Comment on “Geographic Concentration in Indian Manufacturing and Service Industries: Evidence from 1998 to 2013”

• Published date: 01 January 2019
• Author: Shuji Uchikawa
• Date: 01 January 2019
• DOI: http://doi.org/10.1111/aepr.12252

Comment on “Geographic Concentration in

Indian Manufacturing and Service Industries:

Evidence from 1998 to 2013”

Shuji UCHIKAWA†

Senshu University

JEL codes: O14, O18, R11, R12

Accepted: 7 July 2018

Amirapu et al. (2018) measure industrial concentration with a spatially adjusted index of

industrial concentration based on the Ellison and Glaeser (EG) index. The adjustment

introduces a neighborhood effect into the EG index. Data from the Economic Census are

used to estimate the index. Both the weighted and unweighted EG indices decreased

clearly between 1998 and 2013. Amirapu et al. argue three points from the results of their

estimated EG indices. First, the levels of agglomeration in India seem to be highest in

capital intensive industries. Second, the levels of coagglomeration between pairs of indus-

tries are highest between certain high-technology and skill-intensive industries. Third,

the average levels of industrial concentration have been falling dramatically over time,

and this trend is driven by decreases in concentration among capital intensive

manufacturing industries. Amirapu et al. ascribe the reasons for the decreases in concen-

tration as being policy incentives for the dispersal of industries and the balance of fric-

tions in the factor markets for land and labor and the reduction of transportation costs.

I have four comments on Amirapu et al.’s paper. First, the dispersion process of

capital-intensive industries did not restrain their rapid growth. The Indian

manufacturing sector developed rapidly due to an investment boom in the second half

of 2000s. Between 1998–1999 and 2012–2013, the gross value added (GVA) of electri-

cal machinery, transport equipment, and all industries in the organized sector

increased by 13.9%, 10.5%, and 8.8% per annum, respectively. During the period, the

growth rates of GVA accelerated in these three sectors. Automobile and electronic

industries have been developed in three metropolitan regions: Delhi, Mumbai–Pune,

and Chennai. Large foreign and domestic companies looked for cheap and larger space

in suburban areas to set up industrial estates not only for their own factories, but also

for their suppliers. They want to control the prompt delivery from their suppliers. The

Delhi National Capital (DNC) region, which consists of Delhi, Gurgaon District, Fari-

dabad District, Gautam Budh Nagar District, is a good example. In the first stage,

large-size plants and industrial estates were set up in Gurgaon, Faridabad, and Noida.

†Correspondence: Shuji Uchikawa, Senshu University, 2-1-1, Higashimita, Tama-ku, Kawasaki-

shi, Kanagawa 214-8580, Japan. Email: suchikawa@isc.senshu-u.ac.jp

© 2018 Japan Center for Economic Research 169

doi: 10.1111/aepr.12252 Asian Economic Policy Review (2019) 14, 169–170