Rajesh Nath, VDMA
India continues to strengthen its position as a preferred manufacturing destination for global machinery and equipment companies, according to the latest VDMA Business Climate Survey. Conducted among 85 member companies between April and May 2026, the survey reveals improving business sentiment, stronger order books, robust capacity utilisation, and sustained confidence in future growth. Despite ongoing geopolitical tensions and uncertainties in global markets, India’s domestic demand and industrial expansion are providing a stable and attractive environment for manufacturers.
The survey highlights a notable improvement in the current business climate. More than one-third of respondents rated their business situation as “good,” marking an increase from the previous survey period. A majority described conditions as satisfactory, while only a small percentage reported poor business performance. These findings suggest that machinery and equipment companies operating in India continue to benefit from the country’s strong economic fundamentals and expanding industrial base.
Capacity utilisation remains another positive indicator. Most companies reported operating at normal or above-normal capacity levels, reflecting healthy production activity and consistent customer demand. At the same time, order books have strengthened significantly. Nearly four out of ten companies indicated that their order levels are above normal, while close to half reported normal order volumes. Expectations for incoming orders during the next three months are particularly encouraging, with approximately two-thirds of respondents anticipating further growth.
Industry leaders believe India’s resilience is closely linked to its strong domestic market. Rajesh Nath, Managing Director of VDMA India, noted that India’s investment momentum and domestic demand continue to provide a comparatively stable environment for machinery suppliers. With India’s GDP growth estimated at 7.6 percent for FY2025-26, many European subsidiaries are finding opportunities to expand operations and strengthen local manufacturing capabilities.
Looking ahead, the outlook remains overwhelmingly positive. More than half of surveyed companies expect their business situation to improve over the next six months, while most of the remaining respondents foresee stable conditions. Only a very small minority anticipate any deterioration. Employment plans reflect this optimism, with nearly half of companies planning to increase headcount and only a few expecting workforce reductions. Revenue projections also remain strong, with companies forecasting average nominal growth of around 11 percent for FY2025-26 and approximately 10 percent for FY2026-27.
The survey also reveals differing performance levels across industrial segments. Electrical Automation emerged as one of the strongest-performing sectors, recording above-average sentiment and substantial improvement compared to previous assessments. Meanwhile, the Machine Tools and Manufacturing Systems segment continues to face comparatively slower momentum, though overall sentiment remains positive.
While business conditions remain favorable, companies continue to face certain operational challenges. The most frequently cited concerns include shortages of raw materials and inputs, lack of orders in specific sectors, and purchasing restrictions linked to local content requirements. Skilled labour shortages were mentioned less frequently, while financing constraints and technical capacity limitations were considered relatively minor obstacles. Despite these issues, the majority of respondents indicated that their operations are not significantly hindered.
The survey concludes that India’s machinery and equipment market remains one of the most attractive growth opportunities for international manufacturers. Supported by strong domestic demand, healthy investment activity, and improving business confidence, the country continues to demonstrate resilience even amid global economic uncertainty. For machinery and equipment companies seeking long-term growth, India is increasingly emerging not just as a market, but as a strategic manufacturing and innovation hub for the future.
