• According to The Manufacturing Purchasing Managers’ Index (PMI) shows India as the only large economy whose factory output is growing significantly.


  • The Indian manufacturing industry generated 16-17% of India’s GDP pre-pandemic and is projected to be one of the fastest growing sectors.
  • The machine tool industry was literally the nuts and bolts of the manufacturing industry in India.
  • Today, technology has stimulated innovation with digital transformation a key aspect in gaining an edge in this highly competitive market.
  • India has the capacity to export goods worth US$ 1 trillion by 2030 and is on the road to becoming a major global manufacturing hub.

  • With 17% of the nation’s GDP and over 27.3 million workers, the manufacturing sector plays a significant role in the Indian economy.
    • Through the implementation of different programmes and policies, the Indian government hopes to have 25% of the economy’s output come from manufacturing by 2025.
  • India now has the physical and digital infrastructure to raise the share of the manufacturing sector in the economy and make a realistic bid to be an important player in global supply chains.
  • A globally competitive manufacturing sector is India’s greatest potential to drive economic growth and job creation this decade.
  • Due to factors like power growth, long-term employment prospects, and skill routes for millions of people, India has a significant potential to engage in international markets. Several factors contribute to their potential.


  • The PMI, which measures the state of manufacturing through the prism of purchasing managers, was at 57.8 in June, slightly lower than 58.7 in May.

  • A PMI of above 50 means expansion or growth compared to the previous month while lower than 50 means contraction.
  • In what is seen as a clear sign of resilience in India’s factory sector, the manufacturing PMI has been above 50 for 24 straight months.
  • This performance has led to an increase in business confidence and optimism around future business activity among the industry.


  • PMI is seen as a significant measure of manufacturing (it also measures the services sector) the world over as it is elaborate and frequent.
  • It surveys purchasing managers in 500 manufacturing companies (in India across 19 industries).
  • Conducted monthly since March 2005, it tracks five major areas — new orders, output, employment, suppliers’ delivery time and stock of items purchased.
  • It helps analysts and economists to correctly anticipate the changing economic trends in GDP, inflation, employment and industrial production.
  • S&P Global, a financial information and analytics firm, compiles the index in India.


  • Factory output is the highest in 18 months and hiring has grown for the last 3 months.
  • Strong demand both within India and outside meant sharp improvements in production, sourcing and recruitment.
  • Experts attribute this to government spending, especially capital expenditure, and a strong rebound in private consumption which in FY23 grew by 7.5%.
  • India is gradually progressing on the road to Industry 4.0 through the Government of India’s initiatives like the National Manufacturing Policy which aims to increase the share of manufacturing in GDP to 25 percent by 2025.
  • The PLI scheme for manufacturing which was launched in 2022 to develop the core manufacturing sector at par with global manufacturing standards.
  • India’s natural resources (for example, iron ore, bauxite, high solar insolation, and cotton) and low-cost labor are a boon to makers of basic metals, textiles and apparel, renewable energy, and chemical products.


  • The Government of India has taken several initiatives to promote a healthy environment for the growth of manufacturing sector in the country. Some of the notable initiatives and developments are:

In the Union Budget 2023-24:

  • Startups incorporated within a time-period and meeting other conditions can deduct up to 100% of their profits.
  • In addition, the period within which losses of startups may be carried forward has been extended from seven to ten years.
  • As per the Union Budget 2023 – 23, the income tax rate for new co-operative societies engaged in manufacturing activities has been lowered from 22% to 15% (plus 10% surcharge).
  • Expenditure on fertilizer subsidy is estimated at Rs 1,75,100 crore (US$ 21.2 billion) in 2023-24.
  • Fertilizer subsidy for 2022-23 was increased substantially in response to a sharp increase in international prices of raw materials used in the manufacturing of fertilizers.
  • The Centre will facilitate one crore farmers to adopt natural farming.
  • For this, 10,000 Bio-Input Resource Centres will be set-up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network.
  • To avoid cascading of taxes on blended compressed natural gas, excise duty on GST-paid compressed bio-gas contained in it has been exempted from excise duty.
  • Customs duty exemption has been extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
  • Basic customs duty on seeds used in the manufacture of Lab Grown Diamonds has also been reduced.


  • Most large economies are struggling.
  • China’s June PMI at 50.5 was lower than May’s 50.9. Manufacturing business confidence is at an 8-month low.
  • It is also battling declining export demand and falling employment despite efforts by its central bank to stimulate the economy.
  • The Euro zone saw a PMI of 43.4 in June compared to 44.8 in May indicating further contraction.
  • The US registered a PMI of 46.3 in June (a six-month low) compared to 48.4 in May.
  • In the UK too the contraction worsened.


  • With impetus on developing industrial corridors and smart cities, the Government aims to ensure holistic development of the nation.
  • The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing.
  • With technology reaching what previously were unimaginable heights in the last decade, industries need to keep up with the current trends and the technology.
  • The focus is shifting towards machine learning to improve the efficiency and precision of the work.