Sujeet Yadav

India’s manufacturing sector, which contributes nearly 17% to India’s GDP and employs over 27 million people, is demonstrating remarkable momentum. In

June 2025, India’s manufacturing activity soared to a 14-month high, with the Manufacturing Purchasing Managers’ Index (PMI) rising to 58.4—up from 57.6 in

May. This growth was powered by surging international demand, driving the fastest expansion in factory output since April 2024. New orders increased at the

steepest rate in nearly a year, while export orders logged the third-highest growth since 2005.

With record-high export orders and booming demand across sectors—from smartphones to automotive components—India is reinforcing its path to reach

US $1 trillion in goods exports by 2030, with manufacturing firmly at the core of its global trade ambitions.

More importantly, the sector’s expansion is not limited to traditional industries. India is gaining traction in emerging verticals like semiconductors, defence

manufacturing, smartphones, renewable energy components, and electric vehicles, many supported by strategic FDI and government-led incentives.

Manufacturing Sector Employment Trend

India’s manufacturing sector continues to play a pivotal role in generating formal employment, as revealed by the Employees’ Provident Fund Organisation

(EPFO) payroll data for June 2025. This data provides valuable insights into how the sector is evolving as a job creator, particularly for young and skilled

workers.

The EPFO data indicates that industries such as engineering, textiles, garments, and general engineering products all showed robust net additions to the

payroll. For example:

• The “Expert Services” category, which includes a wide range of manufacturing-related professional roles, added 168,956 net new members in June 2025

alone.

• Engineering contractors and general engineering product companies added thousands more, reflecting the sector’s need for both technical and operational

talent.

These figures indicate that demand for skilled manpower in manufacturing is broad-based and increasing, spanning from entry-level factory roles to

specialised engineering positions.

Youth-Centric Employment Patterns: A particularly striking trend is the large share of new EPFO subscribers in the 18–25 age group. This indicates that

companies in the manufacturing ecosystem are actively hiring young, first-time workers, likely fresh graduates or vocationally trained individuals. This is a

promising sign for India’s demographic dividend, as it shows that the sector is absorbing the youth into formal employment structures. This youth-focused

hiring trend is also being driven by government incentives and skilling programmes that aim to bridge the gap between industrial demand and workforce

readiness.

Policy Push: Adding momentum to this employment trend is the launch of the Employment Linked Incentive (ELI) Scheme in July 2025. This policy offers

direct financial incentives to employers in manufacturing and related sectors for hiring new workers. The scheme supports employers for up to four years,

encouraging long-term, formal job creation. It is especially targeted at boosting employment in labour-intensive manufacturing segments, thereby supporting

inclusive growth.

Hiring Reflects Sectoral Expansion: The hiring spike closely aligns with broader indicators of manufacturing health. The Manufacturing PMI rose to 58.4

in June 2025, the highest in over a year. This sharp uptick in output, new domestic and export orders led companies to hire at the fastest rate ever recorded in

the PMI’s two-decade history. It reflects how real production growth is directly translating into more jobs, especially in response to rising international demand.

Positive Future Outlook: Looking ahead, the outlook remains optimistic. With a projected Compound Annual Growth Rate (CAGR) of atleast 4.8% from

2025 to 2030, and continued government support through schemes like ELI, India’s manufacturing sector is well-positioned to remain a key engine of formal

employment. The focus on youth hiring, skilling, and incentivised recruitment is expected to further strengthen the sector’s job-creating capacity in the years to

come.

China+1 Strategy: How India’s Manufacturing

Sector Stands to Gain

The China+1 strategy is a global business approach adopted by companies seeking to reduce their heavy dependence on China for manufacturing and

supply chain operations. Instead of completely moving out of China, businesses are now diversifying by adding another country— hence the term “+1”—to

spread risk and improve resilience. This shift has been driven by several factors, including rising labour and production costs in China, increasing geopolitical

tensions (especially between China and the US), COVID-19-related disruptions that exposed supply chain vulnerabilities, and a growing recognition that

relying too heavily on one country is risky.

Among the countries benefiting from this strategic pivot, India stands out as a major contender. It offers several advantages that make it attractive to global

companies. India has a large, youthful, and skilled workforce that makes it well-suited for labour-intensive industries as well as high-tech sectors like

electronics and IT. Additionally, India’s strategic geopolitical alignment with the US, EU, Japan, and Australia adds to its stability and attractiveness as a

manufacturing base. While infrastructure gaps and regulatory hurdles remain, continued reforms and targeted investments position India as a strong

alternative to China in the global supply chain.

