Industries in Bihar: Structure, Growth Trends and Policy Framework for BPSC Mains

1. Introduction

The growth trajectory of industries in Bihar must be understood within the broader macroeconomic transformation of the state. According to the Bihar Economic Survey 2025–26, the state’s Gross State Domestic Product (GSDP) at constant prices grew by 8.6 percent in 2024-25, while at current prices it expanded by 13.1 percent, reaching Rs. 9,91,997 crore. This places Bihar among the fastest-growing states in India.

A significant structural shift is visible in the sectoral composition. The share of the secondary sector in Gross State Value Added (GSVA) increased from 21.1 percent in 2020-21 to 26.8 percent in 2024-25, indicating gradual industrial expansion. In 2024-25 alone, the secondary sector recorded 11.1 percent growth at constant prices, driven mainly by construction and manufacturing bihar economic survey 2025-26.

Despite this improvement, industries in Bihar remain relatively underdeveloped compared to national standards, especially after the 2000 bifurcation when a major portion of mineral-based industries went to Jharkhand. The state’s industrial base is now largely agro-oriented, with food processing, dairy, and small manufacturing playing a leading role.

Thus, while Bihar’s economy is diversifying and industrial share is rising, strengthening industries in Bihar remains essential for employment generation, income enhancement, and long-term structural transformation.

2. Historical Evolution of Industries in Bihar

The trajectory of industries in Bihar has witnessed phases of prominence, decline and gradual revival. Historically, Bihar was one of the leading industrial centres of eastern India. During the pre-independence and early post-independence period, the state was particularly known for its sugar industry, contributing nearly 22.7 percent of India’s total sugar production at the time of Independence. Large sugar mills, jute processing units and agro-based industries flourished due to fertile alluvial plains and proximity to raw materials.

However, the industrial decline began gradually due to structural bottlenecks such as outdated technology, labour unrest, weak infrastructure and limited capital investment. The most significant setback came in 2000, when the state was bifurcated and Jharkhand was carved out. Nearly 82 percent of the mineral-based industrial base, including major steel, coal and heavy industries, went to Jharkhand. Bihar was left primarily with agriculture-dominated districts and limited large-scale industrial infrastructure.

Post-bifurcation, the industrial structure of Bihar shifted towards agro-based and small-scale industries. Over time, the state government initiated policy reforms to revive industrial growth. According to the Bihar Economic Survey 2025–26, the share of the secondary sector in GSVA has increased steadily to 26.8 percent in 2024-25, reflecting gradual diversification bihar economic survey 2025-26.

Thus, the historical evolution of industries in Bihar reflects a transition from mineral-dominated industrial strength to agro-based and policy-driven industrial revival.

3. Classification of Industries in Bihar

The structure of industries in Bihar can be understood through two major bases of classification — first, on the basis of raw material, and second, on the basis of size and scale of operation. This classification helps in analysing the industrial character of the state, which remains largely agro-oriented with limited heavy industry.

(A) Classification on the Basis of Raw Material

On the basis of raw material, industries in Bihar are broadly divided into agro-based, forest-based and mineral-based industries.

Agro-based industries dominate the industrial landscape of Bihar. Given that agriculture and allied sectors still account for 23.1 percent of GSVA in 2023-24, a strong backward linkage exists between farming and industry. Sugar, jute, silk, dairy, food processing, tea and tobacco industries depend directly on agricultural output. The food processing sector has attracted significant investment under the Bihar Industrial Investment Promotion Policy (BIIPP), with a large number of operational units in recent years Industries of Bihar.

Forest-based industries are relatively limited due to moderate forest cover. However, bamboo products, lac, timber-based units and minor forest produce industries exist in selected districts.

Mineral-based industries are less developed compared to the pre-bifurcation period. After the formation of Jharkhand, most of the heavy mineral industries shifted out of Bihar. At present, cement, stone crusher units and limited small-scale mineral industries operate mainly in districts like Rohtas and Kaimur.

(B) Classification on the Basis of Size

On the basis of size, industries in Bihar can be categorised into large-scale industries and Micro, Small and Medium Enterprises (MSMEs).

Large-scale industries are limited in number but strategically important. Examples include the Barauni Oil Refinery, fertilizer units and selected manufacturing plants. According to the Enterprises Sector chapter of the Economic Survey, 956 industrial units have become operational under BIIPP 2016, generating employment for 42,999 persons, with total investment exceeding Rs. 10,635 crore.

MSMEs form the backbone of industries in Bihar. Schemes such as the Mukhyamantri Udyami Yojana have seen a sharp increase in applications — rising from 4.64 lakh to 7.74 lakh applications between 2023-24 and 2024-25. This reflects growing entrepreneurial activity and the importance of small-scale enterprises in employment generation.

