India’s PMI Registers High Growth; However, Exports Slump

Despite a slight slowdown in export growth, India’s manufacturing sector achieved its highest performance in 8 months. According to the HSBC India Manufacturing Purchasing Managers’ Index (PMI) released on Wednesday, a sharp rise in new orders and production drove this improvement.

India’s PMI Shows Substantial Growth

The seasonally adjusted HSBC India Manufacturing PMI rose to 58.1 in March, up from 56.3 in February. This increase indicates a significant improvement in the sector’s health, surpassing its long-run average. In PMI terms, a score above 50 indicates expansion, while below 50 signals contraction.

New Orders Drive Growth In India’s PMI

The improvement in PMI was primarily driven by a stronger contribution from the New Orders Index. This index reached its highest level since July 2024, signalling robust customer interest, favourable demand conditions, and successful marketing initiatives.

Production Ramp-Up

As a result of the surge in demand, firms increased production volumes by a sharp margin. This growth rate was the strongest in 8 months and was above the historical average. Companies scaled up production in the final quarter of the 2024/25 fiscal year, reflecting a significant boost in sector activity.

Export Sales Face Slight Slowdown

Although domestic sales expanded sharply, growth in international sales softened, reaching a 3-month low. However, demand from regions like Asia, Europe, and the Middle East kept export orders strong, preventing a major decline.

Manufacturers Tapping Into Inventories

Surging demand caused manufacturers to draw from their inventories, leading to the fastest depletion of finished goods stocks since January 2022. This marked the 4th consecutive month of inventory decline. In response, firms increased input purchases at the quickest rate in seven months, which was well above the average for the series.

Growth of Pre-Production Inventories Drives India’s PMI

In line with growing demand, companies also saw pre-production inventories swell at the fastest pace in five months. This signals the expectation of continued demand in the upcoming months as firms prepare to meet consumer needs.

Conclusion

India’s manufacturing sector showed strong growth in March, fueled by an increase in new orders and production. Despite a slight dip in exports, overall demand remained robust, positioning the sector for continued growth.

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