India’s manufacturing growth hits eight-month high in March

Manufacturing sector growth in India surged to an eight-month high in March as a faster upturn in total sales underpinned a sharper increase in output, according to an HSBC report released on Wednesday.

The acceleration in March came despite a mild slowdown in international order growth.

Buoyant demand led companies to tap into their inventories to meet increased client appetite, resulting in the most rapid decline in finished goods stocks since January 2022.

Firms aimed to counter declining stock levels by acquiring additional inputs for their production processes at the quickest pace seen in seven months, the report compiled by S&P Global states.

Pranjul Bhandari, Chief India Economist at HSBC, said: “India registered a 58.1 manufacturing PMI in March, up substantially from 56.3 during 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.”

“Business expectations remained fairly optimistic, with around 30 per cent of survey participants foreseeing greater output volumes in the year ahead, compared to less than 2 per cent that anticipate a contraction,” Bhandari added.

The latest reading showed a substantial improvement in the health of the sector that was above its long-run average. Helping boost the PMI was a stronger contribution from its largest sub-component: The New Orders Index. 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 states.

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.

Although new export orders continued to increase strongly in March, the pace of growth retreated to a three-month low. Where international sales expanded, panellists cited gains from Asia, Europe and the Middle East, the report added.

Strong demand prompted firms to tap into their inventories, causing the fastest drop in finished goods stocks in over three years, according to the report.

Finally, favourable demand conditions, better customer relations and projects pending approval underpinned upbeat forecasts for output levels in the coming 12 months, the report added.

Meanwhile India’s Manufacturing Purchasing Managers’ Index (PMI) rose to 58.1 in March 2025, up from 56.3 in February, according to data released by HSBC and compiled by S&P Global on Wednesday. The rise was driven by stronger new orders growth, as the New Orders Index reached its highest level in eight months, supported by increased customer interest, favourable demand conditions, and successful marketing initiatives.

Pranjul Bhandari, Chief India Economist at HSBC, said, “India registered a 58.1 manufacturing PMI in March, up substantially from 56.3 during 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. Business expectations remained fairly optimistic, with around 30 per cent of survey participants foreseeing greater output volumes in the year ahead, compared to less than 2 per cent that anticipate a contraction.”

In response to stronger new orders, manufacturers scaled up production at a pace above historical averages. To meet rising demand, firms tapped into their inventories, leading to the fastest drop in finished goods stocks since January 2022. Companies also increased input purchases at the quickest rate in seven months to counter stock depletion.

Agencies