India’s manufacturing sector has shown significant growth in recent quarters, with a Gross Value Added (GVA) increase of 7.72% in Q1 FY26 and 9.13% in Q2. This growth is attributed to a shift towards higher-value production, enhanced industrial infrastructure, and increased technology adoption. The Economic Survey 2025-26 reveals that medium- and high-technology industries now contribute 46.3% to India’s manufacturing value added, indicating a move towards a more sophisticated production structure.
Manufacturing plays a pivotal role in India’s goal to achieve a $35 trillion economy by 2047, supported by reforms, sectoral initiatives, and robust supply chains. The country’s global industrial competitiveness has also improved, with its ranking in the Competitive Industrial Performance (CIP) index climbing to 37th in 2023 from 40th in 2022. The Union Budget 2026-27 has further bolstered support for manufacturing through targeted measures focusing on investment incentives, innovation, infrastructure development, and strengthening the industrial ecosystem.
Industrial activity in India continues to gain momentum, with real Industry GVA growing at 7% year-on-year in the first half of FY 2025-26. December 2025 witnessed a significant expansion in industrial production, with a growth rate of 7.8%, the highest in over two years. The manufacturing sector drove this growth, with notable increases in computer and electronic products (34.9%), motor vehicles and trailers (33.5%), and other transport equipment (25.1%).
Forward-looking indicators suggest optimism in India’s industrial sector, as the Purchasing Managers’ Index (PMI) for manufacturing has remained consistently above 50 since March 2023. In January 2026, the PMI stood at 55.4, surpassing its long-run average and indicating ongoing sectoral improvement.
