Intro
India’s manufacturing growth slowed to a four-year low in March due to rising costs, uncertainty, and Middle East conflict
New Delhi:
India’s manufacturing sector growth slowed to a four-year low in March as rising input costs, intense market competition, global uncertainty, and the ongoing war in the Middle East tempered expansion in new orders and output, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI).
The seasonally adjusted PMI fell to 53.9 in March from 56.9 in February, marking the weakest improvement in overall business conditions since June 2022. In PMI terms, a reading above 50 indicates expansion, while a score below 50 signals contraction. Pranjul Bhandari, Chief India Economist at HSBC, noted that disruptions linked to the Middle East conflict are affecting the global economy and weighing on Indian manufacturers.
The slowdown was most pronounced in the two largest PMI sub-components: new orders and output, which expanded at the slowest pace since mid-2022. Firms reported significant cost pressures across a wide range of inputs, including aluminium, chemicals, fuel, jute, leather, fabric, oil, rubber, and steel. While input costs surged to their highest level in over three-and-a-half years, output price inflation remained subdued as companies sought to retain customers and secure new business.
Despite these challenges, the survey revealed some positive trends. Indian manufacturers saw the strongest expansion in external sales since September last year, with notable demand from Australia, Brazil, Canada, China, Europe, Japan, the Middle East, Turkey, and Vietnam. Employment also rose at the fastest pace in seven months, reflecting cautious optimism about future production.
The HSBC India Manufacturing PMI is compiled by S&P Global using responses from around 400 manufacturers. Analysts said that while growth has moderated, the sector continues to expand, supported by resilient external demand and a generally positive outlook for the year ahead.
