IDEAS home Printed from
   My bibliography  Save this paper

Industrial Location in India under Liberalization


  • Saikia, Dilip


The economic liberalization policy initiated in the country since 1991 has made large-scale delicensing of industry and changes in the industrial location policies along with the stabilization-cum-structural adjustments of the economy. This curtailed the role of the state as industrial owner and location regulator and increases the role of private sector in industrialization. With the increasing dominance of private sector in industrialization under the liberalization policy it is expected that industries will be more spatially concentrated in the leading industrial regions. However, the neoclassical principle suggests that in the long run “divergence is followed by convergence”. This is in contrast with the theory that raises the question about the regional industrial development in India under the two policy regimes (an inward looking restrictive policy regime prior to 1980s and liberalization policy since 1991). The main objective of our study is to see whether there is convergence or divergence of industrial location and also the relative concentration of industries within the states in the post liberalization period, and thus, understands the influence of economic liberalization on industrial location in India. These two objectives are examined with the employment data of organized manufacturing sector for the pre- and post-reform periods using: first coefficient of variation of manufacturing employment, aggregated for all industries and second, location quotients and specialization coefficients, disaggregated into three use-based manufacturing sectors (consumer goods, intermediate goods and capital goods). Our study finds that there is more concentration of the manufacturing industries in the post liberalization period in India and the tendency to catch up the industrially developed states is hardly seen among the backward states, which suggest widening inter-regional divergence, as against the neo-classical principle “divergence followed by convergence”.

Suggested Citation

  • Saikia, Dilip, 2009. "Industrial Location in India under Liberalization," MPRA Paper 27821, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27821

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    1. Uwe Deichmann & Somik V. Lall & Stephen J. Redding & Anthony J. Venables, 2008. "Industrial Location in Developing Countries," World Bank Research Observer, World Bank Group, vol. 23(2), pages 219-246, May.
    2. Sanjoy Chakravorty, 2003. "Capital source and the location of industrial investment: a tale of divergence from post-reform India," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(3), pages 365-383.
    3. Sanjoy Chakravorty, 2003. "Industrial location in post-reform India: patterns of inter-regional divergence and intra-regional convergence," Journal of Development Studies, Taylor & Francis Journals, vol. 40(2), pages 120-152.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Industrial Location; Economic Liberalization; India;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:27821. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.