Economic Survey says industrial GVA growth stayed strong in first half of FY26

New Delhi: India’s industrial Gross Value Added (GVA) grew by 7.0 per cent year-on-year in real terms during the first half of FY2025-26, the Economic Survey 2025-26 said. The growth marked a clear pickup after industrial expansion slowed to 5.9 per cent in FY2024-25.

The survey, tabled in Parliament by Union Finance Minister Nirmala Sitharaman, said manufacturing remained the main driver of this performance. Manufacturing GVA grew by 7.72 per cent in the first quarter of FY26. It further accelerated to 9.13 per cent in the second quarter.

The survey attributed this momentum to structural changes in the sector. These included a shift towards higher-value manufacturing. It also cited better industrial infrastructure through corridor-led development. In addition, wider adoption of technology and formalisation supported growth.

Industrial GVA growth driven by manufacturing and core sectors

The survey said medium- and high-technology activities now accounted for 46.3 per cent of India’s total manufacturing value added. It linked this rise to government initiatives such as the Production Linked Incentive schemes and the India Semiconductor Mission. Capacity expansion in electronics, pharmaceuticals, chemicals, and transport equipment also played a role. As a result, India’s Competitive Industrial Performance ranking improved to 37th in 2023 from 40th in 2022.

Even though bank-based industrial credit growth moderated to 8.24 per cent in FY25 from 9.39 per cent in FY24, overall financing strengthened. The survey noted a steady shift towards non-bank funding sources. Financial flows from non-bank sources recorded a compound annual growth rate of 17.32 per cent between FY20 and FY25.

Core industries maintained strong momentum during the period. India remained the world’s second-largest producer of steel and cement. The survey said cement demand was likely to rise further. It linked this to large infrastructure projects in highways, railways, housing, and urban development. It also noted major transformation in the steel sector over the last five years due to strong domestic demand.

India’s coal sector reached a record output of 1,047.52 million tonnes in FY25. This marked a 4.98 per cent increase over the previous year. The chemicals and petrochemicals sector continued to play a key role. It contributed 8.1 per cent to manufacturing GVA in FY24.

The automotive industry recorded nearly 33 per cent growth in production between FY15 and FY25. The survey said government initiatives supported this expansion. These included schemes to promote electric vehicle manufacturing. As a result, EV registrations rose sharply in recent years.

The survey highlighted a structural shift in electronics manufacturing. Electronics moved from the seventh-largest export category in FY22 to the third-largest in FY25. Mobile phone manufacturing led this growth. Production value in the segment rose nearly 30-fold, from ₹18,000 crore in FY15 to ₹5.45 lakh crore in FY25.

India’s pharmaceutical sector also recorded sustained expansion. The industry remained the world’s third-largest by volume. It met around 20 per cent of global generic drug demand in FY25. Annual turnover reached ₹4.72 lakh crore. Exports grew at a compound annual rate of 7 per cent over the last decade.

Looking ahead, the survey said the next phase of industrialisation would require a strategic shift. It called for moving beyond import substitution towards scale, competitiveness, and innovation. It also stressed deeper integration with global value chains. The survey emphasised the need for higher private investment in research, skills, technology adoption, and quality systems.