India’s manufacturing sector continued its growth momentum in the fourth quarter of FY 2025-26, supported by strong domestic demand and stable economic fundamentals, according to the latest survey released by the FICCI.
The survey indicates that nearly 93 percent of respondents reported higher or stable production levels during Q4, an improvement from 91 percent recorded in the previous quarter. This steady rise reflects resilience in the sector despite persistent cost pressures.
Strong Domestic Demand Drives Growth
A key highlight of the survey is the sustained demand environment within the domestic market. Around 89 percent of manufacturers expect higher or stable domestic orders in the coming months, signaling continued demand momentum.
The findings point to a positive outlook among both large enterprises and Micro, Small and Medium Enterprises (MSMEs), which form the backbone of India’s manufacturing ecosystem. The consistent demand has helped maintain production levels and boosted business confidence across sectors.
Rising Input Costs Remain a Concern
Despite the encouraging growth trend, the survey underscores a significant challenge—rising production costs. Nearly 70 percent of respondents reported an increase in input costs, primarily driven by higher raw material prices, logistics expenses, and utility costs.
These elevated costs have put pressure on profit margins, forcing manufacturers to adopt cost-control measures and improve operational efficiencies. Industry experts believe that while demand remains strong, sustained cost pressures could impact future growth if not managed effectively.
Optimism Across Manufacturing Segments
The survey reflects widespread optimism across various manufacturing segments. Both large-scale industries and MSMEs have expressed confidence in maintaining or improving production levels in the near term.
This optimism is largely attributed to stable macroeconomic conditions, improved supply chain efficiency, and supportive policy measures. Government initiatives aimed at boosting domestic manufacturing and infrastructure development have also played a crucial role in strengthening the sector.
Outlook for the Coming Quarters
Looking ahead, the manufacturing sector is expected to maintain its growth trajectory, provided demand conditions remain favorable. However, managing input cost inflation will be critical for sustaining profitability and long-term expansion.
The FICCI survey highlights that while challenges persist, the overall outlook for India’s manufacturing sector remains positive. Continued policy support, coupled with strong domestic consumption, is likely to drive further growth in the coming quarters.
