Archive · 20 Jan 2026
India's Manufacturing Sector Sees Record Growth
At the World Economic Forum in Davos 2026, leaders talked about how India's manufacturing could grow a lot.
They said if even a small part of the new growth that was supposed to go to China comes to India, India's manufacturing could double in five years.
This is because China's manufacturing is much bigger than India's.
The leaders also said it's important for India to invest more in making things and to use machines to do the work.
They think India has a big chance to grow, but needs to work on some areas more than others.
Meanwhile, a survey by FICCI showed that India's manufacturing sector had its best performance ever in the third quarter of FY 2025–26.
Most companies said they were making more or the same amount of stuff, and they expect more orders.
But there are some problems like higher costs and not enough skilled workers.
Still, most companies think things will keep getting better.
India's manufacturing sector recorded its highest-ever performance in Q3 FY26, with 91% of respondents reporting higher or stable production levels.
Rising optimism was visible on the demand front, with 86% of manufacturers expecting higher or unchanged domestic orders.
Average capacity utilisation across the manufacturing sector stood at nearly 75%, indicating continued economic momentum.
Key sectors for growth include electronics and electricals, capital goods, auto components, chemicals, machine tools, metals, and textiles.
Despite strong performance, cost pressures continue to weigh on manufacturers, with 57% reporting an increase in production costs.
- Who
- Leaders at the World Economic Forum 2026, including Deepak Jain, Gopal Agarwal, and Sanjeev Krishnan; FICCI’s Quarterly Survey on Manufacturing (QSM)
- What
- Discussion on the potential growth of India's manufacturing sector and the results of FICCI’s Quarterly Survey on Manufacturing (QSM)
- When
- During the World Economic Forum 2026 and Q3 FY26 (October–December 2025)
- Where
- Davos and across India's manufacturing sectors
- Why
- To highlight the opportunity for India's manufacturing growth if a portion of China's incremental growth shifts to India and to assess the current state of the manufacturing sector
Optimistic View
Challenges Ahead
Growth Potential
Optimistic View
India's manufacturing could double in five years if 10% of China's incremental growth shifts to India.
Challenges Ahead
Global and geopolitical uncertainties, trade restrictions, and regulatory hurdles pose significant challenges to this growth.
Cost Pressures
Optimistic View
Strong business sentiment and rising demand indicate a positive outlook.
Challenges Ahead
Higher raw material prices, currency depreciation, and rising logistics, power, and utility costs are increasing production costs.
- Event
- World Economic Forum 2026, Davos
- Speakers
- Deepak Jain, Gopal Agarwal, Sanjeev Krishnan
- China's Manufacturing
- $1.2 trillion trade surplus
- Potential Shift
- 10% of China's incremental growth to India
- Projected Growth
- India's manufacturing could double in five years
- Key Sectors
- IT, industrial manufacturing, aerospace and defence
- Investment Focus
- Automation and scale in manufacturing
- Survey
- FICCI’s Quarterly Survey on Manufacturing (QSM)
- Production Levels
- 91% of respondents reported higher or stable production levels in Q3 FY26
- Domestic Orders
- 86% of manufacturers expect higher or unchanged domestic orders
- Capacity Utilisation
- Nearly 75%
- Exports
- 69% of manufacturers reported stable or higher exports in Q2 FY26
- Hiring Sentiment
- 38% of respondents planning to add workforce in the next three months
- Interest Rate
- 8.9%
- Bank Funding
- More than 87% of respondents indicated adequate availability
- Electronics and Electricals Growth
- 10–20% in Q3 FY26
- Other Sectors Growth
- 5–10% in Q3 FY26
- Production Costs
- 57% of respondents reported an increase in production costs
- Workforce Availability
- 80% of respondents reported no labour shortages
Sources
‘Even if 10% of China’s incremental growth shifts to India…’: Nation’s manufacturing needs to take off now, say leaders at WEF 2026
From 're arm Europe' to AI warfare: Bharat Forge's Amit Kalyani maps risks, opportunities at Davos 2026
GST cuts, rising demand lift manufacturing sentiment in Q3 FY26: FICCI Survey
Davos 2026: China is facing some structural issues, says CGTN's Guan Xin
Davos: Global trade uncertainty persists, but India’s economic fundamentals remain strong, say industry leaders
