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.

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?