Thus, industries in Bihar are predominantly agro-based and MSME-driven, with gradual expansion in manufacturing and organized industrial units.

4. Major Agro-Based Industries in Bihar

Agro-based industries form the backbone of industries in Bihar, as agriculture and allied sectors contribute 23.1 percent to the state’s GSVA (2023–24). The strong agricultural base provides raw materials, labour and market demand for processing industries. The dominance of cereals, horticulture and livestock production directly supports industrial growth in this segment.

Sugar Industry

The sugar industry has historically been the most prominent agro-based industry in Bihar. At the time of Independence, Bihar contributed nearly 22.7 percent of India’s sugar production, making it one of the leading states. However, due to outdated machinery, financial stress and competition from other states, the sector declined significantly. At present, only a limited number of sugar mills are operational, and the state’s national share has reduced sharply. Despite this, sugarcane remains an important commercial crop in north Bihar.

Jute Industry

The jute industry is concentrated mainly in districts like Katihar and Purnea. Availability of raw jute from the alluvial plains of north-eastern Bihar supports this sector. To promote revival, the state established a Jute Park at Maranga (Purnea) with investment support Industries of Bihar – BPSC (Bih…. The industry plays an important role in employment generation in the Seemanchal region.

Silk Industry

Bihar is known for its traditional silk production, especially Bhagalpuri silk, which has national and international recognition. The silk industry is primarily cottage and small-scale in nature, providing employment to artisans and weavers. It represents a strong example of labour-intensive industrial activity in the state.

Tea Industry

Tea cultivation has expanded significantly in Kishanganj district, where agro-climatic conditions resemble those of North Bengal. Thousands of hectares are under tea cultivation, and production has increased steadily over the years Industries of Bihar. The tea industry has created local employment and export potential in the region.

Dairy Industry

The dairy sector has witnessed remarkable expansion under COMFED (Sudha Dairy). In 2024–25, COMFED expanded its retail outlets from 31,529 to 34,795, a growth of 10.3 percent bihar economic survey 2025-26. It also exported products like ghee and makhana to the USA and Canada. Rising milk production and organized marketing have strengthened the dairy-based industrial ecosystem.

Food Processing Industry

With horticulture production reaching around 230 lakh tonnes in 2023–24, food processing has emerged as a priority sector. Under industrial promotion policies, the food processing sector has attracted the highest number of operational units in recent years. This sector holds significant potential for value addition, reduction of post-harvest losses and rural employment.

Overall, agro-based industries dominate the landscape of industries in Bihar due to strong agricultural linkages. Their expansion remains central to the state’s industrialisation strategy.

5. Mineral-Based and Core Industries in Bihar

Mineral-based and core industries constitute a smaller but strategically important segment of industries in Bihar. After the bifurcation of the state in 2000, most major mineral deposits and heavy industries went to Jharkhand. As a result, Bihar’s present mineral-based industrial structure is relatively limited and concentrated in specific districts.

Oil Refinery – Barauni

The Barauni Oil Refinery in Begusarai is the most prominent core industrial unit in Bihar. It plays a crucial role in petroleum refining and supply for eastern India. The refinery has also encouraged the development of ancillary industries in the Barauni industrial belt. Its presence strengthens the industrial base of the state beyond agro-processing.

Fertilizer Industry

Barauni is also known for fertilizer production. Fertilizer units support Bihar’s agriculture-dominated economy by ensuring the availability of chemical inputs. The linkage between fertilizer manufacturing and the agricultural sector reflects inter-sectoral industrial integration in the state.

Cement Industry

Cement production is mainly concentrated in districts like Rohtas and Kaimur, where limestone deposits are available. Cement plants at places such as Banjari and Dalmianagar have historical significance. Although production scale is modest compared to mineral-rich states, cement remains an important mineral-based industry in Bihar.

Stone Crusher and Minor Mineral Industry

Stone crusher units operate in plateau and hilly districts such as Rohtas, Aurangabad and Gaya. These industries depend on locally available hard rocks from the Southern Plateau Region. The output is primarily used for construction activities within the state.

Power and Energy-Linked Industrial Base

The power sector expansion has supported industrial development. Installed power capacity has reached 11,764 MW, with significant transmission network expansion. Improved power availability reduces a major bottleneck for industrial growth and enhances the viability of manufacturing activities.

Overall, mineral-based and core industries in Bihar are limited in scale but serve as foundational industrial pillars. Their development is closely tied to infrastructure expansion, energy availability and regional resource distribution.

