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Manufacturing: The dark underbelly of Delhi’s economy

Feb 04, 2025 05:08 AM IST

70 years ago, industrial areas were envisioned to usher Delhi into an age of egalitarian growth. But today, this remains a distant dream

On April 13, 1958, Prime Minister Jawaharlal Nehru inaugurated the Okhla Industrial Area in what was then a Delhi suburb. It was dubbed India’s biggest industrial estate . Nehru described industrialisation as “a revolution to achieve a welfare State as distinguished from the revolution we waged to obtain freedom”. He also underlined that India would continue to be a land of paradoxes as a country which was determined to take full advantage of automation and atomic energy for peaceful reconstruction and industrialisation while allowing the “takli” (spindle) the “charkha” (spinning wheel), and the bullock cart to exist side by side.

Mayapuri industrial area in New Delhi. (Sanchit Khanna/HT Photo) PREMIUM
Mayapuri industrial area in New Delhi. (Sanchit Khanna/HT Photo)

He also called for “complete reorientation of employer-employee relations” which made sure that the former did not have to face strikes and the latter had access to all basic facilities including housing. Lal Bahadur Shastri, the Union minister for industries and commerce, said India had taken the cue from Britain and Japan who were pioneers in working industrial estates. The government, he said, would be glad to extend all the necessary facilities.

Almost seven decades later, the manufacturing landscape in Okhla and almost all of Delhi is a story which is diametrically opposite to the vision of progress and shared prosperity which Nehru spoke of that day. Days before Delhi elects a new government, there is very little hope among stakeholders in manufacturing that things will change for better.

The national capital is also the capital of low-value manufacturing in India.

The failure to give a boost to manufacturing is seen as one of the biggest reasons for low mass income levels in India. Ironical as it sounds, official statistics show that manufacturing is a part of the (low-income) problem rather than the solution in Delhi.

Manufacturing’s employment share in Delhi, according to the 2022-23 Periodic Labour Force Survey (PLFS) was 23.5% (around 1.7 million). This is more than double the national average of 11.4% and higher than all states except Gujarat.

The share of manufacturing in Delhi’s Gross State Value Added (GSVA), however, was just 6%.

If one were to compare the ratio of income and employment share of manufacturing among major states, Delhi is ranked lowest by a fair distance.

There is only one inference to be drawn: almost all of the manufacturing in Delhi is extremely low value in nature and factories are essentially menial sweat shops rather than modern entities creating value and promoting innovation.

Chart 1: Ratio of income and employment share of manufacturing across major states

The low value creation problem of Delhi’s manufacturing is more a result of its lack of formal large factories than informal manufacturing. Once again, the data is unambiguous. According the Annual Survey of Industries (ASI) – it is a database of registered manufacturing in India – Delhi had the lowest capital investment and value added per factory among major states in India. Among informal sector manufacturing establishments, however, Delhi is ranked highest in terms Gross Value Added per establishment and per worker among major states. This informal manufacturing, however, is economically precarious and deeply exploitative. HT visited two major industrial clusters in Delhi to see what these numbers mean in real life. It is a story of decay, distress and, and — there is no other way to put it — de-industrialisation.

Chart 2A and 2B: Delhi’s rank in terms of fixed capital and value added per factory in ASI and ASUSE

Okhla Industrial Area captures what is wrong with Delhi’s manufacturingStanding at the Mahadev Chowk on the Okhla Estate Marg, one can see goods-laden trucks swinging dangerously in either direction. A three-wheeler breaks down midway and workers walk down a waterlogged street even though Delhi has not seen much rain in the past month. Drains nearby are choked with plastic bags, discarded bottles and industrial waste.

A few metres away, a group of factory workers are on their lunch break.

Vikku Khan, 43, originally a resident of Khagaria in Bihar, started working in Okhla 10 years ago. A daily wage labourer, Khan is a helper in garment factories.

“There are many garment export units where helpers are needed. We work 12 hours a day as porters and get paid 9,000- 10,000 a month,” Khan said, adding that provisions such a minimum wage or housing remain a distant dream.

One step higher in the shop-floor hierarchy, a “karigar” (literally, craftsman) gets paid by piece rate, such as the number of zips or buttons added to jackets. Field workers, who ferry goods around, get 12,000- 13,000 with additional payment based on the distance covered.

Khan lives in Manav Kalyan Camp – a slum cluster with 1,365 voters along the Jasola periphery of the industrial area. The roads in the camp, like Khan’s workplace, are overflowing with sewage.

Basant Kumari, 32, another factory worker, said that the area does not have any public toilets. “We have to visit Sanjay camp (another slum cluster a kilometre away), just to access toilets,” she lamented. “No one cares about us.”

While factory workers complain of exploitation and poor conditions, even the so-called capitalists are not exactly thriving. According to the local industry association, Okhla Industrial Area houses more than 3,000 industrial plots where around 200,000 workers are employed. The area is home to many industries -- garments, printing , plastics and electronics -- but lacks even basic civic amenities or regulation. Trucks carrying goods, water tankers feeding water to slums , cars of factory owners and even bicycles joust for space on encroached roads. Arterial roads double up as parking spaces for trucks and a substantial part of key intersections has been taken over by informal units dealing with waste and scrap.

