New Delhi | January 29, 2026
India’s industrial momentum remained strong in the first half of FY 2025–26, with real gross value added (GVA) from industry rising 7.0% year-on-year, the Economic Survey 2025–26 said on Wednesday, signalling a clear recovery after growth moderated to 5.9% in the previous fiscal.
Presenting the Survey in Parliament, Union Finance and Corporate Affairs Minister Nirmala Sitharaman said the rebound underscores the resilience of India’s industrial base amid global uncertainty, driven by structural shifts in manufacturing, expanding infrastructure, and deeper technology adoption.
According to the Survey, manufacturing GVA grew by 7.72% in the first quarter and 9.13% in the second quarter of FY26, reflecting a sustained acceleration. This improvement has been attributed to a gradual shift towards higher-value manufacturing, corridor-led industrial infrastructure development, increased formalisation of firms, and large-scale adoption of technology.
Higher-Tech Manufacturing Gains Ground
A key highlight of the Survey is the rising sophistication of India’s manufacturing sector. Medium- and high-technology activities now account for 46.3% of total manufacturing value added, supported by Production-Linked Incentive (PLI) schemes, the India Semiconductor Mission, and capacity expansion in electronics, pharmaceuticals, chemicals, and transport equipment.
India’s global competitiveness has also improved, with the country climbing to 37th position in the Competitive Industrial Performance (CIP) index in 2023, up from 40th in 2022.
Shift in Industrial Financing
While growth in bank-led industrial credit slowed marginally—from 9.39% in FY24 to 8.24% in FY25—the Survey notes a decisive diversification of funding sources. Between FY20 and FY25, non-bank sources of finance to the commercial sector grew at a compound annual rate of 17.32%, indicating deeper capital markets and alternative financing channels supporting industry.
Core Industries Remain Robust
The performance of core industries continued to anchor industrial growth. India retained its position as the world’s second-largest producer of steel and cement, after China. Domestic cement consumption, currently around 290 kg per capita compared with the global average of 540 kg, is expected to rise sharply, supported by large-scale investments in highways, railways, housing, smart cities, rural development, and industrial expansion.
The steel sector, backed by strong demand from construction and manufacturing, has undergone significant transformation over the past five years.
Coal production touched a historic high of 1,047.52 million tonnes in FY25, up nearly 5% from 997.83 million tonnes the previous year, reinforcing energy security amid rising industrial demand.
The chemicals and petrochemicals sector also remained a critical growth pillar, contributing 8.1% to total manufacturing GVA in FY24.
Autos, EVs and Electronics Drive Structural Change
India’s automobile industry recorded nearly 33% growth in production between FY15 and FY25, with government initiatives accelerating the shift towards electric mobility. The Survey notes a sharp rise in electric vehicle (EV) registrations in recent years, supported by a suite of targeted policy interventions.
These include the PLI scheme for automobiles and auto components, the PLI scheme for Advanced Chemistry Cell (ACC) battery storage, the PM E-DRIVE scheme, PM e-Bus Sewa–Payment Security Mechanism, and the scheme to promote manufacturing of electric passenger cars in India.
Electronics emerged as one of the most dynamic sectors, rising from the seventh-largest export category in FY22 to the third-largest in FY25. This surge has been driven by strong growth in domestic production and exports, led overwhelmingly by mobile manufacturing. The value of mobile phone production jumped nearly 30-fold, from ₹18,000 crore in FY15 to ₹5.45 lakh crore in FY25.
Pharma: Global Scale, Steady Growth
India’s pharmaceutical industry, the third-largest globally by volume, continued its steady expansion. In FY25, Indian pharma exports reached 191 countries, meeting nearly 20% of global demand for generic medicines. Over the past decade (FY15–FY25), pharma exports grew at a CAGR of 7%, taking the sector’s annual turnover to ₹4.72 lakh crore in FY25.
