India’s Manufacturing Sector Shows Resilience as Business Optimism Hits Seven-Month High
Bengaluru — India’s manufacturing sector continued to expand in September, demonstrating resilience amid global challenges, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global.
While the pace of growth moderated slightly to 57.7 from August’s 59.3, the sector remains on a strong upward trajectory, reflecting steady domestic and international demand.
The moderation in growth was primarily due to a temporary slowdown in new orders and output, but new export orders picked up pace, signaling continued global confidence in Indian products.
Economists note that while U.S. tariffs have created headwinds for certain exports, rising demand from other international markets is helping to offset these effects, reinforcing India’s status as Asia’s third-largest and fastest-growing economy.
Input cost pressures prompted firms to adjust prices, with factory gate prices rising at the fastest rate in nearly 12 years. Companies responded strategically to ensure sustainable operations, reflecting strong adaptability and financial discipline.
Despite these cost pressures, manufacturing firms maintained robust performance and continued investment in operations, signaling the sector’s long-term strength.
Employment growth saw a modest slowdown, but firms remain committed to workforce development and strategic hiring as conditions stabilize. Only 2% of companies reduced hiring, indicating that businesses are taking measured steps to ensure operational efficiency while navigating current challenges.
Business optimism in the sector reached a seven-month high in September, driven by confidence in domestic policy support, including recent goods and services tax (GST) rate cuts. Firms expressed optimism that these measures will enhance demand, improve profitability, and create a favorable business environment for the year ahead.
Analysts highlight that tax relief and strong domestic consumption are key factors supporting continued growth in manufacturing activity.
Chief India economist at HSBC, Pranjul Bhandari, noted, “New export orders increased at a faster rate in September, indicating strong global demand outside the U.S., while domestic policy support is enhancing business confidence. Firms remain positive about future output and the overall growth outlook despite temporary challenges.”
Overall, India’s manufacturing sector continues to demonstrate remarkable resilience, combining steady expansion, adaptive strategies to manage costs, and growing optimism for the future. With strong domestic demand, supportive policy measures, and a diverse export base, India is well-positioned to sustain long-term manufacturing growth and maintain its leadership among major global economies.
