India Manufacturing Tracker 2025

India is keen to expand its manufacturing sector, with a focus on diversifying into newer lines of production, advancing the industrial capacity of traditional sectors like automobiles, and establishing a globally competitive domestic supply chain ecosystem.

Various national flagship schemes, like the Production-Linked Incentives (PLI) program targeting 14 sectors, alongside state-specific industrial policies, intend to raise the sector-wise contribution of manufacturing to the GDP. As per recent estimates, the manufacturing sector’s contribution to the GDP is estimated to be around 13-14 percent in 2025.

Find Business Support

Whether you're looking to expand into new regions, optimize operations, or enhance financial performance in India, our business growth solutions are tailored to meet your specific goals. Speak with our experts.

While India’s manufacturing sector has experienced steady growth in the past decade, it has been somewhat underwhelming relative to the country’s large population. Recently, however, the sector has gained momentum, driven by new investments and a strategic move by several foreign manufacturing firms to diversify their operations across multiple markets.

Nevertheless, in FY 2023-24, India’s manufacturing sector production growth rate stood at 1.4 percent, as against a growth rate of 4.7 percent in FY 2022-23. According to the Economic Survey 2024-25, the slowdown in the manufacturing sector could be attributed to similar dynamics in global merchandise trade. 

Given this background, India Briefing presents the 2025 India manufacturing tracker, where we monitor key statistics associated with India’s key production trends and note prominent government support policies.

India’s Purchasing Managers’ Index (PMI)

Source: HSBC India Manufacturing PMI

Note: These PMI figures do not include estimates.

The Purchasing Managers’ Index (PMI) is an economic indicator based on monthly surveys of companies. It tracks trends in both the manufacturing and services sectors, showing whether business conditions are expanding, contracting, or staying the same. PMI is important for predicting the economic health of a country and is closely monitored.

There are two types of PMI:

1. Manufacturing PMI
2. Services PMI

A combined PMI includes both sectors.

How is manufacturing PMI calculated?

The PMI is derived by sending fact-based questions to a large number of companies in the concerned sector. For manufacturing PMI, the questionnaire is sent to manufacturing companies. The questions are factual in nature, and the survey is not meant for opinions, intentions, or expectations.

The PMI is based on five key factors:

1. New orders (30%)
2. Output (25%)
3. Employment (20%)
4. Suppliers’ delivery times (15%)
5. Stock of items purchased (10%)

A PMI above 50 indicates business expansion, while below 50 signals contraction. The difference between 50 and the previous month’s data shows the rate of change.

PMI is released before other economic indicators like GDP and industrial output, offering early insight into economic trends. It’s useful for manufacturers, suppliers, and investors to gauge economic health and make informed decisions.

India’s Index of Industrial Production (IIP)

In India, the Index of Industrial Production (IIP) tracks the growth rates of three key sectors—mining, manufacturing, and electricity—on a month-on-month basis. Manufacturing remains the largest contributor, accounting for 77.6 percent of total industrial production.

According to the latest IIP data released by the Ministry of Statistics & Programme Implementation in January 2025, 18 out of 23 industry groups at the NIC 2-digit level recorded positive growth within the manufacturing sector in November 2024 compared to November 2023. The top three contributors to this growth were:

• Manufacture of basic metals: 7.6 percent
• Manufacture of electrical equipment: 37.2 percent
• Manufacture of other non-metallic mineral products: 12 percent

Source: PIB

Notes:

• *According to the announcement by the Ministry of Statistics and Programme Implementation, in August, the Index of Industrial Production contracted year-on-year for the first time in 22 months, decreasing by 0.1 percent compared to July’s growth, due to a slowdown in economic activities and an unfavorable base effect, according to the National Statistical Office.
• ** The ministry has also revised July’s IIP output from 4.8 percent to 4.7 percent.

Reading the IIP data

The data released by the National Statistics Office (NSO) shows India’s industrial output, as measured by the IIP, experienced a 5.8 percent increase in November 2024. This marks a significant improvement from the previous month’s growth rate of 3.5 percent.

December 2024: 

• As per the latest IIP figures, the growth rates of the three sectors, mining, manufacturing and electricity are 2.6 percent, 3.0 percent and 6.2 percent respectively.

November 2024: 

• As per the latest data, the growth rates for the mining, manufacturing, and electricity sectors were 1.9 percent, 5.8 percent, and 4.4 percent, respectively. 

October 2024: 

• As per the latest IIP growth rate, manufacturing output rose 4.1 percent in October, electricity generation grew 2 percent and mining activity was up 0.9 percent.
• Within the manufacturing sector, the largest contributors to growth were the production of basic metals (3.5 percent), electrical equipment (33.1 percent), and coke and refined petroleum products (5.6 percent).
• Considering the April-October period, industrial output went up 4 percent.

