India’s Ambitious Leap Towards Global Manufacturing Leadership: Key Highlights from Union Budget 2025

India’s manufacturing sector saw strong growth in January 2025, driven by increased domestic and export demand, with a PMI of 57.7. The Union Budget 2025 prioritizes industrial and logistics development, with investments aimed at boosting manufacturing and reducing import dependency. Key initiatives, including PM Gati Shakti and National Manufacturing Mission, aim to make India a global manufacturing powerhouse.

CONTENTS:

• India’s Manufacturing Sector Sees Robust Growth in January 2025, PMI Reaches 57.7
• India’s Factory Activity Soars in January 2025, PMI Hits 57.7 Amid Strong Domestic and Export Demand
• India Poised to Become a Global Manufacturing Hub with Strong Growth Drivers and Strategic Initiatives
• India’s Defence Sector Transforms into a Self-Reliant Global Manufacturing Powerhouse
• India’s Surge as the World’s Second-Largest Smartphone Manufacturer: A Success Story of Growth and Innovation
• Union Budget 2025: Strengthening India’s Industrial, Logistics, and Manufacturing Sectors

India’s Ambitious Leap Towards Global Manufacturing Leadership: Key Highlights from Union Budget 2025

India’s Manufacturing Sector Sees Robust Growth in January 2025, PMI Reaches 57.7

India’s Ambitious Leap Towards Global Manufacturing Leadership India’s manufacturing sector showed strong performance in January 2025, with the Manufacturing PMI rising to 57.7, up from 56.4 in December. The increase was driven by higher demand both domestically and internationally, particularly in exports. The growth in new orders was the fastest in six months, and job creation reached record levels. Cost pressures eased to their lowest in 11 months, though selling prices rose due to strong demand. Nearly 32% of companies forecast growth, citing positive economic conditions, improved customer relations, and effective marketing strategies. Timely material deliveries also helped businesses boost inventory levels.

India’s Factory Activity Soars in January 2025, PMI Hits 57.7 Amid Strong Domestic and Export Demand

India’s Ambitious Leap Towards Global Manufacturing Leadership India’s factory activity surged in January 2025, marking the fastest growth in six months, driven by strong domestic and export demand, as well as robust output. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 57.7 from 56.4 in December, surpassing a year-low figure. This positive momentum comes at a critical time for the Indian economy, which has faced slower growth in recent quarters due to weak consumption. The sharp rise in new orders, especially from exports, contributed to a three-month high in output.

Confidence for the year ahead increased, leading to the fastest pace of hiring since at least 2005. Input price inflation eased, allowing companies to raise prices more gradually. This encouraging news comes amid inflationary pressures and is expected to support further economic policies, including anticipated rate cuts by the Reserve Bank of India.

India Poised to Become a Global Manufacturing Hub with Strong Growth Drivers and Strategic Initiatives

India’s Ambitious Leap Towards Global Manufacturing Leadership India’s manufacturing sector is set for continued growth, with the potential to become a major global manufacturing hub. Factors like rising production costs in Europe and the US, combined with India’s status as the second-lowest cost producer after China, make it an attractive option for global supply chain diversification. Government initiatives such as “Make in India” are also playing a crucial role in boosting domestic production and attracting foreign investment.

India’s focus on strengthening industrial capabilities, improving infrastructure, and fostering innovation, along with its young and educated workforce, positions the country well for future growth. Key sectors such as defence, aerospace, and modern railways present significant opportunities, supported by policies that prioritize indigenisation and export growth. Indian companies can capitalize on these opportunities by partnering with global firms, embracing technology transfers, and enhancing productivity.

Industry 4.0 technologies, like AI and machine learning, are transforming the sector, allowing manufacturers to optimize operations and improve efficiency. Trends such as automation, sustainability, data analytics, and localized production through micro factories are shaping the future of India’s manufacturing industry. As sustainability becomes increasingly important, companies are adopting eco-friendly practices to reduce emissions and minimize waste, ensuring long-term growth and environmental responsibility.

India’s Defence Sector Transforms into a Self-Reliant Global Manufacturing Powerhouse

India’s Ambitious Leap Towards Global Manufacturing Leadership India’s defence sector has experienced a significant transformation since 2014, moving from being heavily reliant on imports to becoming more self-sufficient in domestic production. The country’s defence budget has more than doubled from ₹2.53 lakh crore in 2013-14 to ₹6.22 lakh crore in 2024-25, highlighting the commitment to enhancing national defence capabilities.

At the heart of this transformation is the “Make in India” initiative, which has fostered domestic production and lessened dependence on foreign imports, aligning with India’s vision of achieving self-reliance (Atmanirbharta) in defence.

In FY 2023-24, India reached a record high of ₹1.27 lakh crore in domestic defence production, marking a remarkable 174% increase from ₹46,429 crore in 2014-15. The country is on track to meet its target of ₹1.75 lakh crore in defence production for the current fiscal year, with an ambitious goal of ₹3 lakh crore by 2029, aiming to solidify its position as a global defence manufacturing hub.

Defence exports have also seen impressive growth, rising from ₹1,941 crore in FY 2014-15 to ₹21,083 crore in FY 2023-24, representing a 32.5% increase from the previous year. Over the past decade, exports have grown 21-fold, reaching ₹88,319 crore from ₹4,312 crore between 2004-14. India now exports to over 100 countries, with the USA, France, and Armenia as key destinations. The government aims to increase defence exports to ₹50,000 crore by 2029.

