Growth Holds, Inflation Bites: India Manufacturing PMI Climbs To 54.7

India’s manufacturing activity strengthened in April, with the PMI rising to 54.7 from 53.9 in March, driven by gains in output, new orders and exports.

However, rising input costs linked to global uncertainties and the Middle East conflict have begun to weigh on the outlook, highlighting a growing inflationary challenge.

Source : Freepik

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Key points generated by AI, verified by newsroom

• India's manufacturing activity expanded moderately in April.
• New orders and output showed mild recovery, driven by exports.
• Input costs rose sharply due to West Asia conflict pressures.

India’s manufacturing sector showed continued resilience in April, with activity strengthening modestly even as cost pressures intensified due to global uncertainties.

According to HSBC Flash India PMI data, the manufacturing Purchasing Managers’ Index (PMI) rose to 54.7 in April from 53.9 in March, signalling an expansion in activity across the sector.

Growth Continues, But Pace Remains Modest

While the uptick in PMI reflects improving conditions, the pace of growth remained relatively subdued. The latest reading marked the second-slowest improvement in overall operating conditions in nearly four years.

April data indicated mild recoveries in both output and new business inflows, although growth rates were still among the weakest seen since 2022.

Orders and Output Show Improvement

Manufacturers reported a moderate rise in output and new orders, including export demand. The improvement suggests that domestic demand remained steady, while international markets provided an additional boost.

Exports emerged as a bright spot, with firms recording the fastest expansion in overseas orders since September last year.

West Asia Conflict Adds Cost Pressure

However, the positive momentum was accompanied by rising inflationary pressures. Companies noted that the ongoing conflict in West Asia has begun to push up input costs.

Input prices increased at the fastest pace in 44 months, while output charges rose at the quickest rate in six months.

HSBC Chief India Economist Pranjul Bhandari said spillovers from the conflict are becoming more visible, particularly through inflation, with firms facing higher cost burdens.

What Is Holding Back Faster Growth?

Despite steady demand, manufacturers pointed to several factors limiting stronger expansion. Competitive pressures, delays in client approvals and uncertainties linked to the West Asia conflict were cited as key constraints.

Survey participants also noted that some customers remained cautious, delaying decisions on pending orders.

Business Sentiment Remains Positive

Even as challenges persist, manufacturers continue to remain optimistic about future growth.

Although overall confidence slipped slightly from March levels, it remained near its highest point since November 2024. Firms expect that marketing efforts and project approvals will support activity in the months ahead.

Supply Chains Show Signs of Improvement

Encouragingly, supply-side conditions improved in April. Companies reported shorter input lead times, attributing the change to better coordination with both new and existing suppliers.

The extent of improvement in supplier delivery times was described as historically strong.

India’s manufacturing sector continues to expand, supported by steady demand and improving supply chains. However, rising input costs and global uncertainties, particularly from geopolitical tensions, are emerging as key risks to sustained growth momentum.