India's manufacturing purchasing managers' index (PMI) surged to 59.3 in August, up from 59.1 in July, marking its highest level in 17 ½ years. This was driven by increased production volumes, which expanded at the fastest pace in nearly five years. The sustained expansion in the PMI underscores strong demand, improved order flows, and robust business confidence.
India’s index of industrial production (IIP) recorded growth of 3.5% in July, reaching a four-month high. This indicates a strong rebound in manufacturing, which expanded by 5.4%, and resilient momentum in core industrial activities, driven mainly by consumer goods and select infrastructure-linked sectors. The IIP stood at 155 in July 2025, up from 149.8 in the same month last year.
India's GDP expanded by 7.8% in the first quarter of fiscal year 2025-26 (April to June), marking a five-quarter high. The growth was underpinned by strong domestic demand, improved manufacturing performance, and a rebound in investments.
On Aug. 27, the United States imposed a 50% tariff (25% base plus an additional 25%) on India's exports. The United States is India's largest trading partner, with bilateral trade reaching $131.84 billion in 2024-25. Exports to the United States amounted to $86.5 billion, representing 18% of India's total exports. Approximately 60% of India's U.S. exports face the full 50% tariff, resulting in an effective average tariff of roughly 33.6%. Specific sectors, such as generic pharmaceuticals, electronics, and petroleum products, have been exempted from the tariffs. However, aluminum, steel, and copper remain subject to the 25% tariff. The tariffs will affect exports of textiles and ready-made garments, footwear, leather goods, sporting goods, shrimp, diamonds and jewelry, furniture, and auto components. The increased tariffs could reduce India's GDP growth by 0.4%-1% this fiscal year, putting pressure on employment in labor-intensive export sectors.
India's defense sector is experiencing a surge, driven by government procurement and the Make in India initiative. Annual defense production reached a record $17.2 billion in FY 2024-25, up 18% from $14.5 billion the previous year. State-owned firms contributed about 77% of the total output, while the private sector share increased from 21% to 23%.
India is making significant strides in strengthening its semiconductor manufacturing capabilities. Under the India Semiconductor Mission, 10 semiconductor units across six states have been approved, with a combined investment of approximately $18 billion. These approved facilities will focus on diverse semiconductor manufacturing segments, including outsourced semiconductor assembly and testing, compound semiconductor wafer fabrication, and advanced packaging technologies. These projects will be established in Gujarat, Uttar Pradesh, Odisha, Andhra Pradesh, and Punjab.
According to a Global Wind Energy Council report, India's wind energy capacity is projected to double from its current 51 GW to 107 GW by 2030. About 30 GW of projects are currently under development, with 6-7 GW expected to be commissioned this year. India is now the world's third-largest wind manufacturing hub, with an untapped wind potential of 1,164 GW.
India has overtaken Japan to become the world's third-largest solar energy producer. Data released by the International Renewable Energy Agency shows that India generated 108.4 GWh of solar power, surpassing Japan's 96.45 GWh. This milestone highlights India's growing renewable energy capacity and output leadership, supporting its net-zero transition goal.
A few recently announced projects and investment news items are listed below:
Suzuki Motor Corp. launched its first EV, the e-Vitara, from its Gujarat-based plant. The company plans to invest $8.3 billion over 5-6 years to make India a global EV manufacturing hub for Suzuki. The plant plans to produce around 1 million units and export to over 100 countries.
Airbus Helicopters has awarded Mahindra Aerostructure the contract to manufacture the main fuselage of its H125 helicopters. The first fuselage is expected to be delivered by 2027.
Hindalco Industries is setting up an aluminum extrusion facility in Andhra Pradesh for iPhone chassis components. Production is expected to start by March 2027.
The BC Jindal group is investing $1.8 billion to set up a greenfield facility in Odisha to produce steel products with specialized coatings. The facility will include a cold rolling mill (CRM), a continuous galvanizing line (CGL), and a color coating line (CCL). The first phase aims for an initial annual capacity of close to a million tons and will be completed by 2027.
The Adani Defense & Aerospace facility in Kanpur plans to double its bullet production. The company will invest over $800 million in the next few years to ramp up production and set up new manufacturing lines for defense equipment such as bulletproof jackets, drones, and missiles.
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