India’s defence export portfolio includes advanced technologies like bulletproof jackets, Dornier aircraft, Chetak helicopters, and lightweight torpedoes. A notable achievement includes the inclusion of ‘Made in Bihar’ boots in the Russian Army’s equipment, highlighting India’s growing manufacturing standards on the global stage.

India’s defence sector, bolstered by strong policy support, innovation, and strategic partnerships, is well on its way to becoming a reliable global defence partner, with a growing role in global security and defence manufacturing.

India’s Surge as the World’s Second-Largest Smartphone Manufacturer: A Success Story of Growth and Innovation

India’s Ambitious Leap Towards Global Manufacturing Leadership India’s rise as the second-largest smartphone manufacturer globally is a result of a combination of favorable demographics, strong government policies, and a competitive manufacturing environment. With a population surpassing 1.4 billion, India has a large, youthful demographic that drives the demand for electronics, particularly smartphones. This has enabled the country’s electronics sector to experience significant growth, supported by various initiatives aimed at making India a global leader in electronics production.

In 2014-15, India produced just 25% of its domestic mobile phone demand. However, over the past decade, mobile phone manufacturing has skyrocketed, reaching ₹4.1 lakh crore (US$ 49.27 billion) in FY24 from US$ 3 billion in FY15. This surge has been driven by initiatives such as the Production Linked Incentive (PLI) scheme and the “Make in India” program, enabling the country to meet 97% of its mobile phone demand domestically.

The introduction of the PLI scheme in March 2020 was a pivotal moment, leading to a steady increase in production from US$ 30 billion to US$ 49 billion in 2023-24. Additionally, India’s mobile phone exports have grown dramatically, with a 42% increase in FY 2023-24, reaching US$ 15.6 billion and becoming the country’s fourth-largest export item.

Several key drivers have fueled this growth. The PLI scheme, introduced in 2020, offers financial incentives to manufacturers, encouraging increased production and local investment. The Phased Manufacturing Programme (PMP) and the Make in India initiative have also played significant roles in building a robust domestic mobile manufacturing ecosystem. As global companies, including Samsung, Foxconn, Apple, and Dixon Technologies, set up operations in India, local production has surged, and technology transfer has accelerated.

India’s Ambitious Leap Towards Global Manufacturing Leadership India has also benefitted from the “China+1” trend, where companies seek to diversify their manufacturing and supply chains beyond China due to geopolitical risks and supply chain disruptions. India has successfully capitalized on this shift, with its mobile phone exports rising significantly compared to declines seen in China and Vietnam in 2023-24.

Domestically, India’s growing consumer market, fueled by increasing disposable incomes, has supported strong demand for smartphones. At the same time, the availability of cost-effective labor has helped keep production costs low, making India an attractive destination for both domestic and international investments. The sector has also created hundreds of thousands of jobs, with more expected in the coming years.

Despite the positive trends, India faces challenges, including competition from China and Vietnam, which have established themselves as global electronics manufacturing leaders. India’s electronics exports currently represent just a small fraction of global trade, underscoring the need for further efforts to increase competitiveness and optimize production.

Looking ahead, India’s goal of achieving US$ 300 billion in electronics production by 2025-26, with mobile phones accounting for 40% of that output, is within reach. India’s mobile phone exports have surged in recent years, and the country’s growing role in global supply chains positions it for continued success as a major global manufacturing hub. The government’s ongoing initiatives and the expansion of the domestic manufacturing ecosystem will be critical to maintaining this growth trajectory and enhancing India’s competitiveness in the global market.

Union Budget 2025: Strengthening India’s Industrial, Logistics, and Manufacturing Sectors

India’s Ambitious Leap Towards Global Manufacturing Leadership The Union Budget 2025 marks a significant step forward for India’s industrial and logistics sectors, with a special focus on the toy manufacturing industry. Key initiatives such as PM Gati Shakti, which integrates digital infrastructure and data mapping, aim to reduce logistics costs, enhance efficiency, and stimulate warehousing demand. This positions India as a potential global manufacturing leader.

Continued investments in infrastructure projects like Bharat Trade Net and air cargo upgrades will streamline domestic manufacturing, reduce logistics costs, and improve India’s global trade competitiveness. The budget also aims to make India more self-reliant, especially in sectors like toys, by decreasing import dependency and incentivizing businesses.

The budget has been welcomed by industry leaders who highlight its focus on economic growth, consumer spending power, rural infrastructure, and manufacturing. These include plans for enhanced farm productivity, national manufacturing initiatives, corporate tax reforms, and investments in skill development. The proposal to establish a National Manufacturing Mission will improve production capabilities, reduce import dependencies, and foster innovation, making India more competitive globally.

In the housing sector, increased tax exemptions and support for stressed housing projects aim to ease the burden on middle-class families and stimulate demand. The SWAMIH Fund II, a ₹15,000 crore initiative, will address stalled projects, enhancing housing affordability.

The defense and aerospace sectors will also benefit from the budget’s allocation, particularly the ₹20,000 crore for private sector-led research and development (R&D), which aims to strengthen India’s defense capabilities. The focus on AI-driven innovations and geospatial intelligence will further enhance India’s strategic security capabilities.

Overall, the budget reflects a balanced approach to driving consumption, manufacturing, and infrastructure growth, reinforcing India’s vision of becoming a self-reliant, globally competitive economy.