Sunil Malhotra, who heads the Okhla Industrial Area Association, said that red tape, a multiplicity of overseeing agencies, poor infrastructure and loss of competitiveness were leading to an exodus of industries from Okhla to Noida and Greater Noida, across the Yamuna and outside Delhi’s political boundaries, to neighbouring Uttar Pradesh.

“Roads are completely encroached. There is a parking mafia. Trucks are parked for days outside our units and we cannot even access to our own units. Then during the monsoon, roads get inundated. We waste so much time requesting agencies to address basic woes. How can one operate in such an environment?” Malhotra complained, and added that the membership of the association has fallen from 3,000-plus to around 1,600 in the last decade.

To be sure, while there are over 3,000 plots, not all of are factories – they’re being replaced by showrooms and offices.

“Factories are shutting and instead showrooms and other non-industrial offices have come up, so the membership has gone down. People are moving out to other places, and when that happens, they no longer remain members,” said Malhotra.

Official statistics support Malhotra’s narrative. ASI data from Centre for Monitoring Indian Economy (CMIE) shows that the number of factories in operation in Delhi has fallen from 3,382 in 1998-99 to just 2,181 in 2022-23, the earliest and latest years for which this data is available. The 2023-24 Economic Survey of Delhi acknowledges the decline as well. The number of registered factories in Delhi has gone down from 9,059 to 8,690 between 2017 and 2022.

Delhi has 29 such planned industrial areas — like Okhla — which are managed by the Delhi State Industrial and Infrastructure Development Corporation Ltd.(DSIIDC), Municipal Corporation of Delhi (MCD) and Public Works Department (PWD). Four flatted (a multi-storey industrial building in which a single building accommodates several units, just like flats in a residential building) factory complexes and 25 notified non-conforming areas, which have mushroomed, are being considered for redevelopment. The notified industrial areas and flatted factory complexes have been developed as planned industrial estates with basic infrastructure being set up by the government.

What are non-conforming areas? According to Delhi’s Master Plan, the demarcation of land for residential, commercial and industrial use is the responsibility of the Delhi Development Authority (DDA). When the unplanned expansion of industrial activities took place in Delhi, the master plans were not quickly updated and industrial clusters were not created timely. This led to illegal or non-conforming industrial areas where residential land was used for industrial purposes.

More than 70% of the land in such areas is being used for industrial activities and they lack even the basic facilities. At least 25 such areas are notified, while units continue to operate from residential areas in the rest.

Promises to redevelop these areas have been made several times over the last decade but the work has never started, Raghuvansh Arora, who heads the Apex Chamber of Commerce and Industries (ACCI) an umbrella body of industrial area associations in Delhi, said.

Economic decline and an entrenched infrastructure crisis are just some of the problems facing these areas.

Poorly paid, often injured, intermittently killed: The working class in Delhi’s factoriesIn 2018, 17 people died and 30 were injured after a factory they were caught inside a factory that went up in flames in the Bawana industrial area. The factory was also used as a firecracker storage unit. In December 2019, a factory fire in Anaj Mandi in north Delhi killed 43 people. The factory was being run illegally. On 13 May 2022, a fire began on the first floor of four-storey building used for manufacturing CCTV cameras and routers in Mundka which killed 27 people. Last year in February, 11 people died in a fire that broke out in at an illegal paint factory in north Delhi’s Alipur, and also engulfed two godowns and a de-addiction centre. The condition of bodies was so bad that DNA tests had to be carried out on three charred bodies to establish their identities.

These are only the most macabre episodes of accidents in Delhi’s factories.

Data shared by the fire department shows that there are an average of 400-500 fires in factories annually.

And accidents are not the only hazards to workers in Delhi’s factories.

In June last year, three men died and nine others were injured after a massive fire broke out due to a gas leak at a moong dal processing and packaging factory in outer Delhi’s Narela. One of the deceased, Shyam Singh (24), was a resident of Bihar’s Amarpur, who had recently shifted to Delhi for work. He was being paid 7,000 a month to roast the snack and pack it.

“ It was his first job and he was excited, but the working conditions there were bad. There were no windows. Men had to stay close to the gas burners for hours. My son would sleep inside the factory due to long working hours. Doctors told us he died in his sleep... Nobody helped us. We didn’t get any compensation. I wish factories would install more fire exits, better ventilation and firefighting equipment. Owners abuse workers and get away with everything…” said Sunita Singh, Shyam’s mother.

In August 2022, Veer Balugher, a 30-year-old man, died in a factory fire caused by a short circuit in Patparganj Industrial Area. Three years later, the family still awaits justice. The owner has not been arrested yet. “He was the sole breadwinner and had taken up a loan to build a house. We couldn’t pay the EMIs after he died, and the property was seized by the bank. The factory owner, the police, the government…Nobody helped us. We did not get any compensation. All political parties make big promises but they never do anything for us. We want stricter legal action against factory owners who violate laws,” said his brother Sunder.

