India’s manufacturing sector regained strength in October after slipping to a four-month low in September, supported by GST relief measures, improved productivity, and increased technology investments, according to a private survey released on Monday.
Stronger growth in new orders drove higher production and purchasing activity, leading to near-record expansions in input inventories. The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.2 in October from 57.7 in September, after readings of 59.3 in August and 59.1 in July. A PMI reading above 50 indicates expansion in activity.
However, external sales grew at the slowest pace in 10 months, indicating some moderation in overseas demand. The survey noted that the growth in new orders was largely fueled by domestic demand, buoyant market conditions, GST reforms, and marketing initiatives, while export orders expanded more slowly.
S&P Global highlighted that Indian manufacturers continued to build up raw materials and semi-finished goods inventories to support production, with purchasing growth at its fastest since May 2023. Lower cost inflation helped support these purchases, while robust domestic demand boosted output, new orders, and job creation. Despite moderation in input costs, some manufacturers passed on higher expenses to consumers, keeping selling prices elevated.
The sector has faced pressure from steep US tariffs imposed on Indian exports, which effectively increased duties by about 50% since late August. Nonetheless, positive business sentiment persists, driven by expectations around GST reform, capacity expansions, marketing efforts, and strong domestic demand. Manufacturers remain optimistic about future growth, anticipating resilient demand and approval of pending contracts.