6. Industrial Regions in Bihar

The spatial distribution of industries in Bihar is uneven and largely influenced by raw material availability, transport connectivity and historical development. Industrial activity is concentrated in specific belts rather than being uniformly spread across the state.

Barauni Industrial Region

The Barauni region in Begusarai district is the most prominent industrial cluster in Bihar. It developed primarily due to the establishment of the oil refinery and fertilizer units. The availability of rail connectivity, power infrastructure and proximity to the Ganga has supported industrial concentration in this belt. Barauni serves as the core of heavy and petrochemical-linked industries in the state.

Son Valley Industrial Region

The Son Valley region, covering districts like Rohtas, Kaimur and parts of Aurangabad, is known for cement and stone-based industries. Availability of limestone and hard rocks from the Southern Plateau Region supports mineral-based industries. The region also benefits from railway connectivity and proximity to Uttar Pradesh markets.

North-West Sugar Belt

The north-western districts such as West Champaran, East Champaran, Gopalganj and parts of Saran constitute the traditional sugar belt of Bihar. This region historically hosted numerous sugar mills due to abundant sugarcane cultivation in fertile alluvial plains. Although many mills have become non-operational, the region still retains agro-industrial potential.

Seemanchal–Kishanganj Agro-Industrial Belt

Districts like Purnea, Katihar and Kishanganj form an emerging agro-industrial region. The jute industry in Purnea and tea cultivation in Kishanganj provide the base for industrial activity. The establishment of the Jute Park in Purnea has further strengthened this region’s industrial identity Industries of Bihar – BPSC (Bih….

South Bihar Plain Region

Districts such as Patna, Gaya and Nalanda have diversified industrial activities including food processing, small manufacturing units and service-linked enterprises. Improved infrastructure, urbanization and proximity to the state capital make this region attractive for MSMEs and new investment proposals.

Thus, the pattern of industries in Bihar reflects a mix of agro-based clusters in the plains and mineral-based industries in plateau districts, with Barauni emerging as the primary heavy industrial centre.

7. Institutional and Policy Framework for Industries in Bihar

The recent expansion of industries in Bihar is closely linked to proactive government policies, institutional support mechanisms and investment promotion strategies. The state has shifted from a traditionally agriculture-dominated structure toward gradual industrial diversification through policy-driven intervention.

Bihar Industrial Investment Promotion Policy (BIIPP)

The BIIPP 2016 serves as the flagship policy for industrial promotion. It provides incentives such as capital subsidy, interest subsidy, tax reimbursement and infrastructure support to investors. According to the Bihar Economic Survey 2025–26, 956 industrial units have become operational under BIIPP, involving an investment of Rs. 10,635.90 crore and generating employment for 42,999 persons bihar economic survey 2025-26.

Between 2016-17 and September 2025, the state received 4,353 investment proposals, with total proposed investment of Rs. 1.11 lakh crore bihar economic survey 2025-26. This indicates increasing investor confidence.

Bihar Startup Policy 2022

To encourage innovation-driven entrepreneurship, the Bihar Startup Policy 2022 has strengthened the startup ecosystem. By the end of 2024-25, 1,239 startups were certified, and the government disbursed Rs. 32.18 crore as seed funding bihar economic survey 2025-26. The policy aims to promote technology-based enterprises and reduce youth migration.

Mukhyamantri Udyami Yojana

This scheme supports first-generation entrepreneurs through financial assistance and training. Applications increased from 4.64 lakh in 2023-24 to 7.74 lakh in 2024-25, reflecting rising entrepreneurial interest. The scheme is particularly significant for MSME development, which forms the backbone of industries in Bihar.

BIADA and Industrial Infrastructure

The Bihar Industrial Area Development Authority (BIADA) facilitates land allocation and industrial area development. Industrial parks and sector-specific clusters have been developed to attract investors. Capital expenditure in the state has increased from 15.8 percent of total expenditure in 2020-21 to 22.3 percent in 2024-25, reflecting greater infrastructure focus.

Power and Infrastructure Support

Reliable power is essential for industrial growth. The installed capacity has reached 11,764 MW, and AT&C losses have reduced significantly to 15.54 percent in 2024-25, improving supply efficiency bihar economic survey 2025-26. Expansion of grid substations and transmission networks supports industrial expansion.

Overall, the institutional framework reflects a shift toward policy-led industrialisation. While industries in Bihar still face structural constraints, increasing investment proposals, startup growth and infrastructure expansion indicate a positive trajectory.

8. Challenges Facing Industries in Bihar

Despite recent improvements, industries in Bihar continue to face several structural and operational challenges. While the share of the secondary sector has increased to 26.8 percent of GSVA in 2024-25, manufacturing growth remains moderate, and the industrial base is still relatively narrow.

