India's Macroeconomic Fundamentals Remain Strong; Manufacturing GVA Grew 10.7% in FY26: MoS Industry

India’s manufacturing sector continued to strengthen despite global uncertainties, with manufacturing gross value added (GVA) expanding 10.7% in 2025-26, while the MSME sector contributed 31.1% to the country’s GDP, the Centre informed the Lok Sabha on Tuesday.

Replying to a query by DMK MP Dayanidhi Maran in the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said, “The macroeconomic fundamentals of the Indian economy remain strong. Real gross domestic product (GDP) has grown at over 7% during the last three years. The high-frequency indicators for the first quarter of 2026-27 point to sustained momentum in economic activity and domestic demand, reflecting the continued resilience of the Indian economy. Manufacturing gross value

added (GVA) at constant prices grew by 10.7% in 2025-26, compared to 9.3% in 2024-25.”

He added that the MSME sector remains an important pillar of the Indian economy. In 2023-24, it contributed 31.1% to India’s GDP and accounted for 35% of the country’s manufacturing output.

“Bank credit to MSMEs grew at a robust rate of 17.5% in May 2026 compared to 5.4% in the corresponding period last year,” he added.

He also highlighted improving industrial indicators, stating that the Index of Industrial Production (IIP) growth rose from 3% in March 2026 to 5.1% in May 2026, while the Index of Core Industries growth increased from 2.9% to 5% during the same period.

Govt Lists Budget Measures for Industry

Responding to queries on fiscal and taxation measures, the minister said Budget 2026-27 introduced tax and customs reforms aimed at simplifying compliance and facilitating trade.

It also highlighted support measures including Mega Textile Parks, extension of the export obligation period from six to 12 months, and stronger liquidity support for MSMEs through the Trade Receivables Discounting System (TReDS).

The minister said the Production Linked Incentive (PLI) schemes have approved 892 applications as of March 31, 2026, attracting investments of over Rs 2.40 lakh crore.

“These have generated production worth Rs 22.66 lakh crore, exports of Rs 15.2 lakh crore, and over 14.15 lakh jobs,” he said.

Steps to Support MSMEs, Exporters and Startups

The government said it has rolled out several measures to shield businesses from rising input costs, energy price volatility and inflation.

Among them are the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, which provides 100% guarantee coverage for eligible MSMEs, the creation of an Inter-Ministerial Group on Supply Chain Resilience, reduction in excise duty on petrol and diesel by Rs 10 per litre in March 2026, and continued support under Startup India.

The Centre said that as of June 30, 2026, 2,40,092 entities had been recognised under the Startup India initiative.

Private Investment, Forex Reserves Remain Strong

On concerns regarding capital outflows and slowing private investment, the government said private Gross Fixed Capital Formation (GFCF) increased from Rs 28.5 lakh crore in 2022-23 to Rs 32.4 lakh crore in 2024-25.

It added that manufacturing capacity utilisation rose to 75.6% in the third quarter of FY26, while India’s foreign exchange reserves stood at $675.2 billion as of July 10, 2026, providing an import cover of 10.3 months. India also posted a current account surplus of $2.8 billion during April-May 2026.

The government said it is continuing reforms to improve investor confidence through tax certainty, lower compliance burden, simplified dispute resolution and ease of doing business. It also reiterated that up to 100% foreign direct investment (FDI) is permitted under the automatic route in most sectors, while the National Single Window System (NSWS) is facilitating faster approvals for investors.