India emerges as global manufacturing hub amid supply chain shift: ASSOCHAM
Synopsis
India has crossed a significant threshold: its manufacturing growth now outpaces the global average by nearly two percentage points, and a new ASSOCHAM report places it among the world's emerging industrial leaders. The China+1 shift is real — but whether India can convert this structural tailwind into lasting capacity is the harder question.
Key Takeaways
ASSOCHAM released a manufacturing competitiveness report on 7 July 2025 , naming India a key beneficiary of global supply chain realignment.
India's average manufacturing growth rose from 3.44% (2016–19) to 4.15% (2022–25), moving nearly two percentage points above the global benchmark.
India now joins the US, France, Germany, Italy , and the UK in outperforming the global manufacturing average — a post-pandemic shift.
The report credits PLI scheme , PM Gati Shakti , industrial corridors, and improved logistics for India's rising competitiveness.
ASSOCHAM recommends accelerating infrastructure, strengthening supplier ecosystems, and deepening free trade agreement integration to sustain momentum.
India is rapidly consolidating its position as one of the world's leading manufacturing destinations, emerging as a key beneficiary of the sweeping realignment of global supply chains, according to a report released by industry body ASSOCHAM on 7 July 2025. The findings place India among a select group of economies outperforming the global manufacturing benchmark in the post-pandemic era.
Key Findings of the ASSOCHAM Report
The report analysed the world's 10 largest manufacturing economies, which collectively account for nearly 65 per cent of global manufacturing output. It identified India as one of the emerging manufacturing leaders, citing its improved performance relative to the global average since the pandemic.
India's average manufacturing growth rose from 3.44 per cent during the pre-pandemic period (2016–19) to 4.15 per cent in 2022–25 — shifting from below the global average to nearly two percentage points above the world benchmark. Notably, before the pandemic, only China, Mexico, and Russia recorded manufacturing growth above the global average. In the post-pandemic period, India joined the United States, France, Germany, Italy, and the United Kingdom in surpassing that threshold.
Why Global Supply Chains Are Shifting
The post-COVID global manufacturing landscape has undergone a significant transformation, with multinational companies increasingly diversifying production beyond China. Strategies such as China+1, nearshoring, and friendshoring have gained traction as businesses seek to build more resilient and geographically distributed supply chains.
Nirmal K. Minda, President of ASSOCHAM, said: 'The global manufacturing landscape is undergoing a gradual but important shift. Companies are no longer looking at efficiency alone; they are equally focused on resilience and diversification. India's improving manufacturing performance reflects the impact of sustained reforms and growing investor confidence.'
What Is Driving India's Rise
The report attributed India's rising competitiveness to a combination of factors: expanding domestic demand, infrastructure development, improved logistics, and growing investor confidence under the China+1 strategy. Government-led initiatives — including the Production Linked Incentive (PLI) scheme, industrial corridors, and PM Gati Shakti — were specifically cited as enhancing India's attractiveness as a preferred global manufacturing investment destination.
What India Must Do Next
ASSOCHAM outlined several steps India must take to further consolidate its manufacturing leadership. These include accelerating logistics and industrial infrastructure, strengthening domestic supplier ecosystems, improving ease of doing business, promoting Industry 4.0 technologies, and leveraging free trade agreements to integrate more deeply into global value chains.
This comes amid a broader debate about whether India can convert its supply-chain-shift tailwinds into durable industrial capacity — a challenge that will require sustained policy follow-through beyond headline incentives.
Point of View
Not just a promotional claim — but the ASSOCHAM report's framing deserves scrutiny. Manufacturing's share of India's GDP has stubbornly hovered near 17% for over a decade despite a 25% target, meaning output growth has not translated into structural weight. The China+1 tailwind is real, but it is also available to Vietnam, Indonesia, and Mexico, all of which are competing aggressively. The harder test for India is not attracting announcements — it is converting PLI disbursements and corridor investments into deep supplier ecosystems that can absorb and retain global value chain activity. Without that, the growth uptick risks remaining a cyclical bounce rather than a structural re-rating.
NationPress
7 Jul 2026
Frequently Asked Questions
What does the ASSOCHAM report say about India's manufacturing growth?
The ASSOCHAM report, released on 7 July 2025, found that India's average manufacturing growth rose from 3.44% in the pre-pandemic period (2016–19) to 4.15% in 2022–25, placing India nearly two percentage points above the global manufacturing benchmark. It identifies India as one of the world's emerging manufacturing leaders.
What is the China+1 strategy and how does it benefit India?
The China+1 strategy refers to the practice of multinational companies diversifying production by adding a manufacturing base outside China to reduce supply chain risk. India benefits as companies seeking resilient alternatives increasingly consider it a viable destination, supported by government incentives like the PLI scheme and infrastructure programmes.
Which government schemes are credited for India's manufacturing rise?
The ASSOCHAM report specifically credits the Production Linked Incentive (PLI) scheme, industrial corridors, and PM Gati Shakti as key policy drivers that have improved India's attractiveness for global manufacturing investment.
How does India's post-pandemic manufacturing performance compare to other major economies?
In the post-pandemic period, India joined the United States, France, Germany, Italy, and the United Kingdom in outperforming the global manufacturing average. Before the pandemic, only China, Mexico, and Russia had recorded manufacturing growth above the global benchmark.
What must India do to sustain its manufacturing momentum?
According to ASSOCHAM, India needs to accelerate logistics and industrial infrastructure, strengthen domestic supplier ecosystems, improve ease of doing business, adopt Industry 4.0 technologies, and leverage free trade agreements to deepen integration into global value chains.
