VDMA India has reported a notable improvement in business sentiment among its member companies operating in India, supported by robust domestic demand, stronger order books and sustained investment activity despite continuing global economic uncertainty. The findings are based on the latest VDMA Business Climate Survey conducted between April 20 and May 4, 2026, covering responses from 85 member companies representing the machinery and equipment sector. The survey highlights India’s growing role as a strategic manufacturing and growth market for international engineering and industrial technology companies.
According to the survey, a majority of respondents rated the current business environment as satisfactory or good. Companies reporting good business conditions increased to 36 percent from 29 percent in the previous survey cycle, while 54 percent described conditions as satisfactory. Capacity utilisation levels also improved, with 66 percent of companies operating at normal utilisation levels and 22 percent reporting above-normal utilisation.
Order books strengthened during the survey period, with 38 percent of respondents indicating above-normal order levels and nearly two-thirds expecting incoming orders to increase over the next three months. Domestic demand remained the primary growth driver, while export demand continued to show mixed trends amid global trade and economic volatility.
Rajesh Nath, Managing Director of VDMA India, stated that India’s strong domestic demand and investment momentum continue to provide a comparatively resilient environment for machinery and equipment suppliers. He added that the survey findings reinforce the need for European subsidiaries to align their localisation and sales strategies with India’s industrial priorities and customer investment cycles.
Johannes Gernandt, Chief Economist at VDMA, noted that India remains one of the brighter markets for machinery and engineering companies in an increasingly fragmented global economy. He added that a future EU–India Free Trade Agreement could further improve market access and reduce tariff barriers, creating additional opportunities for companies with manufacturing and sales operations in India.
The outlook for the next six months also remained optimistic. Around 57 percent of surveyed companies expect business conditions to improve further, while only a small minority anticipate deterioration. Employment trends reflected similar confidence, with 44 percent of respondents planning to expand their workforce. The survey additionally projected average nominal revenue growth of approximately 11 percent for FY2025-26 and around 10 percent for FY2026-27.
Among individual sectors, electrical automation showed particularly strong momentum, while machine tools and manufacturing systems continued to face relatively slower growth. Key operational challenges cited by respondents included raw material shortages, lower order visibility in select markets and local content-related procurement restrictions. VDMA stated that the findings underline India’s increasing importance within global industrial supply chains and highlight the resilience of local operations amid evolving geopolitical and trade dynamics.
