When Digital India Helped Services and Hurt Factories
India’s Digital Push Has a Hidden Bias
India wants factories, jobs, and exports. At the same time, it wants cashless payments, apps, and digital rails everywhere. On paper, both sound compatible. In reality, they often pull talent in opposite directions.
After demonetization, digital payments exploded. Firms that could switch fast survived. But the winners weren’t factories — they were service firms.
Why? Because digitalisation doesn’t just need internet cables. It needs people. And India has very few ICT-skilled workers relative to demand.
Service companies — IT services, platforms, finance, logistics — rushed in, paid higher wages, and hired aggressively. Manufacturing firms couldn’t keep up. Their digital wages didn’t rise. Talent quietly moved away from factories. Productivity followed.
So digital readiness helped districts grow — but mainly through services. Manufacturing firms in the same places actually became less productive, hiring cheaper labour instead of scarce digital talent.
This is the contradiction:
A fast digital push, in a country with skill shortages and low labour mobility, can reinforce a services-led economy, even when the goal is industrialisation.
Digital India didn’t fail. It succeeded — just unevenly.
Rapid digitalisation boosts services first; without enough skilled workers, manufacturing loses talent, productivity, and momentum.
Infosys