Economic Survey 2025: India’s Manufacturing PMI Shows Optimism Amid Global, Seasonal Pressures
The expansion rate for December 2024 PMI exceeded its long-term average, driven by new business gains, robust demand, and advertising efforts, it said.
In fiscal 2025, India's manufacturing sector faced various challenges, including global demand and domestic seasonal pressures, but business surveys and purchasing managers’ index point to improving optimism, Economic Survey 2024-2025 revealed on Friday.
One of the key reason for global demand being impacted was, "the rise of China as a manufacturing powerhouse and its impact on the manufacturing aspirations of other nations, as well as the supply of minerals, materials, machinery, and equipment needed for energy transition, pose challenges," the report said.
The survey also noted that a part of the reason for manufacturing growth deceleration in the first half was seasonal causes, like the alignment of festivities and monsoon-related disturbances.
"Slackening global trade and aggressive trade and industrial policies of many major economies have affected manufacturing and investment by the private sector," the survey revealed.
However, business surveys and purchasing managers’ index point to improving optimism. "The way ahead lies in vigorous focus on deregulation, R&D, appropriate skilling and employment strategies, and targeted support for smaller enterprises," the report said. "This will improve the competitiveness of the Indian industry and prepare it to weather global challenges."
The survey found that latest Manufacturing PMI for December 2024 remained well within the expansionary zone. "The expansion rate for December 2024 exceeded its long-term average, driven by new business gains, robust demand, and advertising efforts," it said. "Meanwhile, international orders grew to a four-month high midway through the third fiscal quarter, signalling recovering external demand, as reported by companies."
According to disaggregated data quoted in the report, many manufacturing sub-sectors experienced growth, others faced challenges, likely due to global and seasonal factors.
Oil companies suffered due to inventory losses and lower refining margins, while steel companies faced price pressures and lower global prices, the survey revealed. The cement sector faced weak demand in Q2, due to heavy rains and lower selling prices.
"However, with the conclusion of the monsoon season and the expected pick-up in government capital expenditure, sectors such as cement, iron, and steel are expected to see a recovery," it said. "Further, mining and electricity are expected to normalise after the monsoon-related disruptions."
Among sectors, while production of capital goods recorded a robust growth in FY24, electronic goods has shown compounded annual growth of 17.5% from FY15 to FY24.
In addition, India has drastically reduced its dependence on smartphone imports, with 99% now manufactured domestically. 'Make in India' and Digital India have boosted domestic manufacturing and drawn foreign investments.
