India’s manufacturing sector recorded its strongest expansion in nearly two decades, driven by resilient local demand.
Mumbai
India’s manufacturing sector expanded at its fastest pace in 17.5 years in August, buoyed by strong local demand, even as export growth faltered under new US tariffs.
According to the HSBC-S&P Global survey, the Manufacturing Purchasing Managers’ Index (PMI) rose to 59.3 from July’s 59.1. The uptick was powered by pre-festive domestic demand, which more than offset weakening international orders. Production volumes grew at their quickest pace in nearly five years, with intermediate goods leading the surge, followed by capital and consumer goods.
HSBC India’s chief economist Pranjul Bhandari said the robust PMI highlighted the ability of domestic demand to cushion the drag from slowing exports. She noted that new orders in August matched July’s momentum, which had been the fastest in nearly five years.
The survey also pointed to a sharp divergence: while international orders rose only marginally—the weakest increase in five months—domestic buyers drove demand, aided by successful advertising and marketing campaigns. The slowdown in exports was linked to the US decision to impose 50% tariffs on Indian goods, which prompted American buyers to hold back.
Employment remained a bright spot, with manufacturers expanding their workforce for the 18th consecutive month, though job growth slowed to its weakest since November 2024. Optimism about future output remained firm, with firms accelerating material purchases in anticipation of sustained demand.
Overall, analysts said the resilience of domestic consumption underlines India’s strong economic fundamentals, positioning the manufacturing sector for steady growth despite external challenges.
