Manufacturing sector growth hits 8-month high

New Delhi

India's manufacturing sector grew at its fastest pace in eight months in March, driven by strong demand and increased sales, an HSBC report revealed on Wednesday.

Despite a slight slowdown in international orders, total sales saw a sharp rise, leading firms to use existing inventory to meet demand. This resulted in the fastest decline in finished goods stocks since January 2022. To counter this, companies increased input purchases at the quickest rate in seven months.

“India’s manufacturing PMI rose to 58.1 in March from 56.3 in February. While export orders slowed, domestic demand remained strong, pushing new orders to an eight-month high of 61.5,” said Pranjul Bhandari, Chief India Economist at HSBC.

Optimism remained high, with 30% of businesses expecting higher output in the next year, while less than 2% anticipated a decline. The overall health of the sector improved, exceeding its long-run average.

A key factor behind this growth was a surge in the New Orders Index, which hit its highest level since July 2024. Firms credited strong customer interest, improved demand conditions, and effective marketing strategies. Production levels increased significantly, marking the sharpest rise in eight months.

Although export orders grew, the pace slowed to a three-month low. Gains in sales were reported from Asia, Europe, and the Middle East. Positive market conditions and pending projects are expected to support continued growth.