India's manufacturing PMI hits 8-month high in March despite export slowdown

Despite a slight slowdown in export growth, India's manufacturing sector reached its highest level in eight months due to a sharp rise in new orders and production, according to the HSBC India Manufacturing Purchasing Managers’ Index (PMI) released on Wednesday.

The seasonally adjusted HSBC India Manufacturing PMI rose to 58.1 in March from 56.3 in February, a substantial improvement in the health of the sector that was above its long-run average, the report said.

In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

The uptick was largely fueled by a stronger contribution from the New Orders Index, which hit its highest mark since July 2024.

"March saw total sales expand to the greatest extent since July 2024, with companies remarking on positive customer interest, favourable demand conditions and successful marketing initiatives," the report said.

"Subsequently, firms scaled up production volumes at the end of the 2024/25 fiscal year. The rate of expansion was sharp, above its historical average and the strongest in eight months," it added.

However, growth in international sales softened to a three-month low, though demand from regions like Asia, Europe, and the Middle East kept export orders strong.

According to the survey, surging demand prompted manufacturers to tap into their inventories, leading to the fastest depletion of finished goods stocks since January 2022, the fourth consecutive month of decline.

To counter this, firms ramped up input purchases at the quickest rate in seven months, well above the series average, while pre-production inventories swelled at the fastest pace in five months.

Pranjul Bhandari, Chief India Economist at HSBC, said, "India registered a 58.1 manufacturing PMI in March, up substantially from 56.3 the previous month. Although international orders slightly slowed, overall demand momentum remained robust, and the new orders index recorded an eight-month high of 61.5. Strong demand prompted firms to tap into their inventories, causing the fastest drop in finished goods stocks in over three years."