The Indian manufacturing sector is steadily emerging as a key pillar of the economy, contributing around 15-17% to GDP and employing over 27 million workers. With government initiatives like Make in India and production-linked incentive (PLI) schemes, the sector is being positioned to contribute 20-25% of India’s GDP by 2030. This growth is being fuelled by strong performances in automotive, engineering, chemicals, pharmaceuticals, consumer durables, textiles, and electronics.
India’s manufacturing industry is also becoming increasingly process-driven and automated, with digital transformation improving efficiency, productivity, and competitiveness. The machine tool industry, once the backbone of manufacturing, is now supported by advanced technologies that encourage innovation and scale.
India’s manufacturing strength is accelerating, with exports rising and core sectors like electronics, pharmaceuticals, automobiles and textiles positioning the country to approach Rs. 88,67,000 crore (US$ 1 trillion) in output by FY26 and strengthen its role as a global manufacturing hub.
Recent indicators highlight this strong momentum. India’s manufacturing momentum strengthened in October 2025, with the PMI rising to 59.2 on robust demand, faster output and purchasing growth, easing input inflation and sustained job gains supported by optimism around GST reforms. With its strengthened physical and digital infrastructure, India is now making a credible bid to become an important player in global supply chains.
During FY26 (April-October 2025), India’s merchandise exports reached Rs. 22,54,435 crore (US$ 254.25 billion), up from Rs. 22,36,701 crore (US$ 252.25 billion) in the same period previous year.
India’s total exports during Q1 FY26 (April-June 2025) is estimated at US$ 210.31 billion registering a growth of 5.94%.
India’s exports grew 6% YoY to US$ 210.31 billion in Q1 FY26 (April-June 2025), driven by strong growth in non-petroleum goods and services, with key contributions from pharmaceuticals, electronics, engineering goods, chemicals, and the e-commerce sector.
India’s annual electronics exports rose from US$ 29.1 billion in FY24 to US$ 38.6 billion in FY25, with ICEA projecting FY26 exports to touch US$ 46-50 billion.
India’s tyre exports grew by 9% YoY in FY25, touching Rs. 25,051 crore (US$ 2.93 billion). With an estimated annual industry turnover of Rs. 99,942 crore (US$ 11.67 billion), the Indian tyre sector stands out as one of the few manufacturing industries with a strong export-to-turnover ratio.
In FY25, India’s merchandise exports reached Rs. 37,34,255 crore (US$ 437.42 billion), up from Rs. 37,31,267 crore (US$ 437.07 billion) in the FY24. The export of the top six major commodities (Engineering goods, Petroleum products, Gems and Jewellery, Organic and Inorganic chemicals, Electronics goods and Drugs and Pharmaceuticals) stood at Rs. 23,87,731 crore (US$ 279.69 billion).
India's domestic investment announcements surged to Rs. 37,00,000 crore (US$ 428.04 billion) in FY23-FY24 from Rs. 10,00,000 crore (US$ 115.69 billion) in FY21, with 9M FY25 already reaching Rs. 32,00,000 crore (US$ 370.20 billion).
Significant initiatives have been introduced under Aatmanirbhar Bharat and Make in India programmes to enhance India’s manufacturing capabilities and exports across the industries. Sector specific Production Linked incentives (PLI) have been introduced in the aftermath of the pandemic to incentivize domestic and foreign investments and to develop global champions in the manufacturing industry.
According to NITI Aayog report, India can potentially capture a larger global market share, targeting Rs. 2,13,925 crore (US$ 25 billion) in exports by 2035.
According to the Council for Leather Exports (CLE), India’s leather, non-leather footwear, and products exports increased by 25% at Rs. 48,667 crore (US$ 5.7 billion) in FY25, may hit Rs. 55,497 crore (US$ 6.5 billion) in FY26.
India's smartphone exports rose by 42% in FY24 to Rs. 1,35,517 crore (US$ 15.6 billion), with the US as the leading destination, highlighting the success of the Production-Linked Incentive (PLI) scheme. Mobile phone production has grown fivefold in the past five years, positioning India as a global export hub. This growth is driving strong demand for integrated circuits and semiconductors, which will further accelerate as the industry shifts focus from assembly to full-scale hardware component manufacturing.
