As global economic conditions continue to evolve, several major trends across manufacturing, technology, retail, employment, and energy markets are shaping the economic outlook going into 2026. In recent months, rising production costs in Asia, improving investor confidence, a surge in consumer spending across smaller Indian cities, and stabilising oil markets have all contributed to a dynamic shift in global and domestic strategies. India has emerged as a central player across multiple industries, from manufacturing to technology, as companies recalibrate operations and investors re-evaluate priorities.
This comprehensive report examines the key developments influencing the global and Indian economic environment and what they may signal for the upcoming year.
Manufacturers Shift Focus to India as Asia’s Production Costs Climb
The global manufacturing landscape is undergoing a significant transition as rising inflation, wage increases, and supply-chain disruptions continue to elevate production costs across several Asian nations. China, long considered the world’s manufacturing powerhouse, has seen increasing labor expenses and stricter environmental regulations. Countries like Vietnam, Thailand, and Malaysia—popular alternatives for cost-sensitive manufacturers—are also experiencing upward cost pressure due to labor shortages and rising energy bills.
In contrast, India is emerging as a strong competitor, offering a blend of competitive labor costs, a large workforce, and government-backed incentives. India’s Production-Linked Incentive (PLI) schemes, introduced across sectors such as electronics, semiconductors, pharmaceuticals, textiles, and automotive components, have attracted global companies seeking long-term cost efficiency and a diversified supply chain.
Major electronics brands have already expanded production facilities in India, particularly in states such as Tamil Nadu, Karnataka, and Uttar Pradesh. Analysts predict that India’s electronic manufacturing services (EMS) market could grow to over $150 billion within the next five years if present momentum continues. In addition, the government’s focus on logistics modernization—including new freight corridors, improved ports, and digitized customs procedures—has significantly reduced the time and cost associated with exporting goods from India.
Furthermore, geopolitical tensions and the “China+1” strategy adopted by many multinational corporations have accelerated India’s inclusion in global supply networks. This transition is expected to generate millions of new jobs and strengthen India’s position as a preferred destination for global manufacturing by 2026.
