India's manufacturing sector posted double-digit growth in 2025-26, cementing its position as one of the world's fastest-expanding industrial hubs, according to a new report by Morocco-based publication Assahifa. The surge is attributed to a combination of government flagship schemes, rising private investment, and a global supply-chain realignment that is increasingly favouring India over traditional production centres.

Key Drivers Behind the Acceleration

The report identifies structural reforms and programmes — including Make in India, the Production Linked Incentive (PLI) scheme, PM Gati Shakti, the National Logistics Policy, and improvements in ease of doing business — as the primary catalysts translating into higher industrial output, investment, and exports. Reforms such as the Goods and Services Tax (GST), digital governance, labour law rationalisation, and faster regulatory approvals have further strengthened India's appeal as a global manufacturing destination.

Infrastructure investment is compounding the effect. Initiatives spanning industrial corridor development, multimodal logistics parks, dedicated freight corridors, port modernisation, and expanded highway networks are steadily reducing logistics costs and improving supply-chain efficiency, the report noted.

India Outperforms Global Manufacturing Average

Citing industry body ASSOCHAM, the report draws a striking before-and-after picture. Between 2016 and 2019, India's average annual manufacturing growth stood at 3.44% — below the global average of 4.39%. In the post-pandemic period from 2022 to 2025, India's manufacturing growth accelerated to 4.15%, while the global average slowed sharply to 2.19%.

The contrast with China is particularly stark. Chinese manufacturing growth fell from 6.79% pre-pandemic to -0.07% in 2022–25, leaving it more than two percentage points below the global benchmark. 'This reversal highlights shifting global manufacturing dynamics and presents India with an unprecedented opportunity to capture a larger share of international production and investment,' the report stated.

Global Supply-Chain Shift Favours India

The COVID-19 pandemic exposed the vulnerabilities of highly concentrated production networks, prompting multinational corporations to diversify away from single-country dependencies. Strategies such as China+1, friendshoring, and nearshoring have accelerated this shift, with India emerging as a preferred destination, according to the report.

Before the pandemic, only China, Mexico, and Russia recorded manufacturing growth above the global average. Global companies now increasingly view India as a preferred production and sourcing destination, given its large domestic market, competitive workforce, policy stability, and an improving logistics ecosystem.

Trade Agreements to Expand Market Access

India's expanding network of Free Trade Agreements (FTAs) could further accelerate manufacturing-led exports. Ongoing negotiations with the European Union and the United Kingdom are expected to improve market access for Indian manufacturers and deepen integration into global production networks, the report said.

India's unique advantage, the report argues, lies in its ability to offer manufacturers both production scale and long-term market potential — a combination few economies can match. With supply-chain diversification still underway globally, the window for India to consolidate these gains remains open, but execution of ongoing infrastructure and reform commitments will be decisive.