The Indian manufacturing sector is experiencing sustained growth and increasing optimism, as per a recent report. The industry’s performance index reached an all-time high in the third quarter of FY26, according to the Federation of Indian Chambers of Commerce and Industry’s (FICCI) latest Quarterly Survey on Manufacturing (QSM). The survey revealed that 91% of respondents reported higher or stable production levels, marking a 4% increase from the previous quarter.
Industrial confidence has surged, with 86% of respondents expecting higher or similar orders in Q3 FY 2026 compared to the previous quarter, especially following the recent GST rate cuts. The survey, which includes responses from units with a combined annual turnover exceeding Rs 3 lakh crore, highlighted financial stability as a key driver of growth. The average interest rate for manufacturers stood at 8.9%, and nearly 87% of respondents indicated sufficient availability of funds from banks for working capital or long-term capital.
The report forecasts strong growth in the electronics, electricals, and miscellaneous sectors, while auto components, capital goods, and textiles are expected to maintain a steady, moderate growth trajectory. Despite global challenges, 38% of manufacturers are planning to hire additional workers in the next three months, up from 35% in the previous year. With the average capacity utilization already close to 75%, there are clear signs of sustained economic activity in the sector.
Moreover, around 57% of survey participants highlighted high production costs or an increase in costs as a percentage of sales. Factors such as higher raw material costs, currency depreciation, and increased logistics, power, and utility costs were attributed to this pressure. While 80% of the industry reported sufficient labor supply, 20% of respondents identified a lack of skilled workforce, emphasizing the need for enhanced skilling efforts from both the government and private sector.
A separate report suggests that India is on track to emerge as a global industrial powerhouse by 2047, with manufacturing’s share of GDP expected to rise from approximately 17% to around 25%.
