Since 1980-81, manufacturing sector output has grown at 7 per cent per year, with economic reforms making little difference to the trend in the 1990s. But growth has decelerated over the last seven years, after peaking in 1995-96. Why is this so? The reforms have narrowly focused on policy-induced restrictions on supply, ignoring the demand constraint due to the cut in public infrastructure investment since the late 1980s and indifferent agricultural performance in the 1990s. These issues have to be squarely addressed to revive industrial growth, and to reap the benefits of the investment boom in organised manufacturing in the last decade.