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Published 15:09 IST, January 31st 2025

Economic Survey 2025: India’s Manufacturing Growth Driven by Steel, Automobiles, and Electronics Sectors

Steel demand in India is surging, largely fueled by the construction and infrastructure sectors.

Reported by: Business Desk
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Economic Survey 2025
Economic Survey 2025 | Image: Republic

India’s manufacturing sector is experiencing significant growth, driven primarily by key industries such as steel, automobiles, and electronics. According to the Economic Survey 2025, the country’s infrastructure-focused growth strategy and strategic government initiatives have played a crucial role in this expansion, positioning India as a major player in the global manufacturing landscape.

Steel: A Backbone for Infrastructure Growth

Steel demand in India is surging, largely fueled by the construction and infrastructure sectors, which together account for an estimated 68 percent of the total steel consumption in FY24, as per the the survey. This growth is aligned with the government’s push for infrastructure development and increased focus on building and construction. 

"The sustained growth in steel sector was fuelled by ongoing development projects and increased public infrastructure spending. The primary drivers of steel demand included expansion in end-user sectors and the implementation of policies like the National Steel Policy and Production-Linked Incentive schemes. Government initiatives on housing, urban and rural infrastructure also contributed to the rising demand
However, the survey pointed out some ongoing challenges as India has been a net importer of steel between April and November FY25. The decline in exports during this period is attributed to the price disparity between international and domestic markets, which made Indian exports less competitive, as per the Survey's findings. 

Automobiles: Fueling Economic Growth

The survey also reckons that the Indian automobile sector is a significant contributor to the country’s economic growth. In FY24, domestic sales grew by 12.5 percent, driven by a diverse range of vehicles produced within India. The government has also extended the Production-Linked Incentive (PLI) Scheme by one year to support this momentum, as pointed out in the survey.

Electronics: A Booming Industry with Global Impact

India’s electronics sector has seen an impressive surge in production and exports over the past decade. Domestic production has skyrocketed from Rs 1.90 lakh crore in FY15 to Rs 9.52 lakh crore in FY24, reflecting a compound annual growth rate (CAGR) of 17.5 percent. One of the standout successes has been the country’s ability to reduce dependence on smartphone imports, as pointed out in the survey. 

"The country has also drastically reduced its dependence on smartphone imports, with 99 per cent now manufactured domestically. In FY24, the country produced approximately 33 crore mobile phone units, with over 75 per cent of the models being 5G enabled. The key drivers of growth have been the large domestic market, the availability of skilled talent, and low-cost labour," mentioned the survey.  

Current Challenges and the Path Forward

While India’s manufacturing sector shows immense potential, there are challenges that need to be addressed, as revealed in the survey. The capital goods sector, for example, has faced fluctuating growth between FY20 and FY23, and continues to rely heavily on imports for high-end machines and technology. The government has launched Phase II of the Scheme for Enhancement of Competitiveness of the Capital Goods Sector to address these technology gaps and improve the global competitiveness of the sector.

 

The survey asserted that India’s manufacturing sector is poised for continued growth, driven by advancements in steel, automobiles, and electronics. While challenges such as technology gaps and fluctuating export demand persist, the government’s strategic focus on innovation, infrastructure, and sustainability is paving the way for long-term success, as per the Survey. 
 

Updated 15:16 IST, January 31st 2025