In 2018, 10 women and seven men were charred to death in a fire that broke out in a firecracker unit in outer Delhi’s Bawana industrial area. In 2019, 43 people, including nine minors, were killed in a fire at a toy factory in Anaj Mandi in central Delhi, in one of the capital’s deadliest industrial tragedies since 57 people were killed in a chemical market complex in 1999. Another 26 people died in a CCTV assembly unit in Mundka in 2022, and 11 were killed in a paint and chemical godown and factory in Alipur last year.

To be sure, workers are not the only ones suffering because of Delhi’s rule-breaking factories

With lax regulatory oversight, absence of fire safety certification, safety measures, worker training and subcontracting to smaller units with absence of labour safety codes and mushrooming of illegal units in non-conforming areas, Delhi’s factories are a safety hazard and nuisance to a population far beyond their premises.

The Mayapuri industrial area in West Delhi is a testament to this.

A hub of light metal factories, scrap and recycling units and automobile parts near what is still called Loha Mandi (literally, iron market), Mayapuri was once known as the graveyard of old vehicles from cars to aircraft. All metallic junk – from old cranes, army trucks, train and aircraft scrap, to ball bearings– is processed in the area and a discarded vehicle is reduced to “useful” components in a few hours. The scrap and automobile business came to Mayapuri in 1975 (during the Emergency) when small businesses dealing with automobile parts were relocated here from Motia Khan, Paharganj, Turkman Gate, Anand Parbat and Shahdara.

Mayapuri, in the past, has faced criticism for illegal scrapping, burning of industrial waste and other safety violations. The worst incident was a radiation leak in the area in April 2010 when discarded laboratory equipment from the Delhi University was being scrapped without any safety protocol. Eight people were hospitalised after exposure to radioactive waste, and one later died due to multi-organ failure. The event was rated level 4 out of 7 (accident with local consequences) on the International Nuclear Events Scale –– the International Atomic Energy Agency’s (IAEA) nuclear accident magnitude scale.

A National Green Tribunal (NGT) mandated 2019 sealing drive in the market led to several regulations on unsafe practices and other kinds of violations. During a spot check on Wednesday, HT found lackadaisical implementation of these directives has left both workers and residents unhappy.

Large-scale encroachments on public roads where engines, chassis, axels and various automobile parts are stored have reduced four-lane roads to single lanes. Untreated oil from scavenged engines and auto parts have coloured the newly laid roads black even as labourers with no protective equipment dismantled old auto parts. Parks in the area were filled with waste.Pavements and roads doubled as storage and working spaces.

Raj Singh Deswal from the Maya Vihar RWA said that the industrial activities are spilling over to residential colonies next to the area. “Our colony in Maya Vihar and Khazan Basti is suffering adversely due to the illegal industrial activities, massive encroachment and air pollution.”

Workers, meanwhile, are unhappy about loss of business, earnings and fear complete closure of activities. Bijay Kumar, 57, said that he has been working in the market from last three decades after it was shifted from Motia Khan forcibly. “The cutting of vehicles has stopped after NGT’s intervention which means employment has also gone down,” he rued. Md Azizul, a 43-year-old who hails from Murshidabad in West Bengal agreed. “I work for nine hours a day only to be paid 15,000. The limit on diesel vehicles in Delhi has further hit the industry hard,” he added. The industry association echoes these concerns.

The Delhi Industrial Development, Operation and Maintenance Act, 2010 was passed to support DSIIDC.

Raghuvansh Arora, who heads the Apex Chamber of Commerce and Industries (ACCI), an umbrella body of industrial associations, said that the DSIDOMA regime was expected to develop industrial areas which were earlier managed by MCD. “MCD abandoned us and the DSIIDC has not been able to deliver. It has been 15 years of disaster for industries in Delhi. While all agencies claim to regulate us with licenses, inspections and new charges, no one has bothered to address our issues,” he added.

Then there’s the issue of power charges. Arora said that industries in Delhi pay up to 17 per unit for power compared to 10-12 per unit in other states.

“Forget power subsidies, we pay the highest charges. Minimum wages here are highest, restrictions on vehicle movement, infrastructure are in shambles. We pay the highest category charges to the Delhi Jal Board, MCD, DSIIDC, and GST but there is nothing that we get in return,” he added.

“We pay charges for running Common Effluent Treatment Plants (CETPs) but the waste water is still being dumped in river untreated. What can one do in this environment but to shift somewhere else?” he asked.

Delhi has sent a lot of its industry outside city limits to control pollution. But while it is only logical that some of the industrial activity has shifted outside as real estate becomes expensive in the city, the fact that almost a fifth of the city’s workforce is still engaged in what is extremely low value, dirty and dangerous manufacturing speaks volumes about the apathy with which the sector has been treated by the city’s policy makers. This is a very different paradox compared to what Nehru spoke about while inaugurating the Okhla Industrial Area seven decades ago -- the charkha and modern manufacturing don’t exactly coexist in a landscape inhabited not just by some of the country’s richest and most powerful people but also by millions of sweat shop workers.

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