Govt. Targets Economic Growth in Tier 2 & 3 Cities
ECONOMY & POLICY

Govt. Targets Economic Growth in Tier 2 & 3 Cities

The Commerce Ministry has directed all states and Union Territories (UTs) to develop a "City Level Economic Vision for 100 Tier 2 and 3 Cities" by June 2026. This initiative aims to foster manufacturing hubs in 1,039 out of 7,935 towns across India, extending beyond traditional Tier 1 industrial cities.

The plan, outlined by the Department of Promotion of Industry and Internal Trade (DPIIT), was discussed during the Fourth National Conference of Chief Secretaries in December 2024. The goal is to substantially increase the manufacturing sector's contribution to India’s Gross Value Added (GVA) from its current share of 17%.

Strategic Shift to Tier 2 and 3 Cities

Manufacturing in Tier 2 and 3 cities is seen as crucial to India's economic development. The government aims to tackle infrastructure issues, improve land availability, enhance logistics, develop workforce skills, and reduce the compliance burden on businesses to establish a thriving manufacturing ecosystem.

The initiative will focus on capital-efficient and labor-intensive industries in states with low Gross State Domestic Product (GSDP), while states with higher GSDP and established manufacturing bases will prioritize R&D and high-tech industries. This regional approach ensures that states can leverage their unique strengths and address specific challenges.

Key Timelines and Enablers for Growth

The government has earmarked specific timelines and key enablers to support these reforms. By June 2026, states are expected to implement State Logistics Action Plans based on the LEADS (Logistics Ease Across Different States) assessment. Additionally, states are urged to streamline business processes by decriminalizing certain state laws and improving single-window systems by December 2025.

In terms of industrial infrastructure, the Ministry has set a target to develop 100 "plug and play" industrial parks with flexible land lease policies by December 2025. States are also expected to integrate the PM Gati Shakti National Master Plan for large-scale industrial projects and upgrade the infrastructure of 1,000 Industrial Training Institutes (ITIs) to support skills development.

Boosting Employment through Manufacturing

By shifting manufacturing focus to Tier 2 and 3 cities, the government aims to increase the share of manufacturing in employment from the current 12% to 22% by 2047. The strategy is seen as a crucial step to create a more balanced economic ecosystem that drives employment growth and boosts industrial output across the country.

The Commerce Ministry has directed all states and Union Territories (UTs) to develop a City Level Economic Vision for 100 Tier 2 and 3 Cities by June 2026. This initiative aims to foster manufacturing hubs in 1,039 out of 7,935 towns across India, extending beyond traditional Tier 1 industrial cities. The plan, outlined by the Department of Promotion of Industry and Internal Trade (DPIIT), was discussed during the Fourth National Conference of Chief Secretaries in December 2024. The goal is to substantially increase the manufacturing sector's contribution to India’s Gross Value Added (GVA) from its current share of 17%. Strategic Shift to Tier 2 and 3 Cities Manufacturing in Tier 2 and 3 cities is seen as crucial to India's economic development. The government aims to tackle infrastructure issues, improve land availability, enhance logistics, develop workforce skills, and reduce the compliance burden on businesses to establish a thriving manufacturing ecosystem. The initiative will focus on capital-efficient and labor-intensive industries in states with low Gross State Domestic Product (GSDP), while states with higher GSDP and established manufacturing bases will prioritize R&D and high-tech industries. This regional approach ensures that states can leverage their unique strengths and address specific challenges. Key Timelines and Enablers for Growth The government has earmarked specific timelines and key enablers to support these reforms. By June 2026, states are expected to implement State Logistics Action Plans based on the LEADS (Logistics Ease Across Different States) assessment. Additionally, states are urged to streamline business processes by decriminalizing certain state laws and improving single-window systems by December 2025. In terms of industrial infrastructure, the Ministry has set a target to develop 100 plug and play industrial parks with flexible land lease policies by December 2025. States are also expected to integrate the PM Gati Shakti National Master Plan for large-scale industrial projects and upgrade the infrastructure of 1,000 Industrial Training Institutes (ITIs) to support skills development. Boosting Employment through Manufacturing By shifting manufacturing focus to Tier 2 and 3 cities, the government aims to increase the share of manufacturing in employment from the current 12% to 22% by 2047. The strategy is seen as a crucial step to create a more balanced economic ecosystem that drives employment growth and boosts industrial output across the country.

Next Story
Infrastructure Urban

Vedanta Extends Demerger Deadline to March 2026 Amid Pending Approvals

Vedanta, led by Anil Agarwal, has extended the deadline for its corporate demerger to March 31, 2026, as approvals from the National Company Law Tribunal (NCLT) and relevant government authorities are still pending, the company said in a regulatory filing. The deadline had earlier been extended from March 31, 2025, to September 30, 2025.The board stated, “Given that the conditions precedent in the Scheme, including NCLT approval and approvals from certain government authorities, are still in process, the timeline for fulfilment of these conditions has been extended to March 31, 2026.” The ..

Next Story
Infrastructure Urban

MOIL Achieves Record September Production and Strong Q2 Performance

MOIL posted its best-ever September production of 1.52 lakh tonnes, up 3.8 per cent from the same period last year, reflecting robust operational performance. Exploratory core drilling also surged to 5,314 metre, a 46 per cent increase, highlighting the company’s focus on expanding its resource base.For Q2 FY26 (July–September 2025), MOIL achieved record quarterly production of 4.42 lakh tonnes, up 10.3 per cent year-on-year, and sales of 3.53 lakh tonne, growing 18.6 per cent over the same quarter last year. Exploratory drilling for the quarter reached 21,035 metre, marking a 4.1 per cent..

Next Story
Infrastructure Energy

Tata Steel Faces Rs 24.11-Bn Demand from Odisha Authorities

Shares of Tata Steel came under pressure as the company faces a fresh financial demand of Rs 24.11 billion from Odisha authorities. The claim arises from alleged shortfalls in dispatch obligations at the company’s Sukinda mine under the Mine Development and Production Agreement (MDPA). Authorities have included both the asserted sale value of the shortfall and the appropriation of performance security under Rule 12A of the Minerals Concession Rules, 2016.Tata Steel has disputed the demand, stating that it has substantial grounds to challenge it legally. In a statement, the company said, “T..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?