India's defence exports reached a record Rs. 23,622 crore (US$ 2.70 billion) in FY25, a 12% increase from Rs. 21,083 crore (US$ 2.41 billion) in FY24. The government aims to raise defence exports to Rs. 30,000 crore (US$ 3.42 billion) in FY26 and Rs. 50,000 crore (US$ 5.71 billion) by 2029. This growth has been driven by both Defence Public Sector Undertakings, which saw a 42.85% export increase, and a strong private sector contribution.
Building on the competitive advantage of a skilled workforce and lower cost of labour, the manufacturing sector is also witnessing an increased inflow of capex and heightened M&A activity, leading to a surge in manufacturing output and resultant increased contribution to exports. The positive developments in the manufacturing sector, driven by production capacity expansion, government policy support, heightened M&A activity, and PE/VC-led investment, are creating a robust pipeline for the country’s sustained economic growth in the years to come.
Real GDP or GDP at Constant Prices is estimated to attain a level of Rs. 188 lakh crore (US$ 2.15 trillion) in FY25, against the first revised estimate of GDP for the FY24 of Rs. 177 lakh crore (US$ 2.02 trillion), registering a growth rate of 6.5%.
Nominal GDP or GDP at Current Prices is estimated to attain a level of Rs. 331 lakh crore (US$ 3.78 trillion) in the FY25, against Rs. 301.23 lakh crore (US$ 3.44 trillion) in FY24, showing a growth rate of 9.8%.
Real GVA is estimated at Rs. 172 lakh crore (US$ 1.97 trillion) in the FY25, against the first revised estimate for the FY24 of Rs. 162 lakh crore (US$ 1.85 trillion), registering a growth rate of 6.4%.
Nominal GVA is estimated to attain a level of Rs. 300 lakh crore (US$ 3.43 trillion) during FY25, against Rs. 274.13 lakh crore (US$ 3.13 trillion) in FY24, showing a growth rate of 9.5%.
The Nominal GVA for Q1 FY26 (April–June 2025) is estimated at Rs. 78.25 lakh crore (US$ 890.01 billion), reflecting an 8.8% growth compared to the previous year.
At the aggregate level, the capacity utilization (CU) in the manufacturing sector stood at 74.1% in Q1 FY26 from 77.7% in the previous quarter.
For the month of September 2025, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 152.8. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of September 2025 stand at 111.2, 154.3, and 154.3, respectively.
The Madhya Pradesh government has introduced the Drone Promotion and Utilisation Policy 2025, aiming to boost drone manufacturing and its application across various sectors. The policy offers incentives, of a 40% capital investment subsidy, up to Rs. 30 crore (US$ 3.4 million) for new investments, and a 25% subsidy on lease rents for three years.
India is planning to offer incentives of up to Rs. 18,000 crore (US$ 2.2 billion) to spur local manufacturing in six new sectors including chemicals, shipping containers, and inputs for vaccines.
This mission was announced by the Union Minister for Finance and Corporate Affairs, Ms. Nirmala Sitharaman in the Union Budget 2025-26 to boost "Make in India" by supporting industries of all sizes with policy frameworks, ease of business, MSME growth, future-ready workforce, and clean tech manufacturing.
The mission places emphasis on five key areas: ease and cost of doing business, developing a future-ready workforce for in-demand jobs, a vibrant MSME sector, availability of technology, and quality products. It also aims to boost domestic value addition and build ecosystems for clean tech manufacturing such as solar PV cells, EV batteries, electrolyzers, wind turbines, and grid-scale batteries.
The Union Minister of Finance, Ms. Nirmala Sitharaman, announced a focus product scheme aimed at enhancing the productivity, quality, and competitiveness of India’s footwear and leather sector. This scheme will provide support for design capabilities, component manufacturing, and the machinery required for producing non-leather quality footwear, as well as leather footwear and related products. It is projected to generate employment for 22 lakh people, achieve a turnover of Rs. 4 lakh crore (US$ 45.66 billion) and facilitate exports exceeding Rs. 1.1 lakh crore (US$ 12.56 billion).
