Steady Growth Persists in India's Manufacturing Sector Amidst Rising Costs

India's manufacturing sector maintained steady growth in Q4 FY 2025-26, driven by strong domestic demand and stable exports. Facing rising costs, manufacturers cite raw material prices and logistics as main challenges. Despite cost pressures, hiring intentions and export outlook remain optimistic, according to a FICCI survey.

India's manufacturing sector showed continued growth in the fourth quarter of the fiscal year 2025-26, benefiting from robust domestic demand and a positive export outlook, as per findings from the Federation of Indian Chambers of Commerce and Industry (FICCI).

The FICCI survey highlighted that 93% of manufacturers reported higher or unchanged production levels in the fourth quarter, up from 91% in the previous quarter. This suggests ongoing growth momentum across various sectors. However, rising costs remain a challenge, with 70% of respondents seeing an increase in production costs due to higher raw material prices and other expenses.

Despite these challenges, the employment outlook has improved, with a greater percentage of firms planning to increase their workforce. Additionally, the availability of finance remains strong, with adequate access to bank loans. Overall, the sector is buoyed by strong domestic demand and a stable export market, despite cost pressures and capacity utilization concerns.