India's manufacturing sector is booming, with the latest PMI data revealing a four-month high in February, driven by robust domestic demand and increased production volumes.
Key Points
- India's manufacturing PMI reached a four-month high of 56.9 in February, indicating strong expansion.
- The growth was primarily fuelled by a substantial improvement in domestic demand.
- New export orders experienced a decline, impacting employment creation in the manufacturing sector.
- Manufacturers increased input purchasing and inventories in response to rising new orders.
- Year-ahead output volume assessments remain positive, with marketing efforts and favourable demand conditions expected to drive further growth.
India's manufacturing sector activity growth jumped to a four-month high of 56.9 in February, supported by substantial improvement in domestic demand even as growth in new export orders witnessed a decline, a monthly survey said on Monday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose from 55.4 in January to a four-month high of 56.9 in February.
In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
"India's final manufacturing PMI reflected an acceleration in manufacturing activity in February. Output expanded at a faster rate for a second month, supported by stronger domestic orders," Pranjul Bhandari, Chief India Economist at HSBC, said.
Goods producers indicated that demand buoyancy, marketing initiatives and rising client requirements underpinned another expansion in new business intakes.
Factors Driving Manufacturing Growth
"According to panel members, efficiency improvements, healthy underlying demand, rising intakes of new work and tech investment collectively boosted production volumes," the survey said.
One area where growth took a step back was new export orders. Where external sales rose, monitored companies cited gains from Asia, Europe the Middle East and the US.
"Growth in new export orders continued its slowing trend that began in mid-2025, somewhat restricting employment creation in the manufacturing sector," Bhandari said.
Price Pressures and Future Outlook
On the price front, cost pressures remained benign, rising at a moderate rate that matched the level seen in January.
With total new orders continuing to expand sharply, manufacturers in India purchased additional materials to supplement production and add to inventories.
In response to increasing workloads, firms stepped up input purchasing, lifted their inventories and hired extra staff.
Meanwhile, year-ahead assessments of output volumes remained positive as 16 per cent of companies forecast growth and fewer than 1 per cent anticipate a reduction.
Boding well to the outlook were marketing efforts and favourable demand conditions, the qualitative survey data showed.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
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