India’s Manufacturing Sector Soars to 16-Month High in July 2025: A New Era of Growth
India’s manufacturing sector is booming, reaching a 16-month high in July 2025 with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) reaching 59.1, up from 58.4 in June. The data, reported on August 1, 2025 shows the strongest improvement in overall manufacturing (PMI) growth since March 2024, driven by increase in new orders and increasing production output. The latest PMI report is good news for everyone following the ascent of India’s economy and demonstrates India’s growing status as part of the global manufacturing landscape supported by strong domestic demand and the decisive government policies being implemented.
The PMI, provided by S&P Global from around 400 manufacturers, shows a huge bump in factory orders—the fastest increase in almost five years—because of its component’s good marketing and conditions. It appears production growth also hit its highest point in 15 months, especially in intermediate goods, as companies prepared to fulfill demand. This growth represents the success of programs like Make in India and Atmanirbhar Bharat, particularly with the growing competitive disadvantages China faces. As other countries around the globe pivot to diversify their supply chains, India’s manufacturing sector appears well poised, with impressive growth in several segments, including automobiles at 22%, and electronics at 47%.
That being said, there are challenges. Business confidence has fallen to a 3-year low, primarily from rising competition and inflation, as explained by Pranjul Bhandari, Chief India Economist at HSBC. Input material costs, in particular, have risen for aluminum, rubber and steel, and these rising costs have caused companies to raise their selling prices for the tenth consecutive month. While the cost pressures are low against their averages historically, any pressure is risky against continuous positive growth. Employment growth also appears to have stalled, where hiring is at its weakest since November 2024, as 93% of firms surveyed noted they were hiring and have enough staff.India’s manufacturing boom is an essential component of India’s economic blueprint, with the aim for the manufacturing share of GDP in India to double to 23% by capitalizing on sunrise industries including semiconductors and renewable energy. Moreover, the manufacturing sector has shown considerable resilience as the domestic demand and consequent policy support have been expressed clearly, notwithstanding massive global volatility particularly in the context of proposed U.S tariffs on Indian exports. The copious initiatives brought forth through PLI (Production linked Incentive) schemes have attracted some $20.3 billion between March 20, 2021 and March 2025 across 14 key sectors. This too has contributed to the aggrandizing of the manufacturing sector. It is the fact that the manufacturing sector aggrandizing has a strong multiplier effect on related to indirect or direct areas of value creation such as real estate – there is a substantial increase in demand for industrial space, logistics space, etc, etc.
As India grapples with runaway inflation, ups and downs fluctuating global trade, and the manufacturing sector performance in July 2025 has removed a level of breath. The combination of reforms and ongoing investment in manufacturing industries suggests that by 2025-26 India is on target towards a $1 trillion manufacturing market and for businesses, investors thought leadership, a call to action is presented to continue to capitalize take advantage of India”s industrial thrust. Follow leading sources including The Hindu, Business Standard, HSBC PMI, and others to keep up to date on how this momentum continues to affect India’s economy.
