India's economy has recorded its strongest quarterly growth in two years, with GDP expanding by 7.2 percent in the latest period, cementing the country's position as one of the fastest-growing major economies in the world. The robust performance has been driven by strong manufacturing output, resilient consumer spending, and increased foreign direct investment from companies diversifying their supply chains away from China.
The government has credited its "Make in India" initiative and production-linked incentive schemes for attracting major international manufacturers to set up operations in the country. Electronics giants including Apple suppliers Foxconn and Pegatron have expanded their Indian facilities, while semiconductor manufacturers are evaluating potential factory locations in response to generous government incentives.
Finance Minister Nirmala Sitharaman highlighted the country's economic achievements at a year-end review, pointing to India's progress toward becoming a five trillion dollar economy. She noted that manufacturing now accounts for nearly 17 percent of GDP, up from 14 percent five years ago, reflecting the success of policies designed to boost industrial production.
The positive economic data has attracted attention from global investors, with foreign portfolio investment in Indian markets reaching record levels during 2025. However, economists have cautioned that challenges remain, including persistent inflation in food prices, uneven job creation, and the need for continued infrastructure investment to support industrial growth.
India's diplomatic relations with Western nations have strengthened as companies seek alternatives to Chinese manufacturing, positioning the country as a key player in the emerging reconfiguration of global supply chains. Trade negotiations with the European Union and United Kingdom are advancing, with the potential to further boost investment and exports.
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