India’s industrial sector continues to demonstrate resilience, with Industry Gross Value Added (GVA) growing by 7.0 per cent year-on-year in real terms during the first half of FY 2025-26, marking a notable acceleration from the 5.9 per cent growth recorded in FY 2024-25, according to the Economic Survey 2025-26 tabled in Parliament by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman.
Manufacturing Drives Industrial Momentum
The Economic Survey notes that manufacturing GVA expanded by 7.72 per cent in Q1 and 9.13 per cent in Q2 of FY 2025-26, underlining a broad-based recovery. This growth reflects ongoing structural shifts within the manufacturing sector, including a gradual move towards higher-value-added activities, enhanced availability of industrial infrastructure through corridor-led development, and deeper technology adoption and formalisation across firms.
Medium and high-technology activities now account for 46.3 per cent of India’s total manufacturing value added, supported by policy initiatives such as the Production Linked Incentive (PLI) schemes and the India Semiconductor Mission, alongside strengthening domestic capabilities in electronics, pharmaceuticals, chemicals, and transport equipment.
India’s improving industrial competitiveness is also reflected in its global standing, with the country’s Competitive Industrial Performance (CIP) ranking improving to 37th in 2023 from 40th in 2022.
Shift Towards Diverse Financing Channels
While bank-based industrial credit growth moderated to 8.24 per cent in FY 2024-25, compared with 9.39 per cent in FY 2023-24, the Survey highlights a structural diversification of funding sources. Citing the Monthly Economic Review (August 2025), it notes that the moderation in bank credit coincided with an increase in overall financial flows to the commercial sector.
Financial flows from non-bank sources to the commercial sector recorded a compound annual growth rate (CAGR) of 17.32 per cent during FY 2019-20 ~ 2024-25, indicating expanding access to alternative financing and reduced reliance on traditional bank credit.
Core Industries Sustain Growth
Core industries maintained strong momentum, with India remaining the second-largest global producer of steel and cement, the Survey emphasises. India is the world’s second-largest cement producer after China, with per capita cement consumption of around 290 kg, significantly below the global average of 540 kg, highlighting substantial scope for demand growth.
The government’s continued focus on large-scale infrastructure projects, including highways, railways, housing, smart cities, rural development, and industrial corridors, is expected to support sustained demand for cement and steel.
India’s coal sector reached historic production levels in FY 2024-25, producing 1,047.52 million tonnes, representing a 4.98 per cent increase over FY 2023-24.
The chemicals and petrochemicals sector continues to play a critical role in industrial development, contributing 8.1 per cent of manufacturing GVA in FY 2023-24.
Automotive, EVs, Electronics and Pharmaceuticals Lead Structural Transformation
The automotive industry recorded nearly 33 per cent growth in production during FY 2014-15 ~ 2024-25, supported by sustained domestic demand and policy support. The Survey highlights the rapid expansion of electric mobility, driven by rising EV registrations and targeted policy interventions. Key initiatives supporting electric vehicle manufacturing include:
PLI Scheme for Automobile and Auto Components
PLI Scheme for Advanced Chemistry Cell (ACC) Battery Storage
PM E-DRIVE Scheme
PM e-Bus Sewa – Payment Security Mechanism
Scheme to Promote Manufacturing of Electric Passenger Cars in India (SMEC)
The electronics sector has undergone a structural transformation, rising from the seventh-largest export category in FY 2021-22 to the third-largest by FY 2024-25. Mobile manufacturing has been central to this expansion, with production value increasing nearly 30-fold, from ₹18,000 crore in FY 2014-15 to ₹5.45 lakh crore in FY 2024-25.
India’s pharmaceutical industry, the world’s third-largest by volume, meets nearly 20 per cent of global generics demand and exported to 191 countries in FY 2024-25. The sector’s turnover reached ₹4.72 lakh crore, with exports growing at a 7 per cent CAGR between FY 2014-15 ~ 2024-25.
Roadmap for the Next Phase of Industrialisation
The Economic Survey concludes that India’s industrial sector has maintained strong momentum despite global headwinds, supported by reforms in infrastructure, logistics, ease of doing business, and innovation systems.
Looking ahead, the Survey underscores the need for a calibrated transition from an import-substitution-led approach towards one focused on scale, competitiveness, innovation, and deeper integration into global value chains. Rather than pursuing complete self-reliance across all segments, India must build strategic resilience through diversification and depth of capabilities.
Achieving this will require higher private-sector investment in R&D, technology adoption, skills development, and quality systems, positioning Indian industry for sustained and globally competitive growth. (Source: PIB PR ID 2219990)
Economic Survey of India 2025-26 dated 29/01/2026