NEW DELHI: India’s manufacturing sector recorded its strongest improvement in operating conditions in over 17 years this August, supported by robust demand and higher production efficiency, according to a monthly survey released Monday.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose slightly from 59.1 in July to 59.3 in August, marking the sharpest improvement in 17-and-a-half years. A PMI reading above 50 signals expansion, while below 50 indicates contraction.
“India’s manufacturing PMI hit another new high in August, driven by a rapid expansion in production,” said Pranjul Bhandari, Chief India Economist at HSBC. She noted that the recent 50% US tariff on Indian goods, effective August 27, may have led to a slight slowdown in export order growth, as American buyers held back amid trade uncertainty. The tariff also includes a 25% penalty for purchases of Russian crude oil.
Data showed that international orders grew at the weakest pace in five months, though still strong by historical standards, with demand coming from Asia, Europe, the Middle East, and the US. Domestic orders, however, remained resilient and matched July’s pace — the fastest in nearly five years — boosted partly by effective advertising.
“Overall orders growth held up well, suggesting domestic demand continues to cushion against tariff-related drag. Manufacturers’ optimism about future output is encouraging,” Bhandari added.
India’s economy grew 7.8% in April-June, its fastest pace in five quarters. Chief Economic Adviser V Anantha Nageswaran said the trade dispute with the US will have some impact in the second quarter as the new tariffs take effect but expects the drag to be contained to Q2 and possibly early Q3.
The survey found that companies increased raw material purchases and added more jobs in August, reflecting positive business expectations. The strongest growth came in the intermediate goods segment, followed by capital goods and consumer goods.
Employment rose for the 18th consecutive month, though at its slowest pace since November 2024, but still remained strong as firms anticipated higher output over the next year.
The HSBC India Manufacturing PMI is compiled by S&P Global from responses of around 400 manufacturing sector purchasing managers.
