New Delhi: The share of India’s manufacturing sector in gross domestic product (GDP) is projected to increase from 13 per cent in FY25 to 20 per cent by FY30, a report said on Monday. 

Manufacturing will account for a fifth of Indian GDP in 2030 due to rising demand, policy reforms and better integration of India into global value chains and a long‑term trend to diversify away from China, the report from financial services firm Equirus Capital said.

“The sector has laid a strong foundation for steady expansion and barring geo-political complications leading to an increase in tariff and non-tariff barriers, Indian corporates will witness extremely high growth over the next five years,” said Munish Aggarwal, Managing Director and Sector Lead Industrials, Equirus Capital.

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He said that reforms such as production-linked incentive (PLI), Gati Shakti, and infrastructure expansion schemes have positioned manufacturing as a core growth pillar.

The schemes laid the groundwork for a sustained capex cycle and deeper structural gains over the coming years, and the report expects the government to double down on such reforms to support employment.

Indian markets have signalled optimism

Indian markets have also signalled this optimism with the BSE Industrials Index outperforming the Sensex and other sectoral indices since July 2022.

Further, fundraising in the industrial sector surged with FY25 seeing 32 industrial IPOs that raised a record Rs 663.2 billion and M&A and private equity investments touching a five-year high of Rs 1,432.8 billion.

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M&A-led consolidation will shape the next phase of growth across the EV, electronics, and cement sectors, while PE interest is likely to remain strong in packaging, aerospace, and defence through FY30.

Automation, robotics and AI integration will witness integration of deep-tech and machine learning across industrial segments, with even smaller manufacturing set-ups adopting robotics, the report noted.

(IANS)