Sundaram Asha author Ahsan Reshad N. author Mitra Devashish author Columbia University. Program on Indian Economic Policies originator text Working papers New York School of International and Public Affairs, Columbia University 2012 In this paper, we have investigated the relationship between the formal and informal manufacturing sectors in India. We find that the employment, output and the value added of the informal part of each of the manufacturing industries in the various Indian states are strongly positively correlated with the same variables for the formal part of the respective industry in these states. Our results provide support for complementarities between formal and informal manufacturing arising possibly from both agglomeration and outsourcing. We also find fairly strong support for the role of labor market flexibility in enabling this complementarity. Trade liberalization also turns out to have an important role. Economics, Commerce-Business South Asian studies 2012-1 http://hdl.handle.net/10022/AC:P:13105 English NNC NNC 2012-05-02 15:37:43 -0400 2012-05-02 15:48:08 -0400 7108 eng