Key Highlights:

  • India's manufacturing sector clocked double-digit growth in 2025-26, emerging as one of the world's fastest-growing manufacturing hubs, according to a report by Morocco-based Assahifa.
  • Post-pandemic (2022-25), India's manufacturing grew at 4.15 per cent annually vs the global average of 2.19 per cent — a sharp reversal from 2016-19 when India lagged the global benchmark.
  • China's manufacturing growth collapsed from 6.79 per cent (pre-pandemic) to -0.07 per cent in 2022-25, opening a structural window for India.
  • Make in India, PLI, PM Gati Shakti, National Logistics Policy, GST, digital governance and labour reforms cited as key growth drivers.
  • Ongoing FTA negotiations with the EU and UK likely to further boost market access for Indian manufacturers.

India's long-cultivated manufacturing ambition is finally translating into headline numbers. A new report by Morocco-based publication Assahifa has flagged that India's manufacturing sector recorded double-digit growth in 2025-26 and continues to accelerate — cementing the country's emergence as one of the world's fastest-growing manufacturing hubs. The trigger, the report notes, is a combination of aggressive government schemes and a sharp rise in private investment interest.

The Policy Stack Behind the Boom

The Assahifa report credits India's structural reforms and flagship programmes as the backbone of the turnaround. Make in India, the Production Linked Incentive (PLI) scheme, PM Gati Shakti, the National Logistics Policy and steady improvements in ease of doing business have collectively begun to translate into higher industrial output, investment and exports. Together, they represent one of the most ambitious industrial policy stacks any large economy has attempted in a decade.

Global CEOs Are Voting With Their Capital

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, the report noted. Rising domestic demand and greater integration into global value chains are further accelerating growth — a virtuous cycle where scale and policy support feed on each other.

Logistics: The Hidden Multiplier

Much of the acceleration is being powered by unglamorous but foundational logistics reform. PM Gati Shakti, 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. In a manufacturing economy, every percentage point saved on logistics translates directly into cost competitiveness on the shop floor.

Reform Runway: GST, Digital, Labour

On the regulatory side, the Goods and Services Tax (GST), digital governance push, labour law rationalisation, and faster regulatory approvals have raised India's appeal as a global manufacturing destination. These are structural changes with long half-lives — the kind global boardrooms study before committing multi-year capex plans.

The Numbers Tell the Story

The report cited industry body ASSOCHAM to underline the shift. India's average annual manufacturing growth in 2016-19 stood at 3.44 per cent — actually below the global average of 4.39 per cent. Post-pandemic, between 2022 and 2025, India's manufacturing growth accelerated to 4.15 per cent, even as the global average slowed to 2.19 per cent. In just half a decade, India moved from a manufacturing laggard to an outperformer.

The China Reversal

The comparison with China is stark. Chinese manufacturing growth fell from 6.79 per cent pre-pandemic to -0.07 per cent in 2022-25, leaving the world's traditional factory floor over 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 said.

Why It Matters: A Structural Global Window

Before the pandemic, only China, Mexico and Russia recorded manufacturing growth above the global average. The Covid-19 crisis, however, exposed the fragility of highly concentrated production networks. Global companies are now actively diversifying supply chains away from traditional hubs — and India is emerging as their preferred alternative. This is not a cyclical trend; it is a decade-defining rewiring of global production.

Industry Impact: China+1, Friendshoring, Nearshoring

The Assahifa report highlighted that multinational corporations are increasingly deploying strategies such as China+1, friendshoring and nearshoring to build supply chain resilience. India's core advantage, it added, lies in offering manufacturers a rare combination — the scale of production geographies and the long-term market potential of a young, growing consumer base. Few countries can offer both. Fewer still can offer both under a stable, reform-oriented policy regime.

FTA Pipeline: The Next Big Lever

The report also flagged India's expanding network of Free Trade Agreements (FTAs) as a critical multiplier. Ongoing negotiations with the European Union and the United Kingdom, if concluded, will improve market access for Indian manufacturers and deepen the country's integration into global production networks. For sectors like textiles, auto components, electronics and pharmaceuticals, these agreements could unlock a step-change in export competitiveness.

Sectoral Momentum: Where the Action Is

While the report focuses on macro indicators, the sectoral reality on the ground echoes the trend. Electronics manufacturing, driven by the PLI schemes, has scaled at record pace, with India increasingly becoming a hub for smartphone assembly and component ecosystem building. Auto components, semiconductors, renewable energy equipment, chemicals and specialty pharma are all seeing fresh capex commitments from both Indian conglomerates and multinationals.

Audience Sentiment: Cautious Optimism in Boardrooms

Global boardroom sentiment on India has visibly shifted over the past two years — from "watching" to "committing". Investor conferences, CEO delegations, and cross-border MoUs have picked up pace, mirroring the broader narrative captured in reports like this one. The caution flag, however, remains around execution — states' ability to translate central policy signals into ground-level ease-of-operation for factory promoters will decide the pace of the next leg.

The Bigger Picture: A Once-in-a-Generation Opening

The Assahifa report frames India's moment as an "unprecedented opportunity". The data supports the framing. With global capital searching for a stable, scaled, democratic and demographically-young alternative to China, India is uniquely positioned to absorb the shift. The next few years will decide whether this window is merely a cyclical benefit — or the beginning of India's decisive rise as the world's next great manufacturing power.