According to MeitY, India’s digital economy is projected to grow at twice the rate of the overall economy, accounting for 20% of the national income by 2029-30, surpassing both agriculture and manufacturing, driven by digital platforms and widespread digitalisation across sectors.
The Union Minister of Defence Mr. Rajnath Singh emphasized that the path to ‘Aatmanirbhar Bharat’ is a comprehensive set of policy frameworks that seeks to build indigenous technological and production capacity & capability with cooperation, participation and collaborations with reputed institutions and Original Equipment Manufacturers (OEMs) from friendly nations.
The Defence Acquisition Council, chaired by Union Minister of Defence Mr. Rajnath Singh, has approved Rs. 67,000 crore (US$ 7.65 billion) worth of projects to strengthen the Indian Army, Navy, and Air Force. The move focuses on boosting ‘Make in India’ with key roles for Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), and Bharat Dynamics Limited (BDL).
Under the "Make in India" initiative, the Marhowrah Diesel Locomotive Factory in Bihar is set to export 150 Evolution Series ES43ACmi locomotives to Guinea for its Simandou iron ore project. Developed in partnership with Wabtec, this export deal is valued at over Rs. 3,000 crore (US$ 345.9 million) and significantly expands India’s global footprint in railway manufacturing.
These six platforms will work towards urging industries (including Original Equipment Manufacturers (OEMs) Tier-I, Tier-II, and Tier-III companies and raw material manufacturers), start-ups, domain experts/professionals, R&D institutions, and academia (college and universities) to come up with technology solutions, suggestions and opinions on matters related to manufacturing technologies.
India has potential to become a global manufacturing hub and by 2030, it can add more than Rs. 43,43,500 crore (US$ 500 billion) annually to the global economy.
Global companies like Apple are expanding manufacturing in India, with smartphone exports volumes touched 22.88 million units in the first half of 2025, from 15.05 million a year ago.
FDI in India's manufacturing sector has reached Rs. 14,34,224 crore (US$ 165.1 billion), a 69% increase over the past decade, driven by production-linked incentive (PLI) schemes. In the last five years, total FDI inflows amounted to Rs. 33,31,465 crore (US$ 383.5 billion).
India's production-linked incentive (PLI) schemes disbursed Rs. 21,534 crore (US$ 2.46 billion) in incentives across 12 sectors as of March 2025, attracting investments of Rs. 1.76 lakh crore (US$ 20.09 billion).
The manufacturing sector has seen some major developments, investments, and support from the Government in the recent past.
- The rollout of Goods and Services Tax (GST) 2.0 aims to unlock stronger manufacturing growth in India by simplifying tax slabs to primarily 5 % and 18 %, removing inversion issues where inputs had higher taxes than finished goods, easing compliance burdens and freeing working capital for reinvestment.
- The Indian government, led by Union Minister of Commerce & Industry, Mr. Piyush Goyal, is launching a new scheme to energize the country's toy sector. The initiative aims to improve several key areas: strengthening toy design, boosting manufacturing quality, enhancing packaging standards, and supporting brand-building efforts.
- India's Global Capability Centres (GCCs) witnessed an 8-10% increase in hiring volumes in Q1 FY26, compared to a 3-6% decline in the Q4 of FY25. The Manufacturing, Automotive, and Energy sectors saw the highest demand growth at 31% QoQ, fueled by investments in smart factories, Industrial IoT, and electric vehicle (EV) platforms.
- In May 2025, the Employees' Provident Fund Organisation (EPFO) added a net total of 20.06 lakh members, which is the highest recorded addition since data tracking began in April 2018, marking a 2.84% YoY growth with 9.42 lakh new members enrolled, largely driven by increased employment opportunities and effective outreach initiatives. Notably, the 18-25 age group accounted for 59.48% of the total new subscribers, adding 5.60 lakh new subscribers. Female membership also saw significant growth, with 2.62 lakh new female subscribers joining, marking a 5.84% YoY growth compared to May 2024, and indicating a shift towards a more inclusive workforce.
