VDMA India Members Expect Sustained Revenue Growth in India

The latest VDMA Business Climate Survey for India, conducted between April 20 and May 4, 2026, among 85 member companies, shows a modest improvement in business sentiment: a clear majority rates the current situation as satisfactory or good, capacity utilization remains robust, and order books have strengthened. Against a backdrop of tariff-driven supply-chain realignments and weak momentum in parts of Europe, India continues to consolidate its role as a strategic manufacturing destination for international machinery & equipment companies. 

Rajesh Nath, Managing Director, VDMA India, says, “India’s domestic demand and investment momentum continue to provide a comparatively resilient environment for machinery & equipment suppliers. With real GDP growth estimated at 7.6 percent for FY2025/26, the survey results underline that many European subsidiaries can still expand in India despite global uncertainty. For VDMA members, this strengthens the case to align sales and localization strategies with India’s industrial policy priorities and customer investment cycles.”

Johannes Gernandt, VDMA Chief Economist, says, “In a fragmented global economy, India stands out as a relative bright spot for many VDMA  members. The survey confirms a stable-to-improving operating environment, supported by robust domestic demand. In addition, the conclusion of negotiations on an EU–India Free Trade Agreement would, once ratified and implemented, improve market access and reduce tariff barriers—an important tailwind for machinery & equipment companies with production and sales footprints in India.”

Current Business Situation and Orders

The current business situation shows a remarkable improvement compared to the previous survey: the share of companies rating conditions as good increased to 36 percent (from 29 percent), while the share reporting satisfactory conditions declined to 54 percent (from 63 percent); the share rating conditions as poor edged up to 9 percent (from 8 percent). Capacity utilization remains robust and improved at the margin, as the share of companies operating below normal fell to 12 percent (from 17 percent), while 22 percent report above-normal utilization (unchanged) and 66 percent report normal utilization (from 61 percent). 

Order books have improved. While 38 percent of companies report an above-normal stock of orders, 46 percent consider it normal and 15 percent below normal. Expectations for incoming orders over the next three months remain upbeat, with about two thirds anticipating an increase and only a small minority expecting a decline. Domestic demand continues to be the main driver, while export orders remain mixed amid global uncertainties.

Outlook: Confidence in Continued Growth

The outlook for the next six months remains positive: 57 percent expect their business situation to improve, 40 percent anticipate stability, and only 4 percent foresee deterioration. Employment plans mirror this confidence, with 44 percent planning to expand headcount, 51 percent expecting no change, and just 5 percent anticipating reductions. 

Nominal revenue growth projections are encouraging. For FY2025/26, companies report solid nominal revenue gains on average (around 11 percent), broadly in line with the optimistic sentiment seen in the previous survey cycle. For FY2026/27, respondents expect average nominal revenue growth of about 10 percent, pointing to continued expansion. 

Sub-sector Performance and Challenges

The survey reveals a differentiated picture across sub-sectors. Electrical Automation shows above-average sentiment and a marked improvement compared to the previous survey, while the Machine Tools and Manufacturing Systems sub-sector continues to lag behind the machinery & equipment average.

Impediments to business remain relatively minor. Overall, 47 percent of respondents report that their business activities are currently hindered, while 53 percent do not. The most frequently cited challenges (excluding ‘other factors’) are shortages of raw or input materials, with 14 percent, marking a clear increase compared to H2 2025 (3 percent). This is followed by lack of orders (13 percent) and purchasing restrictions due to local content requirements (11 percent). Shortages of skilled labor (9 percent) are mentioned less often, while financing constraints and technical capacity limitations (both 4 percent) remain relatively minor.

Strategic Implications

India’s machinery & equipment market continues to offer attractive growth prospects for VDMA member companies, supported by robust domestic demand, improving order books, and sustained investment intentions. New survey evidence also suggests that the ongoing West Asia conflict has, on average, only a moderate impact on domestic business prospects— primarily via demand and trade/logistics channels rather than directly through energy costs— highlighting both the resilience of local operations and the importance of supply-chain risk management for subsidiaries integrated into global trade routes. 

 

For more information: www.vdma.eu