India's manufacturing purchasing managers’ index (PMI) remained robust in May 2025, registering 57.6, a slight decrease from April’s 58.2. Both domestic and international demand proved strong, with notable growth in new orders and output.
In the fourth quarter (January to March 2025) of fiscal year 2024-25, India’s GDP grew 7.4% year over year. Overall, the annual GDP for FY 2024-25 is projected to grow by 6.5% in real terms, maintaining its position as the fastest-growing large economy in the world. India has also surpassed Japan, becoming the fourth-largest global economy in nominal GDP, which is now valued at $4.19 trillion.
Foreign direct investment in India increased by 14%, reaching $81.4 billion in FY 2024-25, up from $71.28 billion in the previous fiscal year.
In May, India and the U.K. signed a free trade agreement to boost bilateral trade between the two nations significantly. The agreement will reduce tariffs on 90% of British products sold in India. Within a decade, 85% of these products will be tariff-free. Some items included in this agreement are liquor, automobiles, medical devices, electrical machinery, aerospace products, non-ferrous metals, metal ores and scrap, general industrial machinery, various food items, and fishery products. Tariffs on automobiles will be reduced from 100% to 10%. In return, India will export refined oils, clothing, telecom and sound equipment, capital goods, and medicinal products with nearly zero import duty.
Currently, discussions are underway between the United States and India to finalize a free trade agreement between the two countries.
According to a recent study conducted by the Confederation of Indian Industry (CII) and Kearney, India's mining and construction equipment (MCE) sector is poised for significant expansion. It is projected to reach $45 billion by 2030, growing at a 19% compound annual growth rate (CAGR). Currently valued at $16 billion, this growth is expected to contribute over $100 billion to the economy by FY 2030, creating around 20 million jobs directly or indirectly.
According to a recent report by Crisil, India's auto parts industry is projected to grow by 7%-9% in FY 2025-26. This growth is attributed to strong domestic demand for two-wheelers, cars, and utility vehicles, which together account for nearly half of the sector's $92 billion revenue.
A few recently announced projects and investment news items are listed below.
Nissan plans to invest around $800 million to launch multiple new products over the next two years. They intend to nearly triple their car sales in India to 100,000 units and increase annual exports to 100,000 units by the end of FY 2027.
ReNew Energy Global PLC (ReNew) is investing around $2.5 billion to develop one of India’s largest hybrid renewable energy projects in Andhra Pradesh’s Anantapur district. The plant will have a generation capacity of around 2.8 GW, comprising 1.8 GW of solar and 1 GW of wind power, along with battery energy storage systems of 2 GWh.
Foxconn has partnered with HCL to set up a semiconductor manufacturing facility in Jewar, Uttar Pradesh. The project is valued at over $350 million. The plant will specialize in manufacturing display driver chips, essential components used in controlling screens across a range of electronic devices, including mobile phones, laptops, PCs, automotive displays, and more. The plant is designed with the capacity to process 20,000 wafers per month, which translates to an estimated monthly output of 36 million units of display driver chips.
Adani Defense & Aerospace has partnered with Sparton, a subsidiary of Elbit Systems, to produce sonobuoy solutions for underwater surveillance and submarine detection. The aim is to produce sophisticated electronics and antisubmarine equipment in India and offer them in the international market as well.
Schaeffler is investing around $570 million to ramp up production capacity and boost localization efforts across Schaeffler’s Indian operations. This move will strengthen the company’s presence in key sectors, including e-mobility, bearings, industrial solutions, powertrain and chassis components, special machinery, and more.
Honda Motorcycle & Scooter India is setting up a fourth production line at its two-wheeler manufacturing plant in Vithalapur, Gujarat. This expansion will make the Gujarat plant Honda’s largest assembly plant in the world.
Suzuki Motorcycle India is establishing a new manufacturing facility in Kharkhoda, Haryana. The plant, which will be spread across 100 acres and commence production in 2027, will have an annual production capacity of 750,000 two-wheelers.
For more information, please contact Arun Mahajan at AMahajan@AMTonline.org.
