Draft: Not to be quoted Spatial location of Industries – Role of R&D Spillovers Vinish Kathuria and Avanti Susan George ♣ February 20, 2006 Abstract: This study attempts to analyze the agglomeration of manufacturing firms for the Indian context using an agglomeration measure given by Ellison and Glaeser for 66 manufacturing industries in 21 major States. The analysis yields that the extractive industries like Iron and Steel and Cement, Lime and Plaster, are highly agglomerated and are found in those States where the raw material is in abundance. The analysis indicates that the agglomerated industries are mostly located in few States thereby pointing that the attempts made by the Government to disperse the industrial units have not been quite successful. Taking one step further, this study also looks at the reasons that could be attributed to this clustering. The econometric results indicate that the policy related factors that affect the agglomeration in the case of India’s manufacturing Industries, are not alone, enough to create clusters. These along with other non- policy related factors having spillover potential also contribute to agglomeration. Submitted for Submitted for First Annual Max Planck India Workshop to be held in IIM Bangalore during March, 2006 ♣ The first author (e-mail: vinish@mse.ac.in ) is an Associate Professor at Madras School of Economics, Chennai and the second author (e-mail: avantigeorge@yahoo.com ) is working as a Research Analyst with American Express, Gurgaon. The views expressed are of authors only. The usual disclaimers apply.