The HSBC India Manufacturing PMI, compiled by S&P Global, rose to 56.9 in February from 55.4 in January, signalling a marked improvement in operating conditions
India’s manufacturing sector expanded at its fastest pace in four months in February, driven by robust domestic demand that lifted new orders and output, even as export growth cooled to its weakest level in nearly a year-and-a-half, a private survey showed on Monday.
The seasonally adjusted HSBC India Manufacturing PMI, compiled by S&P Global, rose to 56.9 in February from 55.4 in January, signalling a marked improvement in operating conditions. A reading above 50 indicates expansion. However, the final print came in below a preliminary estimate of 57.5.
The data were collected between February 9 and February 23.
Domestic demand drives expansion
The survey pointed to a substantial improvement in domestic demand, which fuelled new business intakes and spurred the strongest rise in production volumes in four months.
“India’s final manufacturing PMI reflected an acceleration in manufacturing activity in February. Output expanded at a faster rate for a second month, supported by stronger domestic orders,” said Pranjul Bhandari, Chief India Economist at HSBC.
New orders grew at the quickest pace since October, while output rose above its long-run average. Firms attributed higher production to efficiency gains, healthy underlying demand, rising new work and technology investments.
Manufacturers also stepped up input purchases at the fastest pace in three months and built up inventories, signalling confidence in near-term demand conditions.
Export momentum weakens
In contrast to buoyant domestic sales, growth in new export orders slowed for the 17th consecutive month, registering its weakest pace in 17 months. The deceleration suggests that global demand remains patchy despite easing tariff pressures.
The survey period followed a reduction in US tariffs on certain Indian goods to 18 per cent from 50 per cent. However, fresh global tariff announcements by US President Donald Trump last week have kept external demand conditions uncertain.
Where export sales did rise, companies cited gains from Asia, Europe, the Middle East and the United States, but the overall pace remained subdued.
Bhandari noted that the slowdown in export growth, which began in mid-2025, had “somewhat restricted employment creation in the manufacturing sector.”
Prices rise, hiring subdued
Input cost inflation remained moderate and unchanged from January, with companies reporting higher expenses on labour, materials and transportation. However, strong demand allowed manufacturers to raise selling prices at the fastest rate in four months, with output charge inflation outpacing its long-run average.
Employment rose for another month, but the increase was marginal. Just 4 per cent of firms reported additional hiring, while most companies kept staffing levels unchanged. Backlogs of work increased slightly, reaching a seven-month high, supporting limited job creation.
Supplier delivery times improved further, indicating limited pressure on supply chains.
With inputs from agencies.
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