India's Manufacturing Sector Surges: PMI Hits 10-Month High

India's manufacturing sector witnessed a sharp improvement in April with a PMI rise to 58.2, driven by robust domestic and international demand. New export orders surged, suggesting a shift towards India amid changing trade dynamics. Increased manufacturing output and employment further highlight the sector's significant growth.

India's manufacturing sector experienced a fresh surge in April as output increased sharply, bolstered by strong international demand. According to the HSBC India Manufacturing Purchasing Managers' Index (PMI), the seasonally adjusted PMI rose slightly to 58.2 in April from 58.1 in March, marking the strongest sectoral health seen in the past ten months.

Pranjul Bhandari, Chief India Economist at HSBC, noted a notable rise in new export orders for April, potentially signaling a shift in production to India amidst an evolving trade landscape and recent US tariff announcements. Bhandari remarked that manufacturing output growth has reached a ten-month peak due to robust orders, despite a modest rise in input prices.

There was a remarkable rise in demand for Indian goods internationally, with export orders having their second-largest increase in 14 years, only falling short of March 2011. Growth was observed across multiple regions, including Africa, Asia, Europe, the Middle East, and the Americas.

Manufacturing output reached its highest growth rate since June 2024, with broad expansion across subsectors, particularly among consumer goods manufacturers. The increased demand led to a notable rise in employment, as 9 percent of firms surveyed hired more staff on both permanent and temporary contracts.

Despite hikes in input costs, driven by rising labor, transportation, steel, and other material expenses, manufacturers successfully transferred these costs to customers, with selling prices climbing at the fastest rate since October 2013.

Order inflows resulted in heightened purchasing and stockpiling activities, with input inventories growing the fastest since August 2024. Conversely, post-production inventories dropped sharply, underscoring strong demand fulfillment.

Backlogs of work grew for the third month in a row, reaching a 15-month high, while supplier delivery times improved, albeit marginally. Manufacturers remain optimistic about future demand growth, reinforced by enhanced marketing efforts and new client acquisitions.

This PMI data underscores a robust beginning to the 2025/26 fiscal year for Indian manufacturing, reaffirming its pivotal role in economic growth.

(With inputs from agencies.)