India continues to stand out on the global manufacturing map despite ongoing geopolitical tensions, aggressive trade policies, supply chain disruptions, and a global trade slowdown. The Economic Survey 2024-25, released on Friday, highlights that fostering investments in research and development (R&D), driving innovation, and enhancing the growth and formalization of smaller manufacturers will play a key role in driving growth across various sectors.
A Changing Global Manufacturing Landscape
The global manufacturing landscape has experienced significant shifts over the past decade, with India emerging as one of the dynamic economies filling the void left by developed nations. Despite challenges, India has steadily gained a larger presence in this space.
India holds 2.8 percent of the global manufacturing share, compared to China’s dominant 28.8 percent. With substantial room for growth, India has a major opportunity to climb the global manufacturing ladder. There is also considerable potential to boost the industrial sector’s contribution to GDP, especially in comparison to other emerging economies.
Shifting Trends in Global Manufacturing
The Economic Survey points to an observation by the International Monetary Fund (IMF) that manufacturing production is increasingly shifting toward emerging market economies, especially China and India. India is well-positioned to benefit from these global trends of industrial diversification.
Strong Industrial Growth Expected
In FY25, India’s industrial growth is expected to surpass the previous five-year average, with the industrial sector showing a 6.2 percent increase, driven largely by strong growth in electricity and construction. The survey highlights that industries such as steel, cement, chemicals, and petrochemicals have stabilized industrial growth, while consumer-focused sectors—such as automobiles, electronics, and pharmaceuticals—are emerging as key growth drivers.
India is currently the second-largest cement producer globally, following China. From April to November of FY25, the country’s crude steel production grew by 3.3 percent, and finished steel production rose by 4.6 percent.
Automotive Industry and Policy Support
The Indian automobile industry continues to be a significant economic driver, with a wide range of domestically produced vehicles. In FY24, the industry saw domestic sales growth of 12.5 percent. Recognizing the sector’s potential, the government has extended the Production-Linked Incentive (PLI) Scheme for one more year to further boost the sector’s growth.
Business Reforms and State-Level Development
State-level analysis from the Economic Survey suggests that business reforms at the state level are expected to significantly contribute to industrial development. These reforms, alongside national-level efforts, will help unlock India’s manufacturing potential.
A Unified Approach for Manufacturing Growth
The Economic Survey stresses that achieving India’s ambition of becoming a global manufacturing powerhouse will require sustained, coordinated efforts from all sectors—government, private industry, academia, R&D institutions, and the skilling ecosystem. The survey calls for collaboration among all stakeholders to ensure India’s growth trajectory in manufacturing.
