Purpose – The study aims to investigate the relationship between financial development and the growth dynamics of the manufacturing industry, offering empirical evidence from India. Design/methodology/approach – This study employs the time series autoregressive distributed lag (ARDL) model to empirically examine the effectiveness of financial development on the growth performance of India’s manufacturing industry in both the long run and short run. Findings – Financial development includes specific variables such as commercial banks’ credit, foreign direct investment inflows, market capitalization, real exchange rate and foreign trade openness have a significant positive effect, while money supply has a significant negative effect on the growth performance of the manufacturing industry in the long run. In the short run, money supply has a significant positive impact, whereas commercial banks’ credit has a significant negative effect on the growth performance of the manufacturing industry. Thus, an advancement in financial development will enhance the manufacturing industry’s growth performance in India over the short run as well as the long run. Research limitations/implications – The outcomes of this study are of significant importance to the Government of India (GoI) for fiscal consolidation and to the Reserve Bank of India (RBI) for effective monetary policy transmission, particularly in their efforts to promote financial inclusion and financial development in relation to the growth of the manufacturing industry amidst challenging market conditions. Originality/value – As a developing economy, India faces the challenge of advancing its financial infrastructure to boost national output and employment, particularly through the manufacturing industry. However, there has been a dearth of research focused on this crucial intersection. So, the study aims to provide a renewed perspective on the interconnection, offering valuable insights.

Purpose – This study aims to investigate the effect of monetary policy transmission on the use-based classification of manufacturing industries in India, an integral aspect influencing the overall economic growth of the nation. Design/methodology/approach – The empirical study applies a panel autoregressive distributed lag model to examine the relationship/association between monetary policy transmission mechanism and the output of manufacturing industries in the long run and short run. Findings – In the long run, the findings reveal a negative association between money supply and manufacturing industries’ output, indicating that an increase in money supply corresponds to a decrease in manufacturing output. Conversely, a positive relationship is observed between manufacturing industries’ output and banks’ credit, indicating that an increase in bank credit leads to a corresponding increase in manufacturing output. In the short run, the results highlight a significant positive relationship between manufacturing output and monetary policy transmission variables, including money supply, statutory liquidity ratio, real exchange rate and foreign direct investment. The use-based classification of manufacturing industries such as primary goods, capital goods and intermediate goods exhibits greater responsiveness to monetary policy shocks than consumer durables and non-durables goods. Research limitations/implications – Policymakers are advised to regulate credit expansion to support the industry without risking financial instability, with key recommendations including stimulating consumer demand and adopting sector-specific policies to promote sustainable growth across diverse manufacturing sectors. Originality/value – India, being a developing economy, efficient monetary policy transmission is crucial for boosting manufacturing output and employment. Nevertheless, there has been a scarcity of research concentrated on this pivotal intersection. This study aims to fill that gap, providing fresh insights into how monetary policy affects the growth of the manufacturing industry.