September 2024: 

• The growth rates of the three sectors, mining, manufacturing and electricity for the month of September 2024 are 0.2 percent, 3.9 percent and 0.5 percent respectively.
• Within the manufacturing sector, top three positive contributors for the month of September 2024 are – “manufacture of coke and refined petroleum products” (5.3 percent), “manufacture of basic metals” (2.5 percent), and “manufacture of electrical equipment” (18.7 percent).

August 2024:

• The IIP growth rate for the month of August 2024 is (-)0.1 percent which was 4.7 percent in the month of July 2024.
• The growth rates of the three sectors, mining, manufacturing and electricity for the month of August 2024 are (-)4.3 percent , 1.0 percent and (-)3.7 percent respectively. It is likely that the decline in the growth of mining sector is due to heavy rainfall in the month of August 2024.

July 2024: 

• Industrial output in India was revised to 4.7 percent on an annual basis in July 2024. This was previously estimated to reach 4.8 percent based on market expectations.
• The mining sector shrank 4.3 percent, likely due to heavy rainfall in the month and electricity contracted 3.7 percent.
• In contract, manufacturing rose 1 percent, with the biggest upward contributors coming from manufacture of basic metals (3 percent), manufacture of electrical equipment (17.7 percent), and manufacture of chemicals and chemical products (2.7 percent)

June 2024:

• Industrial output in India rose by 4.2 percent on an annual basis in June 2024, below market expectations of 5.5 percent and marking the lowest growth rate in five months. 
• Manufacturing output expanded by 2.6 percent with growth noted for manufacturing computer, electronic & optical products (+10.7 percent) and electrical equipment (+28.4 percent)

May 2024:

• Industrial output increased by 5.9 percent (highest since October 2023), surpassing expectations of 4.9 percent.
• Manufacturing output grew by 4.6 percent, with strong performance in pharmaceuticals (+7.5 percent) and basic metals (+7.8 percent).
• Mining output rose by 6.6 percent, and electricity by 13.7 percent.

April 2024:

• Industrial output rose by 5 percent, exceeding expectations of 4.6 percent.
• Manufacturing output expanded by 3.9 percent, with significant growth in furniture (+38.4 percent) and transport equipment (+17.4 percent).
• Mining output increased by 6.7 percent, and electricity by 10.2 percent.

India’s GDP growth rate

In India, the GDP growth rate measures the change in the value of goods and services produced each quarter, adjusted for seasonal variations. India is the fifth-largest economy globally and the second most populous country.

As of January 31, 2025, the country’s real GDP growth is estimated at 6.4 percent in FY 2024-25. The real GDP growth for FY 2025-26 is anticipated to grow between 6.3 and 6.8 percent.

Sector-wise GDP in India in 2023-24

Services: 54.71 percent

• Public administration, defense and other services: 14.55 percent
• Financial, real estate and professional services: 22.66 percent
• Trade, hotel, transport, communications and services related to broadcasting: 17.5 percent

Industry: 27.63 percent

• Mining and quarrying: 1.97 percent
• Manufacturing: 14.27 percent
• Electricity, gas, water supply, and other utilities services: 2.48 percent
• Construction: 8.91 percent

Agriculture (including forestry and fisheries): 17.66 percent

Source: Statista

According to the Annual Survey of Industries (ASI), employment in India’s manufacturing sector dipped slightly in 2020-21 due to the pandemic but rebounded with 7 percent year-on-year growth in 2021-22, surpassing pre-pandemic levels by over 935,000 workers. Average salaries also rose, with a 1.7 percent increase in 2020-21 and an 8.3 percent rise in 2021-22.

India’s manufacturing sector showed resilience, with Gross Value Added (GVA) increasing by 26.6 percent in 2021-22, driven by strong growth in key industries like basic metals, pharmaceuticals, and motor vehicles. The top five states employing the highest number of persons in this sector were Tamil Nadu, Gujarat, Maharashtra, Uttar Pradesh and Haryana in ASI 2020-21 as well as in ASI 2021-22.

The ASI noted that despite various challenges, the manufacturing sector showed a strong recovery, with significant gains in invested capital, output, and profits.

Production-linked incentives in India

India launched the Production Linked Incentive (PLI) Schemes for 14 key sectors, with an outlay of INR 1.97 trillion (US$23.4 billion), to increase domestic manufacturing capacities and export size.

India’s manufacturing sector has consistently contributed only 17 percent to the country’s GDP and strengthening it is crucial for providing employment to the growing youth population and making better use of semi-skilled labor.

As global economies look to reduce their reliance on China, India has emerged as a key alternative manufacturing hub due to its market potential, favorable policies, and competitive advantages.

The expansion of manufacturing also benefits the real estate industry, driving demand for industrial and logistics spaces. This growth highlights the interconnectedness of manufacturing and real estate development, signaling mutual economic progress. The recent rise in industrial and logistics real estate reflects this trend.

