India’s economy is on an amazing growth trajectory in 2025, and the manufacturing sector is at the center of it. Contributing heavily to the country’s GDP and providing jobs for millions, manufacturing is fueling employment generation, accelerating exports, and consolidating India’s position as a global economic giant.
Through favoring government policies, increasing investment, and increasing attention to pollution-free energy options such as LPG, the industry is establishing a bright future.
India’s manufacturing industry contributes approximately 17% to the nation’s GDP and provides more than 27 million jobs. In 2025, the industry is expected to reach a market size of USD 338.57 billion at a growth rate of 9.11% per annum.
Growth is propelled by sectors such as automobiles, electronics, textiles, and energy equipment, with Gujarat, Maharashtra, and Tamil Nadu spearheading.
The industry’s success is no coincidence. Government policies such as Make in India and the Production-Linked Incentive (PLI) scheme have provided a facilitative environment for businesses. These initiatives induce businesses to establish factories in India, promote foreign investment, and enhance indigenous production.
For instance, international companies such as Apple and Tata are increasing the size of their manufacturing units in India, generating employment and exports.
One of the largest forms that manufacturing drives economic expansion is through the creation of jobs. The industry employs millions in 2025, ranging from factory floors to engineers. The emergence of new industries, including semiconductor manufacturing and renewable energy, is providing high-skill opportunities for India’s young and increasingly educated workforce.
For example, in 2024, the government sanctioned three semiconductor factories with investments of more than USD 15 billion, which will create thousands of high-technology jobs.
India’s manufacturing industry is not only fulfilling domestic demand—it’s creating ripples on the international level. India will supply 10% of world wind energy demand by 2025, owing to its increasing skill base in wind power component production. India’s hand and power tool industry is likely to see exports of USD 25 billion by 2035, generating 3.5 million jobs.
Make in India has positioned India as a destination of choice for international firms to de-risk their supply chains. With policies permitting 100% foreign direct investment (FDI) in manufacturing, India received USD 17.96 billion of FDI inflows during 2023-24.
Such investment drives production in areas such as electronics, where India’s capacity to produce laptops and tablets is likely to reach USD 100 billion by 2025.
The vision of the Indian government is clear: to raise manufacturing’s contribution to GDP to 25% by 2025. To make this happen, it has launched programs like the National Manufacturing Policy and the Gati Shakti program, which aim to develop world-class infrastructure.
Investments in roads, railways, and ports—such as the INR 11,110 billion for infrastructure in 2024-25—facilitate manufacturers to transport goods more efficiently.
The PLI scheme, for 14 major industries, provides fiscal relief to enterprises that increase production and exports. For instance, the auto and electronics industries have witnessed a spurt of investment, as companies such as Tata Motors and Wistron established new factories.
These initiatives are yielding results, as manufacturing growth recovered by 9.9% in the January-March quarter of 2024, adding to a fiscal year GDP growth of 8.2%.
In 2025, India’s manufacturing industry is adopting Industry 4.0, with artificial intelligence, robotics, and the Internet of Things (IoT) revolutionizing production.
These new technologies enhance efficiency, cut waste, and enable factories to compete internationally. For instance, the electronics industry is set to expand to USD 15 billion in display panel production by 2025, fueled by automation and government support.
Sustainability is yet another area of emphasis. Producers are embracing cleaner fuels such as LPG to minimize emissions and address environmental compliance
Though it has grown, the manufacturing industry has challenges. India’s logistics cost is high, at 14% of GDP, as opposed to 8-10% in developed economies. Shortages in skilled labour also constitute a challenge, with 70% of the workforce not being formally trained. Budget 2025 should look to deal with these by investing in vocational training and port and logistics hub modernization.
Yet the potential is greater than the risk. India’s youthful population, low cost of labor, and emerging middle class ensure strong demand for manufactured products. As trade tensions cause multinational firms to decamp from China, India stands poised to claim an increasing percentage of the global market.
India’s manufacturing sector is expected to grow to USD 1 trillion by 2025-26, fueled by investment, innovation, and government support. Through the generation of jobs, increased exports, and adoption of sustainable processes, the sector is driving India’s journey towards becoming the world’s fourth-largest economy in 2025, as estimated by the IMF.