Limited Manufacturing Expansion

The Enterprises Sector chapter indicates that in 2024-25, growth in the secondary sector was driven largely by construction and utilities, while manufacturing expanded only marginally. This shows that Bihar’s industrial growth is not yet strongly manufacturing-led, which is essential for sustained employment generation.

Low Credit-Deposit Ratio

As of March 2025, bank deposits in Bihar stood at Rs. 5.69 lakh crore, while credit amounted to Rs. 3.04 lakh crore, resulting in a Credit-Deposit ratio of 53.5 percent. Although the ratio has improved over the years, it remains lower than more industrialised states, indicating limited credit flow into productive industrial activities.

Infrastructure Gaps

Although power availability has improved significantly, with per capita consumption rising to 374 kWh in 2024-25, it is still below the national average. Logistics, storage and high-end industrial infrastructure require further strengthening to attract large-scale manufacturing.

Skilled Manpower and Migration

According to labour data, a significant proportion of workers are self-employed (61.2 percent among males), reflecting limited formal wage employment opportunities. High outward migration for work indicates insufficient local industrial absorption capacity.

Sectoral Concentration

Industries in Bihar remain heavily dependent on agro-based sectors. While this provides stability, it limits diversification into high-value manufacturing, electronics, automobiles or large engineering industries.

Thus, while policy support and infrastructure improvements are ongoing, industries in Bihar must overcome structural bottlenecks in manufacturing depth, capital availability and technological adoption to achieve sustained industrial transformation.

9. Way Forward for Industrial Development in Bihar

For sustainable expansion of industries in Bihar, the state must move from agro-dominated industrialisation toward diversified, manufacturing-led growth while strengthening existing strengths.

Strengthening Manufacturing Base

Although the secondary sector share has increased to 26.8 percent of GSVA in 2024-25, manufacturing growth remains modest. Greater focus on medium and large manufacturing clusters in sectors such as food processing, textiles, pharmaceuticals and light engineering can enhance value addition and employment generation.

Improving Credit Flow and Investment Climate

With a Credit-Deposit ratio of 53.5 percent, increasing industrial credit availability is essential. Encouraging banks to expand lending for MSMEs and improving financial inclusion through digital banking expansion can accelerate industrial growth.

Infrastructure-Led Industrialisation

Capital expenditure has increased to 22.3 percent of total expenditure in 2024-25, showing commitment to asset creation. Continued investment in roads, logistics parks, industrial corridors and uninterrupted power supply will reduce cost of doing business. Expansion of expressways and multi-modal transport networks can improve market access.

Skill Development and Employment Linkage

Skill programmes such as RSETI and DDU-GKY have trained thousands of youth. Aligning skill development directly with industrial cluster requirements can reduce migration and create a stable workforce for industries in Bihar.

Promotion of Export-Oriented Sectors

Dairy exports under COMFED and growth of tea and makhana show export potential. Developing branding, quality certification and logistics support for such products can integrate Bihar into global value chains.

Cluster-Based Industrial Development

Sector-specific clusters such as food parks, textile parks and agro-processing hubs should be expanded. Concentrated industrial zones reduce infrastructure costs and create ecosystem benefits.

Overall, the way forward lies in leveraging Bihar’s agricultural strength, expanding manufacturing depth, improving credit flow and ensuring infrastructure-led industrial growth. A balanced and policy-driven approach can transform industries in Bihar into a major engine of economic development.

10. Conclusion

The trajectory of industries in Bihar reflects a gradual but meaningful structural transformation. While the state historically suffered industrial decline, particularly after the 2000 bifurcation, recent years show visible progress. The secondary sector’s share in GSVA has increased to 26.8 percent in 2024-25, supported by rising investment proposals, operational industrial units and improved infrastructure bihar economic survey 2025-26.

However, the industrial base remains largely agro-oriented and MSME-driven, with limited large-scale manufacturing depth. Sustainable industrialisation in Bihar will depend on strengthening manufacturing competitiveness, expanding credit flow, improving logistics and aligning skill development with industrial needs.

If policy momentum continues and structural bottlenecks are addressed, industries in Bihar can become a key driver of employment generation, income growth and long-term economic resilience.

BPSC Mains Practice Questions: industries in Bihar

Discuss the structure and recent growth trends of industries in Bihar. Examine the role of policy interventions in industrial development.
Analyse the dominance of agro-based industries in Bihar. Why has large-scale manufacturing remained limited?
Evaluate the challenges facing industries in Bihar. Suggest measures to promote sustainable industrialisation in the state.

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