Manufacturing Sector
India’s manufacturing sector is poised to hit $1 trillion by 2025–26, driven by infrastructure investment, pro-industry policies, and PLI schemes. Growth spans key industries—automotive, machinery, electronics, and equipment—attracting global players while empowering domestic firms to expand production and boost competitiveness on the world stage.
/ Overview of India's Manufacturing Sector
India’s manufacturing sector is set to reach $1 trillion by 2025–26, driven by strong infrastructure investments, supportive policies, and sectoral diversification. Key industries like automotive, machinery, electronics, and equipment are seeing rapid growth. Government initiatives such as Production-Linked Incentives (PLI) are boosting global and local participation. India is emerging as an EV hub, with companies like Stellantis and Leapmotor launching models by late 2025. The machine tool market is projected to hit $3 billion by 2029, growing at 11.6% CAGR. The National Manufacturing Policy targets a 25% GDP share from manufacturing by 2025, fueling sustained momentum.
40%+
Urbanization & Population Growth
$1.41 tn
Market Size
$71 bn
FDI (till Jan 2025)
10%
Economic Growth Rate
/ Growth Drivers
EV Component Manufacturing: India’s EV market is projected to grow at a CAGR of 49% between 2022–2030, with estimated sales of 10 million EVs annually by 2030; this creates high demand for batteries, motors, and power electronics manufacturing locally
Precision Engineering Tools: India’s machine tool market is set to reach $3.9 billion by 2025 from $2.7 billion in 2022, driven by localization in aerospace, defense, and auto sectors
Semiconductor Assembly & Testing: India has approved $10 billion in incentives under its Semicon India Programme, with 4+ OSAT (Outsourced Semiconductor Assembly and Test) proposals under review in 2024, indicating strong momentum into 2025
Industrial Automation & Robotics: India’s industrial automation market is projected to reach $13 billion by 2025, growing at 10% CAGR, driven by labor cost pressures and PLI-fueled manufacturing scale-ups.
/ Key Investment Opportunities
Industry Automotive Manufacturing
∕ EV Plant in Tamil Nadu: VinFast’s $2B investment targets 150,000 EVs/year by 2025, positioning Tamil Nadu as an EV manufacturing hub.
∕ Affordable EVs via Leapmotor-Stellantis: Stellantis to launch low-cost EVs in India by late 2025 through its China JV, focusing on mass-market penetration.
∕ Electric Commercial Vehicles in UP: Ashok Leyland’s new EV plant in Uttar Pradesh to produce 2,500+ electric CVs annually, scaling with demand.
∕ EV Ancillary Hub in Gujarat: Wardwizard’s ₹2,000 Cr investment in Vadodara includes a 1 GWh battery plant, boosting EV component supply chains
Electronics Manufacturing Industry
∕ Semiconductor Fabrication Expansion: India approved three chip plants worth $15.2 billion in 2024, including Tata Group’s facility in Gujarat, aiming to tap into the projected $63 billion semiconductor market by 2026.
∕ Electronics Component Manufacturing Growth: The demand for electronics components and sub-assemblies in India is expected to reach $240 billion by 2030, up from $45.5 billion in 2022, creating approximately 280,000 jobs by 2026.
∕ Mobile Phone Manufacturing Incentives: India’s $2.7 billion Production-Linked Incentive (PLI) scheme aims to attract $7 billion in investments and create 91,000 jobs over five years, reinforcing its position as the world’s second-largest mobile phone producer.
Machinery Manufacturing Industry
∕ Cutting Tools Market: India’s metal cutting tools market to grow from $162.8M (2024) to $274.3M by 2033, driven by CNC demand.
∕ Smart Machine Tools: Surge in Industry 4.0 adoption is boosting demand for sensor-enabled, cloud-connected machinery.
∕ Defense Corridor in UP: UPDIC attracting major investments, aiming to make India a global defense machinery hub.
∕ Swiss Precision Firms Expanding: Post-$100B trade pact, Swiss firms like ABB and Feintool scaling up India operations.
Industrial Equipment Manufacturing Industry
∕ Renewable Equipment: Capital goods demand growing at 17% CAGR to support India’s 500 GW renewable goal by 2030.
∕ Smart Logistics Systems: Surge in demand for robotic warehousing and AI-driven industrial automation infrastructure.
∕ Data Centre Equipment: Cooling and backup systems in demand as capacity doubles from 950 MW (2024) to 1,800 MW (2026).
∕ Defense Equipment: Domestic defense output hit ₹1.27 lakh crore in FY24; exports up 32.5%, driving equipment demand.
∕ Infra Machinery Demand: ₹1.97 lakh crore in projects under NIP (till 2025) fuels need for heavy industrial machinery.
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