- Prime Minister Mr. Narendra Modi announced an Employment Linked Incentive Scheme with an Rs. 1,00,000 crore (US$ 11.62 billion) outlay to support first-time private sector employees, expected to generate 3.5 crore jobs.
The Union Budget 2025-26 has been well received by the renewable energy industry, with experts praising its emphasis on clean power, domestic manufacturing, and sustainability. Key initiatives include the Rs. 20,000 crore (US$ 2.30 billion) allocation for nuclear energy, legislative reforms for energy security, and the Rs. 20,000 crore (US$ 2.30 billion) commitment to the PM Surya Ghar Muft Bijli Yojana for rooftop solar expansion.
On February 7, 2025, the Union Cabinet has approved the restructuring of the Skill India Programme with an Rs. 8,800 crore (US$ 1.1 billion) outlay, extending it till 2026 to integrate demand-driven, tech-enabled, industry-aligned training nationwide.
The Union Cabinet has announced the merger of Pradhan Mantri Kaushal Vikas Yojana 4.0, Pradhan Mantri National Apprenticeship Promotion Scheme, and Jan Shikshan Sansthan Scheme under the Skill India Programme.
In the Union Budget 2025-26, the Ministry of Defence was allocated Rs. 6,81,210.27 crore (US$ 77.75 billion), marking a significant increase of 9.53% from the previous allocation of Rs. 6,21,541 crore (US$ 70.94 billion) in the Interim Budget 2024-25. This allocation accounts for about 13.45% of the total Union Budget, the highest among all ministries, with a strong focus on modernization, indigenous production, and operational preparedness.
In the interim budget 2024, the allocation for the Production Linked Incentive (PLI) Scheme for various sectors saw a substantial increase, with notable examples including a 360% rise to Rs 6,903 crore (US$ 830 million) for the Semiconductors and Display Manufacturing Ecosystem and a 623% surge to Rs 3,500 crore (US$ 421 million) for the Automobile sector.
Semiconductor associations IESA and SEMI signed a Memorandum of Understanding (MoU) in Bengaluru to establish India as a global manufacturing hub, focusing on talent development, policies, design, skilling, research, academia, and supply chains, leveraging SEMI's international network and IESA's expertise.
In February 2025, the Employees' Provident Fund Organisation (EPFO) added a net total of 16.10 lakh members, marking a 3.99% YoY growth, with 7.39 lakh new members enrolled, largely driven by increased employment opportunities and effective outreach initiatives. Notably, the 18-25 age group accounted for 57.71% of new memberships, and female membership saw significant growth, with 2.08 lakh new female members added, reflecting a shift towards a more inclusive workforce.
In the interim budget 2024, there was commendable fiscal responsibility demonstrated alongside significant investments in infrastructure, including emphasis on affordable housing, clean energy, and technological advancement. Additionally, the budget allocated funds for the creation of a Rs. 1,00,000 crore (US$ 12 billion) innovation fund for sunrise domains, providing a substantial boost for the startup industry. Moreover, there was a notable focus on promoting the shift to electric vehicles (EV) through the expansion of EV charging networks, thereby offering opportunities for small vendors in manufacturing and maintenance.
Google is set to begin manufacturing Pixel smartphones in India, specifically in Tamil Nadu, in collaboration with Foxconn and Dixon Technologies. This production aims to cater primarily to export markets in Europe and the US, with operations expected to start in September 2024. The initiative comes as Google prepares to launch its Pixel 9 series in India on August 13, leveraging India's Production-Linked Incentive (PLI) scheme to enhance manufacturing scalability.
The 'Operation Green' scheme of the Ministry of the Food Processing Industry, which was limited to onions, potatoes, and tomatoes, has been expanded to 22 perishable products to encourage exports from the agricultural sector. This will facilitate infrastructure projects for horticulture products.
India’s manufacturing sector is on a strong growth trajectory, powered by policy support, rising investments, expanding exports, and increasing technological adoption. With its skilled workforce, robust infrastructure, and global competitiveness, India is steadily transforming into a leading manufacturing hub. Looking ahead, the sector is poised to play a central role in driving economic growth, innovation, and employment, positioning the country as a key player in global value chains.
