Manufacturing at Centre of India’s growth strategy to become USD 35 trillion economy by 2047

Manufacturing sits as the engine of growth for India’s ambition to become a USD 35 trillion economy by 2047, with reforms, sectoral initiatives, and resilient supply chains, the government said on Thursday.

Recognising this importance, the Union Budget 2026-27 has reinforced support for manufacturing through targeted measures focused on investment incentives, innovation, infrastructure development, and strengthening the industrial ecosystem, according to a government statement.

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While global manufacturing output expanded modestly by 0.7 per cent in the third quarter of calendar year 2025, India recorded manufacturing output growth of 1.3 per cent during the same period. This performance reflects the strength of domestic fundamentals and sustained policy support for industrial expansion, it said.

Building on the three defined Kartavyas, the manufacturing sector is poised to drive India’s growth, employment generation, export competitiveness, and long-term economic transformation.

According to government data, India’s industrial activity continues to gain strength, with real Industry GVA growing by 7 per cent year-on-year in the first half of FY 2025-26.

This momentum carried further into the year as industrial production rose 7.8 per cent in December 2025, the strongest expansion in over two years, after registering a high growth of 7.2 per cent(RE) in November 2025.

This expansion, also reflected in the Index of Industrial Production (IIP), is primarily driven by the manufacturing sector registering a growth of 8.1 per cent in December 2025.

Within this, strong growth was recorded in computer and electronic products (34.9 pc), motor vehicles and trailers (33.5 pc ), and other transport equipment (25.1 pc).

Manufacturing performance has strengthened further in recent quarters, with GVA growth of 7.72 pc in Q1 and 9.13 pc in Q2 in FY 2025-26, supported by a gradual shift towards higher-value production, improved industrial infrastructure, and wider adoption of technology and formalisation, together reflecting rising industrial capability across the sector.

Forward-looking indicators continue to reflect optimism in India’s industrial sector, with the manufacturing Purchasing Managers’ Index (PMI) remaining firmly in an expansion zone (well above the 50 mark) since March 2023.

In January 2026, PMI stood at 55.4, above its long-run average, indicating continued improvement in the sector’s health.

The Index of Eight Core Industries (ICI) stood at 175.7 in December 2025, recording a provisional growth of 3.7 pc compared to December 2024, with cement, steel, electricity, fertiliser, and coal registering positive production growth during the month.