India’s Industrial Growth Surges with 7% Rise in GVA
India’s industrial sector is showing remarkable strength, with the Industry Gross Value Added (GVA) experiencing a notable 7.0% year-on-year increase in real terms during the first half of FY2025-26. This growth marks a significant rebound following a 5.9% expansion in the previous fiscal year, according to the Economic Survey 2025-26 presented in Parliament by Union Finance Minister Nirmala Sitharaman.
Manufacturing on the Rise
The Economic Survey highlights a robust growth in the manufacturing sector, with GVA escalating by 7.72% in the first quarter and 9.13% in the second quarter of FY26. This upswing is largely attributed to transformational shifts within the industry, including a transition toward higher-value manufacturing segments, enhanced industrial infrastructure through corridor-led development, and increased technology adoption and formalisation among firms.
Notably, medium and high-technology sectors now contribute to 46.3% of India’s overall manufacturing value. This acceleration is bolstered by various government initiatives, including the Production Linked Incentive (PLI) schemes and the India Semiconductor Mission, which have simultaneously strengthened domestic capabilities in electronics, pharmaceuticals, chemicals, and transportation.
Funding and Credit Sources
Although bank-based industrial credit growth from commercial banks experienced a slight decline to 8.24% in FY25, down from 9.39% in FY24, the Survey indicates a diversification of funding sources beyond traditional banks. Financial contributions from non-bank sectors to commercial entities recorded a compound annual growth rate of 17.32% from FY20 to FY25.
Core Industries Maintain Momentum
India’s core industries remain vibrant, firmly establishing the country as the second-largest producer of both steel and cement globally. With domestic cement consumption averaging approximately 290 kg per capita—far below the global average of 540 kg—the government’s extensive infrastructure projects are expected to boost demand significantly.
The steel sector has similarly evolved, driven by domestic needs from construction and manufacturing. Additionally, the coal industry achieved a historical output of 1,047.52 million tonnes in FY25, marking a 4.98% increase from the previous year.
Sectoral Developments
The chemicals and petrochemicals sector constituted 8.1% of the manufacturing GVA in FY24. Meanwhile, the automotive industry experienced almost 33% growth in production between FY15 and FY25, with substantial government efforts promoting electric vehicle manufacturing. Initiatives include various PLI schemes aimed at bolstering the electric mobility sector.
Furthermore, the electronics industry transformed significantly, becoming the third-largest export category by FY25 and showing tremendous spikes in production, particularly within mobile manufacturing.
Looking Ahead
The Economic Survey emphasizes the potential of India’s industrial sector amid a changing global landscape, advocating for a strategic shift towards competitiveness, innovation, and deeper integration into Global Value Chains (GVCs). It argues for an increase in private sector investments focusing on research and development, technology, and skill enhancements to drive the next wave of industrial advancement.
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