Manufacturing is key to India's goal of a USD 35 trillion economy by 2047, backed by Budget 2026-27. The sector outpaces global growth, with industrial production rising 7.8% in Dec 2025 and GVA growth hitting 9.13% in Q2 FY26.
Manufacturing today 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, Government of India said in a statement on Thursday.
Budgetary Push for Manufacturing
Recognising this importance, the Union Budget 2026-27 has reinforced support for manufacturing through targeted measures focusing on investment incentives, innovation, infrastructure development, and industrial ecosystem strengthening, it added.
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.
Outpacing Global Trends
It highlighted that while global manufacturing output expanded modestly by 0.7% in the third quarter of calendar year 2025, India recorded manufacturing output growth of 1.3% during the same period. This performance reflects the strength of domestic fundamentals and sustained policy support for industrial expansion.
Advancing Up the Value Chain
According to the Economic Survey 2025-26 the medium- and high-technology industries now contribute 46.3% of India's manufacturing value added, signalling a gradual shift towards more sophisticated production structure. This transition places India among a smaller group of middle-income economies steadily advancing up the manufacturing value chain. Reflecting these gains, India's global industrial competitiveness has improved, with the country's ranking in the Competitive Industrial Performance (CIP) index rising to 37th in 2023 from 40th in 2022.
Robust Industrial Performance Data
India's industrial activity continues to gain strength, with real Industry GVA growing at 7% year-on-year in the first half of FY 2025-26. This momentum carried further into the year as industrial production rose 7.8% in December 2025, the strongest expansion in over two years, after registering a high growth of 7.2%(RE) in November 2025.
Sector-Specific Growth Highlights
This expansion, also reflected in the Index of Industrial Production (IIP), is primarily driven by the manufacturing sector registering a growth of 8.1% in December 2025. Within this, strong growth was recorded in computer and electronic products (34.9%), motor vehicles and trailers (33.5%), and other transport equipment (25.1%).
Manufacturing performance has strengthened further in recent quarters, with GVA growth of 7.72% in Q1 and 9.13% 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.
Comprehensive Measures in Union Budget 2026-27
Union Budget 2026-27, unveiled a comprehensive set of measures aimed at accelerating economic growth through promoting manufacturing in strategic and frontier sectors. These announcements build on the government's agenda and address both immediate needs like tax reliefs and customs reforms and long-term capacity development like new industrial missions and cluster schemes, it said. (ANI)
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