Central government policies on manufacturing

Manufacturing schemes in India

Source: NITI Aayog

State-level policies for manufacturing

Source: NITI Aayog

India’s manufacturing sector in 2025

According to the latest flash estimates from the HSBC India Manufacturing PMI, the manufacturing activity for January 2025 came in at 57.7, slightly below the initial estimate of 58. However, this marked the fastest expansion since July 2024, with new orders rising at the sharpest pace in six months, driven by the steepest increase in exports in nearly 14 years. As a result, manufacturers ramped up production, continuing a substantial expansion trend since October 2024.

Manufacturers also accelerated the purchase of inputs, with January’s upturn the strongest in three months.

India’s manufacturing activity grew at a slower pace in December 2024. The report, compiled by S&P Global, reveals that the PMI fell to 56.4 in December, marking a 12-month low and signaling a weaker improvement in operating conditions.

India’s Services PMI stood at 56.5 in November 2024, down from 57.5 in October. The index recorded 56.5 in September, 57.5 in August, and 58.1 in July, reflecting a marginal decline from June’s figure of 58.3.

The survey notes that factory activity in 2024 rose at its slowest pace, driven by softer increases in output, new orders, and stock purchases. However, the report highlighted that a “robust rate of growth” remains likely, as the headline PMI continues to stay above its long-term average of 54.1. Meanwhile, cost pressures eased and were relatively mild, but charge inflation remained historically elevated.

India’s manufacturing activity ended a strong 2024 with a soft note amidst more signs of a slowing trend, albeit moderate, in the industrial sector. The rate of expansion in new orders was slowest in the year, suggesting weaker growth in future production. That said, there was some uplift in the growth of new export orders, which rose at the fastest pace since July. The rise in input prices eased slightly, wrapping up the year when Indian manufacturers felt the strain of sharp cost pressures. -Ines Lam, Economist at HSBC

The survey, however, notes that in December, India’s manufacturing employment increased for the tenth consecutive month, with the rate of job creation accelerating to its fastest pace in four months. Approximately one in ten companies hired additional staff, while fewer than 2 percent of firms reduced their workforce.

The HSBC flash survey, based on responses from 400 manufacturers and an equal number of service providers, revealed that growth in India’s private sector output in November was driven by an increase in new business and export sales, despite rising cost pressures and the sharpest increase in selling prices since February 2013.

India’s manufacturing sector has been growing steadily, with March marking the 33rd consecutive month of output growth, and the fastest growth in new orders in three-and-a-half years. Both domestic and export markets contributed to this rise, with export orders increasing at their quickest pace since May 2022.

India is pushing forward with significant investments in infrastructure, manufacturing, and sunrise sectors like semiconductors and electric vehicles, aiming to become a US$10 trillion economy in the next decade.

Foreign direct investment in India’s manufacturing sector

As of August 2024, foreign direct investment (FDI) inflows into India’s manufacturing sector rose by 69 percent to US$165.1 billion during 2014-24, compared to the previous decade (2004-14), when inflows stood at US$97.7 billion. Additionally, total FDI inflows of US$383.50 billion were recorded in the past five financial years (2019-20 to 2023-24).

In a written reply to the Rajya Sabha (parliament’s upper house), the Minister of State for Commerce and Industry, Jitin Prasada, stated that government initiatives have significantly reduced dependency on imports in several sectors. For instance, mobile phone imports dropped from INR 486.09 billion (US$5.7 billion) in 2014-15 to INR 76.74 billion (US$914 million) in 2023-24, while exports surged from INR 15.66 billion (US$186 million) in 2014-15 to over INR 1289.82 billion (US$15.3 billion) in 2023-24.

The “Make in India” initiative, launched on September 25, 2014, has played a pivotal role in boosting FDI equity inflow in the manufacturing sector by 57 percent between 2014-2022 compared to the previous eight years (2006-2014). To further enhance India’s manufacturing capabilities and economic growth, the government introduced a series of policy measures, including the pivot to an Atmanirbhar Bharat (Self-Reliant India), production-linked incentive schemes for 14 key sectors, and investment opportunities under the National Infrastructure Pipeline (NIP) and National Monetisation Pipeline (NMP). Other initiatives include the India Industrial Land Bank (IILB), Industrial Park Rating System (IPRS), and the National Single Window System (NSWS). An institutional mechanism, Project Development Cells (PDCs), has also been established in all concerned ministries and departments to fast-track investments.

India has taken additional steps to attract domestic and foreign investments, such as introducing the Goods and Services Tax (GST), reducing corporate tax rates, improving the ease of doing business, reforming FDI policies, reducing compliance burdens, and boosting domestic manufacturing through public procurement orders, the Phased Manufacturing Programme (PMP), and Quality Control Orders (QCOs).

The PLI schemes alone, with an incentive outlay of INR 1.97 trillion (US$23.4 billion), are expected to enhance production, skills, employment, economic growth, and exports over the next five years.

(US$1 = INR 83.95)

• Previous Article India Offers Tax Relief for Foreign Tech Experts to Boost Electronics Manufacturing Sector
• Next Article Pharmaceutical SMEs in India Gain Time to Meet Enhanced GMP Standards Under Revised Schedule M