Technology intensity and Indian manufacturing industries

Abstract

The significance of technology-intensive industries for the growth and competitiveness of the manufacturing sector has been well documented. Many studies have attempted to define and classify the industries based on their technology intensity. However, very few attempts have been made in this respect from the vantage point of developing counties. In an attempt to fill this gap in the empirical literature, this article examines the technology intensity of organized manufacturing industries in India. A composite index of technology intensity of industries is calculated using the method of principal component analysis. The results of our analysis reveal poor performance of industries in terms of their technology intensity. It was found that only four industries in the Indian organized manufacturing sector spend more than 1 per cent of their sales on R&D. The highest score of ‘composite technology intensity index’ (2.63) is for the industry manufacturing electronic components. This score is, however, found to be far below the level prescribed by OECD for an industry to be categorized as ‘high-tech’. The results of our empirical analysis, therefore, suggest the need for increasing technology intensity for the Indian organized manufacturing industries to achieve competitiveness in the global market.