Demand, Investment, Policy Push Triad

Demand: India’s rapidly expanding middle class creates a powerful domestic demand engine. At the same time, international companies are increasingly

adopting a “China+1” strategy—diversifying their manufacturing and sourcing operations away from China to reduce risk and ensure supply chain resilience.

This twin dynamic—a massive internal market and rising global demand for alternative sourcing destinations—positions India uniquely. It is not only becoming

an attractive base for global manufacturing, but also a high-growth consumer market that can absorb what it produces, making India a strategic hub for both

production and consumption in the new global order.

Investment: India’s manufacturing sector is experiencing robust investment momentum, marked by a notable rise in both foreign and domestic capital

flows. In FY 2024–25 alone, Foreign Direct Investment (FDI) into the manufacturing sector surged by 18%, reaching USD 19.04 billion compared to USD

16.12 billion in the previous fiscal year—underscoring growing global confidence in India as a manufacturing hub. This foreign influx is complemented by a

sharp rise in domestic investment announcements. Major international players like Google, Apple, Micron, and Foxconn are actively scaling operations in

India, positioning the country as a serious contender in high-tech manufacturing and a strategic alternative in global supply chains amid the ongoing “China+1”

shift.

Policy Push

India is positioning itself as a global manufacturing powerhouse through a comprehensive set of policies and schemes. The flagship Make in India initiative

promotes domestic and foreign investment by improving ease of doing business, developing industrial corridors, and upgrading infrastructure. To accelerate

sectoral growth, the Production - Linked Incentive (PLI) schemes offer performance - based financial incentives across 14 sectors including electronics,

semiconductors, automobiles, textiles, and pharmaceuticals—drawing major firms like Apple, Samsung, and Foxconn. The National Manufacturing Mission,

announced in the Union Budget 2025–26, supports industries of all sizes through regulatory reforms, clean tech incentives, MSME empowerment, and skilling

for a future-ready workforce. The National Policy on Electronics (NPE) targets US $300 billion in electronics production by

25-26, while the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) provides incentives to localise the

electronics supply chain. The `76,000 crore Semicon India Programme aims to establish semiconductor and display fabrication units, and the FAME India

Scheme supports the local production of electric vehicles, batteries, and charging infrastructure. The Defence Production and Export Promotion Policy

(DPEPP) targets defence exports worth more than 40,000 crore by 2025 and is supported by two regional Defence Corridors in Uttar Pradesh and Tamil Nadu

that offer shared infrastructure and plug-and-play manufacturing setups.

To promote modernisation, the National Policy on Advanced Manufacturing and SAMARTH Udyog Bharat 4.0 drive the adoption of Industry 4.0

technologies like AI, automation, and robotics. The National Logistics Policy streamlines logistics through digital integration, logistics parks, and improved last-

mile connectivity. For clean energy manufacturing, the `20,000 crore PM Surya Ghar Muft Bijli Yojana boosts rooftop solar production and adoption, while the

Wind Power Manu-

facturing Push aims to meet 10% of global wind energy demand by 2030 through local production of turbine components. The Nuclear Energy Invest-ment,

also budgeted at `20,000 crore, strengthens domestic manufacturing of nuclear components and fuels. The Green Hydrogen Mission and Battery Storage

Manufacturing Scheme support the production of green hydrogen, electrolysers, and advanced battery technologies to ensure energy security and

sustainability. Skilling is addressed through the Skill India Mission, which integrates programmes like PMKVY, National Apprenticeship Promotion Scheme,

and Jan Shikshan Sansthan to train youth in industry-aligned skills. The Rashtriya Udyamita Vikas Pariyojana, a 22-week entrepreneurship programme

supported by Flipkart, empowers aspiring entrepreneurs—especially women— with business and manufacturing skills and MSME support. The Mega

Investment Textiles Parks (MITRA) scheme aims to develop seven world-class textile parks with integrated value chains and cluster-based production. The

Electronics System Design and Manufacturing (ESDM) Policy promotes the entire electronics manufacturing ecosystem from design to export. Finally, Startup

India, in partnership with DPIIT and the private sector, fosters innovation-led manufacturing in fields like defence, mobility, clean tech, and electronics, linking

startups with corporates and government support for scale and global competitiveness.

As the world recalibrates global supply chains and seeks resilient, diversified production bases, India’s manufacturing sector is emerging as the single most

powerful driver of economic growth and employment this decade. With the combined momentum of government-led initiatives, private investments, robust

digital infrastructure, and favourable demographics, India is uniquely positioned to serve both domestic and international markets. From semiconductors and

electric vehicles to defence equipment and consumer electronics, the country is expanding capacity in high-value, high-growth sectors that demand a wide

spectrum of skills and expertise.

(The author is correspondent of an international multi-media platform. Views expressed are personal)