India’s manufacturing export sector is at a crossroads in 2025, as the global economic landscape continues to evolve. The nation’s ambition to become a major player in the global manufacturing export market by 2047 is supported by several key government initiatives, but challenges loom in the form of global economic uncertainties, changing trade dynamics, and rising protectionism. India must leverage its strengths and navigate these challenges to establish itself as a leading exporter of manufactured goods.
Growth Amid Global Economic Slowdown
India’s manufacturing exports have demonstrated resilience despite global economic headwinds. During April–August 2025, India’s merchandise exports rose by 2.52% year-on-year, reaching $184.13 billion. This growth is driven by strong industrial production, which has increased by 3.5% year-on-year, especially in manufacturing sectors. The government’s initiatives, such as the Production Linked Incentive (PLI) scheme, National Manufacturing Mission, and PM MITRA, are boosting manufacturing capabilities, improving competitiveness, and making India an attractive destination for foreign investment in various industries.
However, the global economy faces headwinds. Growth projections for 2025 are subdued, with the global GDP expected to decline from 3.3% in 2024 to 3.2% in 2025. Higher tariffs, geopolitical tensions, and a slowdown in consumer demand from key markets like the U.S. and Europe pose significant risks for Indian exporters. Furthermore, U.S.-imposed tariffs on Indian goods, particularly in textiles, leather, and food products, have the potential to disrupt trade flows and increase costs for Indian manufacturers.
Strategic Sectors Driving Export Growth
India’s manufacturing export success hinges on its ability to leverage growth in strategic sectors. The electronics sector, for instance, is a significant contributor, with exports rising by 32.5% in fiscal 2024–25. The government’s focus on the Electronics System Design and Manufacturing (ESDM) sector and the establishment of specialized parks in states like Uttar Pradesh is attracting global investments and bolstering the sector’s export potential.
The hand and power tools industry is another key area poised for growth. With an export potential of $25 billion by 2035, India’s strong MSME base and the government’s policies aimed at enhancing this sector’s competitiveness will fuel export growth. Additionally, India’s shipbuilding industry is seeing substantial investment to reduce dependence on foreign vessels, with a Rs 70,000 crore ($8 billion) revitalization package in place to boost production and exports.
Trade Agreements and Diversification of Markets
India is actively pursuing trade agreements to diversify its export markets. The recent India–European Free Trade Association (EFTA) Trade and Economic Partnership Agreement, which comes into effect on October 1, 2025, will eliminate tariffs on a majority of goods traded between India and the EFTA region. This is expected to significantly boost India’s exports of pharmaceuticals, textiles, and machinery to these countries.
India’s global export strategy also includes increasing trade with emerging markets in Africa, Southeast Asia, and Latin America, reducing dependence on traditional Western markets, and expanding India’s footprint in the global supply chain.
Conclusion
The future of India’s manufacturing exporters in the global economy is shaped by both challenges and opportunities. While global economic slowdowns and protectionist policies threaten growth, India’s strategic initiatives in electronics, shipbuilding, and other key industries provide a foundation for sustained export growth. By actively pursuing trade agreements, diversifying markets, and capitalizing on its competitive advantages, India can navigate the complexities of the global economy and emerge as a global manufacturing powerhouse.