There was much to cheer in August 2025 for the Indian manufacturing sector 2025. The HSBC PMI surged to 59.3, its highest in 17 years, signaling strong demand and expansion. India’s manufacturing industry is undergoing a remarkable transformation, positioning itself as a global economic powerhouse.
Backed by robust government policies, GST 2.0 reforms, and steadily rising output, the sector is experiencing accelerated growth, diversifying into new subsectors, and creating millions of jobs. According to S&P Global, India is becoming increasingly attractive to global investors as it strengthens its competitiveness and supply chain resilience.
This article by The People Weekly, powered by PeopleLogic, explores India’s manufacturing growth trajectory, subsector expansion, hiring trends, impact of US tariffs, and long-term outlook.
Growth Trajectory and Economic Significance
India’s manufacturing sector contributed approximately 14% to the country’s GDP in fiscal year 2024-25, a figure that is steadily rising as the government pushes for a 25% share by 2030. The sector recorded an impressive growth rate of 4.26% in FY 2024-25, up from 1.4% the previous year, reflecting a strong production momentum..Additionally, the Index of Industrial Production (IIP) showed a 5.4% growth in manufacturing output as of July 2025, with 14 out of 23 industry groups registering positive growth year-over-year. IIP “tracks the volume of output across manufacturing, mining, and electricity, and is a snapshot of how industry is performing and its contribution to GDP growth.”
As per PIB “In April-August 2025, total exports rose 6.18%YoY to US$ 349.35 Billion. The cumulative value of merchandise exports during April-August 2025 was US$ 184.13 Billion, as compared to US$ 179.60 Billion during April-August 2024, registering a positive growth of 2.52%.
India’s real GDP growth rate is projected at 6.5% for FY 2025-26, signaling a resilient overall economy supported significantly by the manufacturing sector. While the services sector continues to dominate with around 55% contribution, manufacturing’s growing share exemplifies its rising importance in India’s economic landscape
Why the Manufacturing Sector is Growing
Several factors explain the rapid rise of the India manufacturing sector 2025:
Policy Environment and Foreign Investment – Pro-investment reforms and production-linked incentives (PLI).
Digitisation and Industry 4.0 – Adoption of AI, IoT, robotics, and automation in factories.
Public-Private Partnerships (PPP) – Collaboration on infrastructure and industrial parks.
MSMEs and Local Manufacturing – Small and medium enterprises driving grassroots industrialization.\
Key Growing Subsectors in Manufacturing
India’s industrial expansion is being powered by both traditional and high-tech subsectors.
Basic Metals: Steel and base metals grew 12.7% in July 2025, reflecting infrastructure demand.
Electrical Equipment: Surged 15.9%, boosted by electronics and consumer appliances.
Automobiles & Auto Components: Growth fueled by PLI schemes, with electric vehicles (EVs) leading.
Pharmaceuticals & Medical Devices: India remains a global pharma hub, expanding drug and device manufacturing.
Textiles & Apparel: Technical textiles and man-made fibers are key growth drivers.
Renewable Energy Equipment: Solar modules, batteries, and drone components expanding with clean energy targets.
This diversification highlights the future of India’s manufacturing industry, combining traditional strengths with innovation.
Employment Creation and Workforce Impact
The manufacturing sector is a significant employer in India, and its job creation trajectory underscores its socio-economic role. As per ET, employment in the manufacturing sector rose by 5.92 per cent year-on-year (YoY) in FY 24 adding 57 lakh jobs in the last decade and as many as 1,95,89,131 workers were employed in factories.
Metro and Tier-1 cities like Delhi NCR, Mumbai, Pune, Hyderabad, Ahmedabad, and Chennai are seeing strong demand for talent..
Emerging Jobs in Manufacturing
Core Roles: Robotics Engineer, Process Improvement Analyst, QA/QC Engineer.
Industry 4.0 Roles: IoT Solutions Engineer, Digital Twin Developer, Industrial Cybersecurity Specialist.
EV & Green Tech: EV Powertrain Engineer, PCB Designer, Semiconductor Fabrication Engineer.
Aerospace & Defence: Composite Materials Expert, Precision Component Engineer.
R&D & Innovation: CAD/CAM Engineer, Rapid Prototyping Engineer, Embedded Systems Developer.
Logistics & Management: Supply Chain Manager, ESG & Sustainability Officer.
MSME & Textiles: Textile Automation Expert, Packaging Designer, E-commerce Manager.
This evolution shows how the growth in Indian manufacturing is reshaping employment beyond traditional factory jobs.
Manufacturing Clusters and Regional Growth
India’s industrial strength is concentrated in regional clusters that power specific subsectors:
Maharashtra & Gujarat: Chemicals, petrochemicals, textiles, engineering goods.
Tamil Nadu & Karnataka: Automotive, electronics, IT hardware.
Andhra Pradesh & Telangana: Pharmaceuticals and electronics.
These clusters benefit from state incentives, skilled labor pools, and port proximity, making them central to India’s global manufacturing competitiveness.
Implications of US Tariffs on Indian Manufacturing
India’s manufacturing exporters face challenges and opportunities related to US trade policies. Tariffs imposed by the US on certain goods can impact exports, especially in sectors like steel, aluminium, and some electronics. However, India’s strategic initiatives to enhance domestic value addition, compliance with global standards, and focus on export diversification are mitigating these effects.
For example, India’s automobile and pharmaceutical manufacturers continue to expand US market share despite tariff headwinds, leveraging competitive cost structures and quality compliance. Moreover, ongoing dialogues between the two nations seek to address tariff and non-tariff barriers, reaffirming trade partnership potential.
Future Outlook and Challenges
India’s manufacturing growth trajectory is promising, with expected sector size reaching approximately USD 1 trillion by FY 2025-26. The sector’s CAGR is forecasted above 7% through the next decade, spurred by digital transformation, environmental sustainability goals, and rising domestic consumption.
However, challenges remain, including bridging skill gaps, improving supply chain resilience, and balancing tariff-related trade uncertainties in global markets. Continued focus on boosting workforce skill development, enhancing infrastructure, and fostering innovation is essential.
Conclusion
The India manufacturing sector 2025 is at an inflection point. With record-high PMI levels, government-backed reforms, strong exports, and rising global investor interest, it is becoming a cornerstone of India’s economy.
By sustaining growth, creating millions of jobs, and diversifying into high-tech industries, the future of India’s manufacturing industry is set to position the country as one of the world’s leading manufacturing hubs in the coming decade.
