counts ‘multi-plants’ as one big factory, giving a false picture of growth.
This episode of Policy Beyond Politics, the first in our new series on markets, will help uncover why firms prefer this approach, how it affects jobs and exports, and what changes in policy might help India build stronger and larger manufacturing units in the future.
Tune in for an insightful conversation on India’s strategy of multi-plants in the manufacturing sector.
KEY DISCUSSION POINTS
- What exactly are “multi-plants,” and why have they become so prevalent in India’s manufacturing sector?
- How has the aggregation of multi-plant data led to the misinterpretation of plant size distribution in India, and what are its implications for policy and economic research?
- Why are multi-plant firms less productive compared to single-plant firms of similar size, and to what extent has this affected India’s global manufacturing competitiveness, especially compared to countries like Bangladesh?
- How do labour regulations and political risks influence the proliferation of multi-plants? Is the use of multi-plants a substitute for contract labour, or do they complement each other in different contexts?
- What policy reforms could encourage firms to scale up plants rather than proliferate smaller ones?
- How can India create an industrial environment that balances labour protections with growth incentives?
Speakers:
Dr Naveen Joseph Thomas, Vice Dean, Jindal School of Government and Public Policy (JSGP), O. P. Jindal Global University, Haryana
Abhishek Anand, Managing Director, Insignia Policy Research, Kerala
Moderator:
Banisha Begum Shaikh, Senior Associate (Research & Projects), Centre for Public Policy Research (CPPR), Kerala
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