India's Manufacturing Sector: Resilient Amid Global Tensions and Rising Costs

India's manufacturing sector is set for stable growth amid global tensions and rising input costs. Machine tools, metal products, automotive components, and electronics show resilience. Challenges include geopolitical uncertainties and rising costs, but strong fundamentals support a positive outlook, according to FICCI's latest survey.

The manufacturing sector in India is projected to maintain a stable growth trajectory, navigating through geopolitical tensions and escalating input costs. Key sectors, such as machine tools, metal products, automotive components, and electronics, continue to demonstrate resilience, as per the latest quarterly survey by the Federation of Indian Chambers of Commerce & Industry (FICCI).

The FICCI Quarterly Survey on Indian Manufacturing for Q1 FY2026-27 indicates that while manufacturing sentiment has somewhat moderated due to global uncertainties, prospects remain positive. The report highlights that despite the impact of ongoing geopolitical issues, manufacturers hold a steady confidence in India's domestic fundamentals, which continue to support growth.

Despite tempered optimism, FICCI predicts several industries are poised to outperform expectations. Machine tools and metal products are set for a 'Strong to Moderate' growth outlook, with automotive components expected to see 'Moderate to Strong' growth. Electronics, electricals, and capital goods are projected to register moderate growth. Moreover, the metals sector stands out as a strong performer, with high capacity utilization levels and plans for expansion and employment amidst external challenges.

According to the survey, electronics and electricals sectors are optimistic, driven by confidence in domestic demand. Over 67% of respondents plan to expand capacity. Nevertheless, challenges such as geopolitical tensions, labor availability, and cost pressures, including higher raw material and logistics costs, persist, impacting expansion plans.

Overall, the survey denotes that while India's manufacturing sector contends with global uncertainties and rising production costs, segments aligned with industrial capex and advanced manufacturing appear robust. The emphasis remains on maintaining operational stability, underpinned by resilient domestic fundamentals, according to the manufacturers surveyed.